In recent months, multiple carbon fraud arrests have been made across Europe in a European Union (EU) wide investigation into tax evasions and money laundering in carbon trading.
According to Europol – Europe’s police agency, fraudulent trading in EU carbon emissions credits has led to more than 5 billion euros ($6.66 billion) in tax revenue losses for numerous EU nations.
Carbon fraudulence occurs when buyers import value-added tax (VAT) free carbon emissions permits from one state to another, sell the permits and then disappear with the VAT collected as part of the sale.
More complicated carbon fraudulence, ‘carousel fraud,’ also occurs where imported permits are sold through a series of companies and then exported. Raids and arrests have been carried out in Germany, Britain, Spain, Norway, Denmark, Belgium, Finland, the Netherlands, Portugal, the Czech Republic and Cyprus.
In April, Britain’s HM Revenue and Customs had arrested 21 people after searching 81 sites, while German prosecutors made three arrests after searching more than 230 sites.
In March, Spanish police arrested nine people on charges of evading 50 million euros ($67.54 million) in tax linked to carbon credit trading, while Norwegian police charged five men. In January, Belgian authorities charged three men with money laundering.
Investigations have also been executed in the Netherlands, France, Denmark, Finland Portugal, the Czech Republic and Cyprus. The European investigations are led by German prosecutors.
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