Investigation Midas. Credit: X @EUProsecutor
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.
Allegedly, Covid face masks were sold to Germany’s own health ministry using a fake Hong Kong firm. On July 15, 2025, a man was sentenced to a suspended 18 months in prison by a German court for his role in one of the EU’s largest cross-border tax scams to date.
Huge VAT scam exploited EU tax loopholes
The so-called Midas case, led by the European Public Prosecutor’s Office (EPPO), centres on VAT carousel fraud, where goods move across EU borders tax-free before vanishing from the books.
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 uncovered a network of shell companies, fake identities, and fictitious invoices allegedly used to sell smartphones, electronics, and personal protective equipment (PPE) during the pandemic.
Covid face masks from fake China firm
One of the most brazen elements of the scheme involved protective face masks bought by the German Federal Ministry of Health in 2020. EPPO revealed that the ministry unknowingly purchased the masks from a company pretending to be based in Hong Kong. In fact, the goods never left Germany.
The company at the beginning of the supply chain, along with the fake Hong Kong front, failed to reimburse VAT after the sale, resulting in a direct loss of taxpayer money.
The full scale of the fraud became public in February 2024, when over 180 searches were carried out across 17 countries, leading to:
- 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 cars including a Rolls-Royce, BMW, and Range Rover
- 2.5 kg of gold and designer jewellery
The suspects allegedly used encrypted communication, buffer companies, and straw men to shield the operation.
The EU-wide investigation was made possible through EPPO’s powers to coordinate fast, transnational action. 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 Cyprus Department
- Czechia: National Organised Crime Agency (NCOZ)
- Estonia: Estonian Tax and Customs Board (EMTA)
- Malta: Financial Crime Investigation Department (FCID)
- Netherlands: Fiscal Information and Investigation Service (FIOD)
- Poland: Warsaw Police Department for Economic Crimes
- Portugal: Guardia Nacional Republicana (GNR)
- Sweden: Swedish Economic Crime Authority (SECA)
- Slovakia: Národná Kriminálna Agentúra (PPZ)
- Albania: Special Prosecution Office against Corruption and Organised Crime (SPAC)
- Slovenia, Hungary, and Croatia also participated in operations
Despite the massive scale of the fraud and confirmed involvement of a national health ministry, there have been no reported investigations into government oversight or regulatory failures.
With only four convictions so far, serious questions about who else is out there unscathed remain.
View all European news.
