July 10, 2025 – In a joint operation named “Operation Gallagher”, the Spanish Civil Guard and the Tax Agency, under the direction of the European Public Prosecutor’s Office (EPPO), have dismantled a major criminal organization responsible for a massive €69 million VAT fraud in the alcoholic beverages sector between 2018 and 2024.
Eight members of the organization have been arrested following 19 coordinated raids across Madrid, Barcelona, La Coruña, Ibiza, Jerez de la Frontera, and Valencia. Authorities seized €400,000 in cash, over €1 million in bank accounts, a luxury yacht, 34 high-end watches, 5 luxury vehicles, and issued seizure orders for 21 properties.
Complex International Network Involving 93 Companies
The organization operated through a complex web of 93 companies registered in Spain, Portugal, Germany, Malta, and the Turks and Caicos Islands. These firms served both as fronts for commercial activity and as channels for money laundering of criminal proceeds.
VAT Fraud Through Tax Warehouses
The investigation focused on a sophisticated intra-community VAT fraud, exploiting EU rules that exempt VAT on cross-border transactions. The scheme relied on tax warehouses in the Netherlands, Portugal, and Spain where large quantities of alcohol were moved without triggering immediate tax obligations.
Once in Spain, fake intermediaries (“missing traders”), controlled by the criminal group, purchased the alcohol, became liable for VAT, then disappeared without paying. The alcohol was then passed through a chain of shell companies using fake invoices, ultimately reaching consumers through distribution channels controlled by the network. Although VAT was charged on paper, it was never remitted to the tax authorities, allowing the group to undercut competitors with artificially low prices.
Spanish Nationals at the Helm
The operation was led by three Spanish nationals, who used straw men to manage shell companies and distance themselves from direct involvement. This structure complicated efforts to trace transactions and shift legal responsibility onto minor players.
The investigation was spearheaded by the Central Operational Unit (UCO) of the Civil Guard, the National Office of Tax Fraud (ONIF) of the Tax Agency, and overseen by the EPPO, which prosecutes crimes against the EU’s financial interests.
The large-scale effort involved multiple regional Guardia Civil units, canine and aerial services, and cyber-auditors from both national and regional Tax Agency teams.
