Sweeping EU probe uncovers vast cross-border customs fraud scheme funneling Chinese goods into black markets while dodging more than €113 million in VAT

Apr 11, 2026, 1:49 PM

At the request of the European Public Prosecutor’s Office (EPPO) in Bratislava (Slovakia) and Liberec (Czechia), multiple searches and investigative measures were carried out today in Czechia and Slovakia, as part of an investigation into suspected large-scale customs fraud and VAT evasion involving the import of textiles, shoes, and e-commerce goods from China into the EU.

The investigation, code-named ‘Podlimit’ (‘below the limit’ in Slovak) conducted by the Financial Administration Criminal Office (Kriminálny úrad finančnej správy) in Slovakia, concerns nine Czech companies and their suspected involvement in a fraudulent scheme where large quantities of goods were allegedly smuggled from China to Slovakia and Czechia, by abusing the Customs Procedure 42 (CP42). This procedure, created to simplify cross-border trade, exempts importers from paying VAT in the country of importation, if the imported goods are subsequently transported to another EU Member State. The tax must then be paid upon release of the goods.

The companies, operating between June 2017 and December 2018, allegedly issued false Single Administrative Documents (SADs) to facilitate the import of Chinese textiles, footwear, and e-commerce goods into the European Union through multiple entry points, including ports in Germany, Poland, and Slovenia.

According to the findings, the goods were transported by truck in sealed containers to Slovakia, where they were declared for customs clearance and released for free circulation. However, instead of being delivered to their declared destination in Czechia, the shipments were allegedly redirected -under instructions from the Czech companies- to other, undisclosed locations. It is suspected that many of the declared transactions existed only on paper, and that the goods ultimately entered the black market without the payment of VAT in the country of actual delivery.

The scheme also appears to have involved systematic undervaluation of imported goods to reduce customs duties, as well as the submission of false information to Slovak customs authorities regarding the final destination of shipments. In parallel, the companies reportedly filed inaccurate declarations with Czech tax authorities concerning intra-community acquisitions and supplies. These actions were allegedly supported by falsified contracts indicating delivery to entities in countries other than Slovakia or the declared destination.

As a result of these practices, it is estimated that customs duties were reduced by at least €24.1 million, while unpaid VAT amounts to over €113,3 million across nearly 4000 consignments.

All persons are presumed innocent until proven guilty by the competent courts of law.

The EPPO is the independent public prosecution office of the European Union. It is responsible for investigating, prosecuting and bringing to judgment crimes against the financial interests of the EU. 