So you and I sit down at a cafe (in Wiesbaden of course) and we energize ourselves into a legal binding agreement to be a company (at least on paper). Naturally, it'll be a Greek company (to make this work).
Then on paper, we sold something of a fake and non-existent nature from our company in Greece to another company (one single guy working for us) in Germany (Company #2).
Then we arrange for a 2nd sale (resell) from our bogus #2 company to a a bogus #3 company (in Wiesbaden). That tax (required by Germany and the EU), the VAT, is then 'forfeited'. Company #3 then resells the product (at least on paper) back to company #1 (the fake Greek company that we started).....at full price and VAT included.
The VAT 'plus-up'? 19-percent? If this were a million Euro purchase from company #1 to #2, and the sell from #3 back to #1 occurred....you and I would walk away with 1,190,000 Euro (190,000 Euro profit). Imagine turning this twelve times a year (making a cool 1.9-million Euro between the two of us.....mostly all just a paperwork drill).
This got brought up today. Both the EU and Germany have come to realize that various mafia gangs are actively engaged in this type of VAT deal, and reselling on a constant basis. How much? The news media say about 50-billion Euro a year is missing from the EU in this mafia game. Germany alone? About 14-billion Euro is figured to be moved around and lost by the German government.
Fixing this? Go ask them about the various schemes, and how nothing has been done for at least two decades that they've known the schemes existing.
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