Germany convicts fourth in €195m EU VAT scam linked to Covid mask fraud

A fourth conviction has been made in the €195 million VAT fraud scheme that spans 17 countries and is commonly known as the Midas investigation.

A fake Hong Kong company allegedly sold Covid masks to the German health ministry. A German court sentenced a man to 18 months of prison with a suspension on July 15, 2025 for his involvement in one the EU’s biggest cross-border tax scams.

Huge VAT scam exploited EU tax loopholes

The so-called Midas Case led by European Public Prosecutor’s Office, focuses on VAT carousel Fraud, where goods cross EU borders tax free before disappearing.

According to EPPO, the convicted man acted as the director of a missing trader company that helped steal around €1 million in VAT.

The investigation revealed a web of shell companies, fake aliases, and fictitious receipts that were used to sell smartphones and electronic equipment, as well as personal protective equipment during the pandemic.

Covid masks manufactured by fake Chinese company

In 2020, the German Federal Ministry of Health purchased protective facemasks. EPPO has revealed that the Ministry of Health purchased the masks unknowingly from a company claiming to be located in Hong Kong. The goods were never shipped out of Germany.

The company at first of the supply chain along with the fake Hong Kong face failed to reimburse the VAT after the sale. This resulted in a direct financial loss for the taxpayer.

In February 2024, the fraud’s full scope became known when 180 searches across 17 different countries were performed.

• 14 arrests
• Over €15 million worth of smartphones seized
• A €3 million yacht, luxury watches, €1.2 million in cash and crypto
• Multiple high-end vehicles including a Rolls-Royce BMW and Range Rover
• Gold and Designer Jewellery 2.5 kg

The suspects used allegedly encrypted communication, buffer firms, and strawmen to conceal the operation.

EPPO’s ability to coordinate rapid, transnational actions made it possible for the EU-wide investigation. It received support from

• Europol
• Eurojust
• Germany: Tax Investigation Offices (Berlin, Bielefeld, Cottbus, Münster, Nuremberg), Police HQs (Nordhessen, Brandenburg), State Criminal Police (Berlin and Brandenburg)
• UK: Her Majesty’s Revenue & Customs (HMRC)
• Italy: Guardia di Finanza (GdF)
• Austria: Amt für Betrugsbekämpfung (ABB)
• Cyprus Police Department
• Czechia : National Organised Crime Agency
• Estonia: Estonian Tax and Customs Board
• Malta: Financial Crime Investigation Department (FCID)
• Netherlands: Fiscal Information and Investigation Service
• Poland: Warsaw Police Department for Economic Crimes
• Portugal: Guardia Nacional Republicana (GNR)
• Sweden: Swedish Economic Crime Authority
• Slovakia: Národná Kriminálna Agentúra (PPZ)
• Albania: Special Prosecution Office against Corruption & Organised Crime
• Slovenia, Hungary, Croatia and other countries also took part in the operation

There have been no reports of government oversight or regulatory failings despite the scale of fraud and the confirmed involvement of the national health ministry.

Only four convictions have been made so far. This raises serious concerns about the rest of those who are out there.

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