Investigators Raid Some 250 Sites Across Portugal as European Prosecutors Chase a Suspected 120 Million Euro VAT Fraud in Mobile Phones
More than 40 arrest warrants were issued in an operation centred on Porto, reportedly built on Operation Admiral, the EU's biggest VAT carousel case, which began with a Coimbra tax inspection. Detainees go before a Lisbon judge on Thursday.
Hundreds of investigators fanned out across Portugal on Wednesday morning in what RTP called one of the largest operations ever run by the European Public Prosecutor's Office (EPPO), targeting a suspected VAT fraud in the trade in mobile phones. The broadcaster reports some 250 searches, more than 40 arrest warrants and suspected losses to the Portuguese state of more than 120 million euros.
The searches are being carried out by the Polícia Judiciária (PJ, the criminal investigation police) and the Autoridade Tributária (Tax and Customs Authority). RTP puts the combined force at about 700 officers; other outlets, including ECO and Diário de Notícias, report 700 PJ inspectors joined by about 300 tax officials. Most of the targets are companies, and most of the searches are in the north, with others in Lisbon and elsewhere in the country.
A judicial source told Lusa that the searches cover dozens of companies in Greater Porto and Greater Lisbon and that the two inquiries behind the operation are centred on the Porto region. Investigators suspect corruption, tax fraud, criminal association and money laundering, according to RTP.
How a VAT carousel works
Sales of goods between businesses in different EU countries are exempt from VAT at the border; the buyer accounts for the tax at home. A carousel exploits that gap. Goods, often small and valuable items such as phones, are sold through a chain of companies across several member states. One company in the chain charges VAT to its customer but never pays it to the tax authority and then disappears, while the next company deducts or reclaims the same VAT as if it had been paid.
In this case, according to Lusa, the scheme involved simulated sales of thousands of phones to companies across Europe, many of them shell firms set up only for that purpose. CNN Portugal, cited by ECO and Diário de Notícias, reports that the operation is code-named Hermes and that some arrests are planned outside Portugal.
Grown out of Admiral
CNN Portugal also reports that the inquiries grew out of information gathered in Operation Admiral, the EPPO's flagship VAT case, which began in Portugal. According to the EPPO, the tax office in Coimbra was looking at a company selling mobile phones, tablets and earphones in April 2021 and reported it to the new European prosecutor that June. Investigators went on to link it to close to 9,000 companies and more than 600 people in several countries. When the EPPO announced the case in November 2022 it called it the biggest VAT carousel fraud ever investigated in the EU and put the damage at 2.2 billion euros, a figure it later raised to 2.9 billion.
The first trial ended in May 2025, when the Central Criminal Court of Lisbon convicted ten people and 13 companies. The three main perpetrators received sentences of seven, seven and a half and eight years, and the court ordered the confiscation of 80.1 million euros, the damage caused in Portugal. That judgment was not final.
What happens next
Those detained are due to be taken to Lisbon and brought before the Tribunal Central de Investigação Criminal (Central Criminal Investigation Court) on Thursday, where a judge will decide on any coercive measures. The EPPO, the PJ and the tax authority are expected to give more details at a press conference once the operation ends, RTP reports. By late morning the EPPO had not yet published a statement on the case.
The figures above come from media reports while the searches were still under way and may change. Everyone named in an investigation is presumed innocent until proven guilty in court.
