Belgium is facing an alarming surge in VAT fraud tied to massive imports from Chinese e-commerce platforms such as Temu, resulting in an estimated loss of €611 million, according to a report by the European Public Prosecutor’s Office (EPPO) published by De Standaard on Monday.
The report highlights that VAT fraud across Europe now totals an astounding €13 billion, with Belgium emerging as a hotspot due to its major transport hubs.
Bierset Airport, one of the busiest entry points, handles up to 200,000 parcels from China daily, making it a focal point for these fraudulent activities.
The report reveals that organised crime networks exploit loopholes in VAT regulations, using sophisticated methods to evade taxes and channel funds into more sinister operations, including drug and human trafficking.
Complex Schemes and Fake Companies
Criminals employ two main strategies to execute VAT fraud. The first involves establishing fake companies with valid VAT numbers to simulate exports to other EU nations, allowing them to evade tax obligations.
The second method exploits Belgium’s position as a key entry point for goods into the EU. Fraudsters import goods, falsely declare another EU country as the final destination to bypass VAT payments, and then sell the products on the black market.
These schemes cover a wide range of consumer goods, including electronics, toys, and clothing. Fraudsters often charge VAT to customers but never remit these payments to the authorities, creating a substantial revenue shortfall.
The influx of goods also raises concerns about product safety, as many items bypass stringent regulatory checks.
Organised Crime and Safety Risks
The EPPO report warns that the funds generated from VAT fraud are not just a financial loss but also a lifeline for organised crime networks across Europe.
The proceeds are frequently funnelled into more dangerous criminal activities, such as trafficking drugs and humans. Additionally, the sheer volume of goods entering Belgium has led to an influx of potentially unsafe products into the market, posing risks to consumers.
The scale of the problem has escalated sharply, with the number of import declarations in Belgium skyrocketing from 400 million in 2023 to 1 billion in 2024.
Despite this surge, the country has only 3,200 customs officers, making it increasingly difficult to manage and inspect the growing volume of imports effectively.
Calls for Immediate Action
In response to the report, the EPPO has called for an urgent increase in resources to combat VAT fraud. The agency recommends boosting the number of customs officers and investigators dedicated to tackling financial crimes linked to imports.
Without immediate action, the report warns, the financial losses and associated risks are likely to escalate further.
The Belgian government has yet to issue an official response to the EPPO’s findings. However, experts argue that addressing the manpower shortage at customs and enhancing inter-EU cooperation will be crucial steps in curbing VAT fraud.
As investigations continue, the EPPO’s report serves as a stark warning about the growing threat of financial crime linked to e-commerce and its far-reaching implications for both Belgium and the wider EU.
