A criminal network defrauded EU tax systems of nearly €69 million by exploiting loopholes in alcohol VAT regulations, a major investigation in Spain has revealed. The transnational scheme involved 8.2 million litres of untaxed alcohol and 93 shell companies across multiple countries.
The case highlights how inadequate alcohol tax enforcement fuels illicit trade, undercuts public health policies, and highlights the EU-wide need for more robust alcohol tax systems that benefit people’s health and protect against tax avoidance and evasion.

Transnational Criminal Network Exploited Alcohol Tax Loopholes Across the EU

A sweeping investigation coordinated by the European Public Prosecutor’s Office (EPPO) and Spanish authorities has exposed a massive VAT fraud scheme involving imported alcoholic products.

Between 2018 and 2024, the scheme enabled a criminal network to generate illicit profits of €68 to €69 million while evading taxes on 8.2 million litres of alcohol, as reported by the Majorca Daily Bulletin and The Olive Press.

€69 Mn
Profits from Alcohol Tax Fraud
Between 2018 and 2024, a criminal network exploited tax loopholes to generate illicit profits by evading taxes on 8.2 million litres of alcohol.

According to the Majorca Daily Bulletin, the suspects exploited EU tax regulations that allow value-added tax (VAT) exemptions on cross-border transactions between Member States. Alcohol was imported into Spain via tax warehouses, where VAT payments are deferred until the products enter commercial circulation. Fraudulent intermediaries, so-called “missing traders”, would then acquire the alcohol and vanish without paying the tax, passing the products along a chain of bogus companies.

The Olive Press revealed that the network operated through 93 shell companies based in Spain, Germany, Portugal, Malta, and the Turks and Caicos Islands.

Most companies dissolved within months of formation, helping to create a façade of legality while laundering profits through falsified invoices and fake transactions.

93
Organized Crime in the Alcohol Industry
The criminal network operated through 93 shell companies based in Spain, Germany, Portugal, Malta, and the Turks and Caicos Islands to evade alcohol tax payments.

Lavish Spending and Seizures

Law enforcement carried out 19 raids across Barcelona, Cádiz, A Coruña, Ibiza, Madrid, and Valencia, reports The Olive Press. Among the seized items were a yacht, five luxury cars (including three Porsches), 34 high-end watches, and €333,085 in cash. Authorities also froze more than €700,000 in bank accounts and issued seizure orders for 21 real estate properties.

Eight individuals were arrested, including three suspected ringleaders. The accused face charges including tax fraud, money laundering, document forgery, and participation in a criminal organisation.

EU Tax Loopholes Fuel Harmful Alcohol Trade

This case emphasises how loopholes in the EU’s tax system can fuel harmful alcohol trade and undermine public health oriented alcohol policy. According to research, organised criminal groups routinely exploit differences in alcohol taxation across borders to evade taxes, bypass public health regulations, and fuel illegal markets.

For instance, research highlights that such illicit trade not only harms government revenue but also weakens alcohol policy measures. It urges governments to improve alcohol taxation systems and close cross-border loopholes to support health promotion and prevent alcohol harm.

In May 2025, Movendi International reported about a push by major alcohol producers in Brazil to formally dismantle the country’s beverage production monitoring system. The case revealed the alcohol industry’s ongoing efforts to avoid fiscal transparency. Despite clear evidence that the absence of a proper monitoring, tracking, and tracing system for alcohol production costs over R$10 billion annually in lost revenue, companies such as Ambev (owned by AB InBev) and Heineken are lobbying to keep oversight off the table. 

This case shows the exploitative practices of the alcohol industry. It reveals the alcohol industry’s conflict of interest and shines a light on the Spanish and European tax fraud scandal.

Already in 2017 a high profile case of alcohol tax evasion showed alcohol industry executives think they are above the law. The leaked Paradise Papers exposed that the alcohol industry is ruthlessly externalizing costs to take home windfall profits, and deliberately scheming to avoid taxation.

Organised Crime and Illicit Trade in Tobacco, Alcohol and Pharmaceuticals
Alcohol industry pushing to remove tax monitoring system
Paradise Papers And Beyond: Big Alcohol Big In Tax Schemes

Need for Robust Alcohol Policy Protections

The Spanish fraud scheme shows the urgent need for modern, coordinated alcohol policy at both national and EU levels. When alcohol taxes are avoided through fraud or manipulation, it reduces the effectiveness of evidence-based policies designed to reduce population-level alcohol consumption, harm, and costs and promote people’s health.

Strengthening the traceability of alcohol shipments, monitoring suspicious shell companies, and harmonising excise tax structures across the EU can all contribute to curbing the illicit alcohol economy. As research notes, comprehensive alcohol tax systems are important financial tools as well as vital components of public health infrastructure.

This case reinforces the importance of implementing effective alcohol tax monitoring systems as part of broader efforts to ensure fair taxation.

This case also serves as a call to action for European institutions to prioritise alcohol policy through evidence-based taxation, transparent supply chains, and international cooperation against criminal exploitation of tax regimes.

Sources

Majorca Daily Bulletin: “Balearics caught up in massive Europe-wide booze VAT scam bust: €100M alcohol tax fraud dismantled across Spain“

The Olive Press: “Gang did not pay €69m in sales tax on alcoholic spirits in Spain“