Munich:Three individuals have been detained in Cyprus as part of an investigation by the European Public Prosecutor's Office (EPPO) into a suspected £114 million cross-border VAT fraud related to smartphone sales. The investigation has revealed estimated tax losses in Sweden and Germany.

According to Cyprus News Agency, five suspects were apprehended this week in Cyprus, Germany, and Italy following requests from the EPPO's Munich office. In addition to the arrests, searches and seizures took place in Cyprus, Greece, and Italy as part of the operation.

The criminal organization under scrutiny is alleged to have operated a sophisticated VAT carousel fraud scheme. This scheme took advantage of EU regulations on cross-border transactions, which allow for certain VAT exemptions. The operation reportedly involved selling smartphones through companies and 'missing traders' located in Germany, Albania, and Sweden.

The estimated tax losses are calculated to be £80 million in Sweden and £34 million in Germany. Authorities suspect that the individuals arrested were responsible for establishing and managing the fraudulent scheme. Twelve searches were conducted at the locations of suspects and involved companies, resulting in the freezing of assets valued up to £80,000, along with the seizure of bank accounts, vehicles, and real estate in Cyprus, Greece, and Italy.

The operation in Cyprus saw the involvement of various national authorities, including the Tax Department, the Cyprus Police, its Cybercrime Division and Digital Forensic Lab, and the Financial Intelligence Unit (MOKAS). Support also came from authorities in Germany, Greece, and Italy. The case is part of the EPPO's larger 'Midas' investigation cluster, which targets cross-border VAT fraud. All individuals involved are presumed innocent until proven guilty in the competent German courts.