Portuguese police conduct 250 raids in 100 million euro mobile phone VAT fraud probe

Nationwide raids and agency mobilization

On the morning of 7 October 2026, Portuguese authorities initiated a large-scale law enforcement action named Operation Hermes to dismantle an alleged cross-border tax evasion network. The action was launched under the supervision of the European Public Prosecutor's Office and mobilized approximately 700 inspectors from the Polícia Judiciária alongside 300 officials from the Autoridade Tributária. Officers executed roughly 250 search warrants across the country, targeting around 150 corporate premises as well as private residences, accounting firms, and legal offices. While field activities covered territory from north to south, operational efforts concentrated heavily in Greater Lisbon and Greater Porto, with additional searches extending into Braga and Coimbra. European prosecutors also prepared parallel search and arrest actions intended for execution abroad to dismantle affiliated network nodes.

Mechanics of the VAT carousel scheme

The inquiry focuses on an alleged VAT carousel fraud centered on the wholesale purchase and distribution of mobile phones. Investigators discovered that the network established dozens of shell companies distributed across multiple European Union member states to route merchandise through repetitive cross-border transactions. Under European Union rules governing intra-community commerce, business-to-business transactions between member countries benefit from VAT exemptions, a mechanism the perpetrators used to avoid paying import taxes on goods. The companies subsequently submitted fraudulent claims for VAT refunds before distributing the mobile devices to end consumers. The tax collected from final sales was never remitted to the Portuguese treasury, as the front entities failed to declare taxes or dissolved entirely after completing transactions.

Financial impact and judicial proceedings

Authorities believe the fraudulent scheme caused substantial financial losses to public funds. Investigators estimate the total loss to the Portuguese state at over 100 million euros, with some estimates citing figures exceeding 120 million euros. The proceedings combine two separate investigative files that developed from intelligence gathered during Operation Admiral in 2022. The formal criminal offenses under examination include criminal association, tax fraud, aggravated tax fraud, money laundering, and corruption. Judicial authorities issued between 20 and 40 arrest warrants targeting key figures within the corporate and financial network. Detainees apprehended during the raids are being transported to Lisbon to appear before the Central Criminal Investigation Court on Thursday, 8 October 2026.

Coordination and international scope

The intervention stands among the largest actions coordinated by the European Public Prosecutor's Office within Portugal. Investigators noted that the network relied on sophisticated corporate structuring to simulate thousands of mobile phone transactions without genuine commercial activity. The deployment of 1,000 total personnel from police and tax inspection bodies reflects the procedural scope required to audit complex corporate structures and recover documentation. Teams on the ground seized physical ledgers, digital communications, and accounting registers from dozens of corporate headquarters. Judicial officials will determine formal detention measures and bail conditions following the preliminary court hearings in Lisbon.