In early October 2026, the Portuguese Tax and Customs Authority (AT) announced its participation in Operation Hermes, a European-wide investigation coordinated by Eurojust and Europol targeting a sophisticated intracommunity VAT fraud network. The scheme involved the fraudulent acquisition of VAT identification numbers in multiple Member States, enabling the consortium to trade goods — primarily electronics and mobile phones — across borders without remitting the due VAT. The Portuguese branch of the network acted as a key transit hub, using shell companies to obscure the true beneficiaries and to generate false invoicing trails.
Key Takeaways
- Scope and Modus Operandi: The fraud network exploited the VAT exemption for intracommunity supplies (Article 138 of the VAT Directive) by creating a carousel of companies that purchased goods VAT-free in one Member State and sold them domestically in another without declaring the output VAT. The Portuguese entities served as “missing traders,” disappearing before tax obligations came due. The estimated VAT loss across the EU exceeds €15 million, with Portugal accounting for approximately €3.5 million.
- Enforcement Outcomes: Coordinated raids in Portugal, Spain, Italy, and Germany led to the arrest of 8 individuals, the seizure of €2.1 million in cash and assets, and the freezing of 47 bank accounts. In Portugal, AT executed 12 search warrants at business premises and residential addresses, securing extensive documentary and digital evidence. The operation also resulted in the revocation of VAT registration for 15 Portuguese companies implicated in the scheme.
- Regulatory Response: AT has issued new guidance (Circular 2026/10) reinforcing due diligence obligations for taxpayers engaging in intracommunity transactions. The circular mandates enhanced verification of counterparties’ VAT status through the VIES system, stricter record-keeping for transport documentation, and immediate reporting of suspicious patterns. The authority also plans to expand the use of the “Certificação de Saída” (exit certification) mechanism introduced by Despacho 104/2026 to provide robust proof of goods leaving the territory.
- Future Prevention: The investigation highlighted vulnerabilities in the current VAT information exchange system (VIES) and the need for real-time cross-border transaction monitoring. AT is advocating for the acceleration of the EU’s “VAT in the Digital Age” (ViDA) package, which includes mandatory digital reporting and a centralized EU VAT portal. Meanwhile, Portuguese taxpayers are urged to review their supply chain compliance programs and to implement automated VAT number validation tools to mitigate exposure to similar frauds.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement