Operation Nebula: EPPO Arrests Seven in €78M EU VAT Fraud Spanning Italy and Croatia

On 27 May 2026, the European Public Prosecutor's Office (EPPO) announced the arrest of seven suspects in Verona and Naples, Italy, as part of Operation Nebula — a major cross-border VAT fraud investigation that has been running since a landmark operation in November 2025. The estimated damage to EU member states exceeds €78 million in unpaid VAT.

How the Fraud Worked

The scheme is a textbook example of a carousel VAT fraud, also known as a missing trader intra-community (MTIC) fraud. The criminal network, with members in Croatia and Italy, operated a chain of companies that purchased hygiene and electronic products VAT-free from Italian wholesalers. These goods were then nominally sold to so-called missing trader companies in the Naples area, which resold them without remitting the VAT owed to the Italian tax authorities.

To evade detection, the organisation continuously replaced the companies involved in the scheme and registered them in the names of straw men with no real assets. The artificial supply chain, involving multiple cross-border transactions, allowed the criminal group to avoid paying over €33 million in VAT in Italy alone, while simultaneously undercutting legitimate competitors with artificially low prices.

Why This Matters for European Businesses

Operation Nebula is a reminder that VAT fraud is not a victimless crime. When missing trader schemes operate at scale, they distort competition across entire product categories — in this case, hygiene and household goods. Legitimate businesses that pay their VAT obligations find themselves undercut by fraudulent operators who can offer artificially low prices precisely because they are not remitting tax.

For businesses engaged in intra-EU trade, the case underscores the importance of supply chain due diligence. Under EU VAT rules, a business that knew or should have known it was participating in a fraudulent transaction can be held jointly liable for the unpaid VAT. Verifying the VAT registration status and commercial legitimacy of suppliers is not just good practice — it is a legal safeguard.

Key Takeaways

• Seven suspects arrested in Italy; two remanded in custody, four under house arrest.

• Total estimated VAT fraud: over €78 million across multiple EU member states.

• Italy alone: over €33 million in unpaid VAT.

• Scheme used missing trader companies, straw men, and continuous entity replacement to evade detection.

• Businesses in intra-EU trade should conduct VAT due diligence on all suppliers to avoid joint liability exposure.

Closing Insight

The EPPO's Operation Nebula demonstrates that European prosecutors are increasingly capable of dismantling sophisticated, multi-jurisdictional VAT fraud networks. For compliance officers and tax advisors, the lesson is clear: supply chain transparency is no longer optional. Businesses that fail to verify the legitimacy of their trading partners face not only reputational risk but potential VAT liability for fraud they did not commit but should have detected.

Source: taxheaven.gr | Read the full article here: https://www.taxheaven.gr/news/73694/ereyna-nebula-h-eppo-syllambanei-hgetika-stelexh-egklhmatikhs-organwshs-se-ereyna-gia-apath-fpa-ypsoys-78-ekat-eyrw