A macro fraud scheme of €300 million in hydrocarbon VAT dismantled

BarcelonaThe Spanish Tax Agency has dismantled a network of 38 companies that allegedly defrauded the government of more than €300 million in 2024 through value-added tax (VAT) in the hydrocarbon sector. The scheme, dubbed "Pamplinas Stars," is one of the two largest such cases in Spanish history. The investigation involved 160 agency officials, and five people considered responsible for the criminal organization were arrested. One of these individuals, believed to be the ringleader, is already in prison for alleged crimes against the public treasury, organized crime, and money laundering. In a statement released this Friday, a public holiday in Catalonia and the Balearic Islands but a working day in Spain, the Tax Agency explained that the investigation began in 2024 when the agency started analyzing potential fraud by a wholesale operator who began selling large quantities of fuel.

In the 18 raids carried out in twelve municipalities across seven different districts—none of them in Catalonia—42 properties, 82 vehicles, two boats, hundreds of bank accounts, crypto assets, a large amount of cash, two works of art, and 64 watches made of gold, silver, and other metals were seized.

How did the scheme work?

The fact is that this company allegedly based its fraudulent scheme on the quarterly declaration of VAT due—the tax generated at the time of sale and provision of services, whether or not the customer has paid—significantly lower than its actual sales, while simultaneously declaring VAT paid—the tax paid to the municipalities. The Tax Agency's investigation revealed that the operator in question was operating through shell companies that would formally invoice the final recipients for the product extracted by the first company. This scheme would allow the company to sell a product for a certain value, declare sales at a lower value, and therefore pay less VAT than it owed, while also declaring higher expenses than the actual ones in order to deduct VAT that it had not paid. Furthermore, it would have used shell companies to avoid being linked to the final customers.

However, the scheme was designed with the dual purpose of facilitating VAT evasion—the tax that companies collect from customers on behalf of the State when issuing invoices and which they are subsequently obligated to pay to the Tax Agency—and preventing the company from paying it into the public coffers, and transferring the funds abroad to obscure their traceability. In fact, part of the funds obtained by the organization, which had a "wide network of front men and the collaboration of legal advisors for its criminal activity," was used to acquire companies registered with the REDEF (Registry of Taxpayers), thus continuing the fraud. "This mechanism allowed for a rapid increase in sales at low prices thanks to VAT evasion and an expansion of operations throughout the country, so the impact of the fraud on the public treasury and on competition in the sector was concentrated in a very short period of the organization's effective operation," the agency explains in the statement.

When this wholesale operator sold large quantities of hydrocarbons at the end of 2023, the regulatory change that came into effect in January 2025, requiring companies registered in the Register of Hydrocarbon Extractors (REDEF) to submit Information Returns (SII), had not yet taken place. This operator submitted quarterly returns and was only required to identify its clients and suppliers to the Tax Agency annually.

The persecution

However, this doesn't end here. Once the Tax Agency detected all of this and removed this first fraudulent operator from the REDEF (Registry of Taxpayers) in the middle of last year, the fraudulent activity continued with a second operator, who began selling large quantities of hydrocarbons in October 2024. A month later, the Tax Agency also removed her wife. During this period, between October and November of last year, the second operator allegedly defrauded approximately 123 million euros, according to investigators. Finally, in December of last year, a third operator began its fraudulent activity. Until then, this operator had been selling hydrocarbons within a tax warehouse—that is, before the excise tax and VAT were due—to other operators. Five days later, the Tax Agency did the same thing again: it removed this operator from the registry.

Once the three operators were barred from functioning as hydrocarbon wholesalers and, therefore, expelled from the market, the case is being investigated by the National Court's Investigating Court Number 4 under the coordination of the Anti-Corruption Prosecutor's Office.