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Italian financial police said Monday they have uncovered a 10.5 million euros ($11.95 million) tax fraud scheme involving 15 Chinese nationals and a network of shell companies that investigators believe funneled profits overseas, undermining the European Union’s financial interests.
The suspects, including the administrators of 13 companies operating in Italy’s northeastern Friuli region, allegedly used fictitious invoices to manipulate their tax filings and reduce their declared income. According to the statement released by the Guardia di Finanza in Pordenone, the fraud resulted in more than 5.5 million euros ($6.26 million) in unpaid value-added tax (VAT).
The investigation, coordinated by the Venice office of the European Public Prosecutor’s Office (EPPO), revealed that the firms claimed expenses for clothing and merchandise supposedly sourced from domestic suppliers. In reality, police said, the goods arrived through untraceable routes from China, bypassing Italy’s tax and customs systems.
Authorities said the invoices—issued by a recurring group of companies mostly based in Lombardy—were linked to shell entities with no physical premises, no employees, and no legitimate business operations. Many of the companies were formally registered to Chinese nationals with no previous business experience, some of whom had recently worked as couriers or waiters.
According to the statement, several of the companies operated from the same addresses or used the same consultants. Their reported turnover surged within months from negligible figures to tens of millions of euros—without ever paying taxes.
Police said the scheme fit the pattern of a classic “carousel fraud,” where false supply chains are fabricated to fraudulently claim VAT credits and obscure the real origin of imported goods.
While some payments for the bogus transactions were made through traceable channels, investigators said the funds were later transferred abroad, mainly to China, in an effort to conceal the actual beneficiaries of the scheme.
Police said 14 suspects filed false tax returns, while the suspected mastermind was behind the fake invoices.
The operation, police said, is part of a broader crackdown on tax fraud and is aimed at protecting compliant businesses and safeguarding public finances within the European Union.
