Three Britons charged over €3m carbon-trading ‘carousel fraud’

January 12, 2010 by Infowars Ireland

guardian.co.uk

• Belgium alleges VAT scam over carbon emissions permits
• Europol fears fraud will be used in energy trading markets

Belgian prosecutors highlighted the massive losses faced by EU governments from VAT fraud today after they charged three Britons and a Dutchman with money-laundering following an investigation into a multimillion-pound scam involving carbon emissions permits.

The three Britons, who were arrested last month in Belgium, were accused of failing to pay VAT worth €3m (£2.7m) on a series of carbon credit transactions.

European authorities believe the EU has lost at least €5bn to carbon-trading VAT fraud in the last 18 months. Europol, the EU’s law-enforcement operation, fears the fraud will be used in other areas, especially gas and electricity trading markets, after criminals found VAT fraud was one of the most lucrative financial frauds.

Pollution permits for businesses were launched in the European Union in 2005 in an effort to cut carbon emissions. But the lack of harmonised tax regimes across the EU has prevented the creation of an orderly market that eliminated fraud.

The fraud occurs when carbon credits are bought and imported tax-free from other EU countries, then sold to domestic buyers, charging them VAT. The UK allows credits to be sold without adding VAT, while Belgians must pay VAT when they buy credits. Once the transaction, or series of transactions, are complete, the sellers disappear without paying the tax.

The three Britons allegedly set up a firm in Tournai, in west Belgium, which bought the credits in Britain and sold them on to banks via an intermediary, pocketing the 21% VAT charged in Belgium. Read more…