Authorities raid Deutsche Bank and 50 other firms

SUSPECTED TAX EVASION

AIDS ON DEUTSCHE BANK AND 50 OTHER FIRMS

BY MAX SCHNEIDER AND STEFAN ERNST

28.04.2010

The chief public prosecutor’s office searched more than 230 business premises across Germany – including those of international giant Deutsche Bank – as well as the homes of accused individuals.

More than 1,000 officials from the tax fraud investigation office, theFederal Criminal Police Office (BKA) and different police authorities took part in the raids.

Searches also took place simultaneously in other EU member states.

Around 150 people are under suspicion of VAT evasion over the trading of greenhouse gas emission permits.

Wednesday morning at 8.20am in Frankfurt: A large contingent of police and other officials arrived at Deutsche Bank. They pulled out their ID at the entrance and entered the building on Theodor Heuss Allee.

Shortly afterwards, a convoy of vehicles with investigators and specialists from the BKA turned up and pulled into the underground car park with blue lights flashing.

In response to an enquiry from BILD.de, a spokesman from the bank said: “We can confirm that we are one of the 230 entities which were searched. We are co-operating with the public prosecutor’s office.”

A spokesman for another major institution, Commerzbank, said it had not been involved in the raids.

WHAT IS IT ALL ABOUT?

The trick is called VAT carousel or missing trader fraud, and according to BILD’s information the current suspected cases add up to a lost revenue of around €1 billion for the German government.

HOW IT WORKS

Dealers in different EU countries buy and sell permits which allow industrial enterprises to release a certain amount of greenhouse gases.

On the sale from dealer A to dealer B across a state border, no VAT is due. Upon the resale of the permits by dealer B to dealer C within the same country (i.e. Germany), VAT does become owed which dealer C can then claim back from the tax office.

Dealer B owes the authorities 19 per cent in VAT – it doesn’t pay, but pockets the 19 per cent and disappears off the market.

The permit is passed along from dealer to dealer until it arrives back at dealer A, which starts a new chain or carousel.

The Bild