We're now experiencing a criminal phenomenon which, though in its early stages, might well be detrimental to the new pallets business sector: CAROUSEL FRAUDS.
The activity is characterized by scam companies that plague the market with very low priced pallets  exploiting the opportunity of removing the VAT component from the buyer's pay.

A carousel fraud (also known as ‘missing trader fraud’) usually takes the form of the following features:

• A given company purchases new pallets from a European State member, therefore supplementing said purchase invoice with national VAT, this entitles the subject to avoid paying the VAT amount due to the Treasury (concurrent tax owed/tax credit);
• Then, that same company, regularly markets those pallets charging VAT on the sale of goods to fully unaware business customers;
• The selling company, instead of paying VAT over to the government’s collection authority, pockets it.

Absconding fraudsters make available goods for consumers at extremely competitive prices, as VAT is their actual profit, VAT payment being deliberately withheld .

This so called ‘missing trader’ fraud disrupts trades, leading to unfair competition while damaging lawful traders and business sector operators.

The Revenue Agency together with Excise and Revenue Police (supported by the national and Community case law) issued tax inspections in relation to those operators who purchased goods from fraudulent companies, not taking proper account of purchases from the above-mentioned traders, while deducted VAT is now subject to taxation with pecuniary sanctions of up to 200% of the alleged tax infringement.

FEDERLEGNO Association shall closely monitor transactions in the forestry-based sector and notify the competent authorities of any suspicious transactions distorting the price outside the permissible market practice boundaries.

Meantime, here’s some helpful hints to tackle potential evidence and/or indicators of atypical and/or outside the permissible market practice, evidence to suggest, exercising ordinary care and due diligence, we’re faced with “unreliable” traders.

Examples of such cases include, but are not limited to the following:

• Goods being sold well below the customary market price;
• Lack of a defined commercial structure;
• Lack of an organizational structure (means of transport – staff – storage and warehouse premises – etc…);
• Payment required is not a wire transfer, bank orders or bank cheques;
• Geographical origin of the seller (significantly out-of-area-sales, which wouldn’t normally enable a competitive market price due to shipping costs).

We strongly advise you to enter business only with known and trusted providers/business operators and refrain from entering any suspicious transaction and take into account not only the above-cited examples, but also based on the experience gained.

(Source: FEDERLEGNO)