Portugal Convicts 23 in Historic VAT Fraud Trial as EPPO’s Admiral Probe Expands Across EU

In a watershed ruling on 12 May 2025, Portugal’s Central Criminal Court in Lisbon handed down convictions against 10 individuals and 13 companies for orchestrating one of the European Union’s most significant VAT frauds to date. The verdict, the first stemming from the ongoing Investigation Admiral probe led by the European Public Prosecutor’s Office (EPPO), marks a pivotal moment in efforts to combat carousel fraud across EU borders. The scheme, which centered on the cross-border trade of electronic goods such as smartphones and computer parts, exploited VAT rules to evade an estimated €2.9 billion in tax obligations.

The court imposed severe prison sentences on the ringleaders, who faced charges including VAT fraud, money laundering, corruption, and document forgery. Three of the primary architects received terms of seven years, eight years, and seven years and six months respectively. Though they were acquitted of charges related to operating a criminal organization, the convictions remain subject to appeal. A fourth individual, who played a crucial role in recruiting straw-man company directors and supervising fictitious trade operations used to clean illicit profits, was sentenced to five years behind bars.

Six other defendants were found guilty solely of money laundering. In less severe outcomes, four managers of implicated firms and one of the conspirators’ spouses received suspended sentences of three years, each under conditional terms. Additionally, a bank employee who knowingly violated anti-money laundering protocols in return for personal financial benefit was given a four-year suspended sentence for private-sector corruption and laundering.

Together, the 23 convicted parties were ordered to forfeit €80,076,336.75 in a joint confiscation ruling intended to recoup damages incurred by both the Portuguese state and the European Union. The court also approved asset seizures, covering real estate, corporate bank accounts, and vehicles, while exempting two third-party pension funds and a legitimate sum of €320,318.25.

The Admiral investigation exposed the inner workings of a textbook carousel fraud: a cycle of intra-community transactions where shell entities—established in Portugal, the Baltics, and other jurisdictions—exchanged electronic goods on paper only. These phantom firms issued fake export invoices to benefit from zero-rated VAT provisions and then filed for unlawful VAT reimbursements without ever remitting the taxes collected to authorities. The same merchandise was passed around among entities in a loop designed to conceal the real buyers and obfuscate audit trails. The fraudulent network made use of forged documentation, layered transactions, and nominee directors to camouflage its operations and bypass scrutiny by national tax administrations.

Under Portuguese law, crimes involving aggravated VAT fraud, laundering, corruption, and falsification of documents carry significant custodial penalties. Beyond individual convictions, the 13 companies implicated in facilitating the scheme also faced sanctions. Two were each fined €16,000 and dissolved outright. The remainder were removed from Portugal’s commercial registry, a move aimed at dismantling the legal scaffolding that enabled such large-scale economic crimes. This dual focus on personal and corporate liability underscores the judiciary’s message that shell structures and front companies will not be tolerated in the single market.

While the Lisbon verdict closes one chapter of the wider Admiral investigation, the broader inquiry remains ongoing. Subsequent phases—dubbed Admiral 2.0 and Admiral 3.0—have uncovered similar fraud networks operating in the Baltic states and Greece, all relying on comparable infrastructure: recycled nominee directors, standardized spreadsheet templates, communication methods, and coordinated financial accounts. According to EPPO officials, local arrests, asset freezes, and expanded data collection are already underway as the scope of the inquiry grows.

Established under Regulation (EU) 2017/1939, the EPPO operates as a hybrid model of decentralized prosecution. European Delegated Prosecutors embedded in member states lead national investigations with independence, while centralized support from Luxembourg provides forensic, analytical, and technical capabilities. The Admiral case has become a showcase for this collaborative model, enabling the identification and dismantling of transnational fraud schemes that had previously thrived amid fragmented enforcement systems across the bloc.

Portugal’s court has now laid a clear foundation for future prosecutions involving complex VAT fraud. With EPPO-driven investigations gaining momentum in multiple jurisdictions, and the Lisbon convictions reaffirming that cross-border financial crime will be met with robust legal consequences, this moment stands as a decisive escalation in the EU’s battle against illicit trade. As the EPPO’s mission advances across Europe, the message is unambiguous: those who defraud the EU treasury will be pursued, prosecuted, and stripped of their ill-gotten gains.

By fLEXI tEAM