The Ministry of Finance is already investigating fraud worth “1 billion euros”

• Employers involved in fuel distribution in Spain claim that 25% of sales are fraudulent.

• The companies in question allegedly do not declare the VAT they charge consumers.

Up to 40 cents/liter, which does not allow them to compete. This is precisely what the Spanish Association of Fuel and Fuel Retailers (Aevecar) condemns, which sent the CNMC a notice: “Some businessmen cannot compete and are forced to close.”

What’s happening? According to the Association of Petroleum Operators (AOP, which brings together oil majors Repsol, Cepsa, BP, Galp, Saras and Gunvor) and independent petrol station organizations (Aevecar, UPI and CEEES), some companies are reducing fuel prices below costs.

They claim that these companies offer fuel at 40 cents per liter below the market price because they do not declare to the Treasury the VAT they force customers to pay. This allows them to lower prices, sell in larger volumes, and compensate for this uncompetitive price.

What kind of money are we talking about? Previous groups have estimated that the amount of suspected VAT return fraud has risen to €700 million in 2022. In 2023, they say, it has grown to 1 billion euros, so they demand urgent measures from the government.

“I would like CNMC to get involved in this matter as well. We want to be able to work in peace. “We are talking about real criminals,” said Victor García Nebreda (Evecar) in words reported by Five days.

Is this widespread? Employers say yes. “Between 25% and 30% of total sales in Spain,” said Luis Nieves, president of industry association UPI, in Spanish newspaper.

Last March, the Guardia Civil carried out a major investigation. The focus was on up to 400 gas stations located in 14 autonomous regions. The investigation requested “real-time data from the suppliers of these petrol stations in order to identify possible tool companies that may be involved in VAT fraud schemes in this sector,” they note in Cause.

They also explain that these companies were asked to provide the product’s place of origin, supporting documents and supply prices or how to charge the consumer. The focus is on companies that have sharply increased their profits and turnover in recent months.

Solution or patch? At the end of 2023, the government developed measures to stop this fraud. He then assured that the language of the Hydrocarbons Act 1998 is used by some companies that are not defined as “retail distributors”, but at the same time “they also do not meet the requirements for wholesale operators.” However, “they make these deliveries without accepting any of their industry obligations.”

The change in language clarifies that retail distributors also have access to pipelines or storage facilities (previously, only wholesalers were understood to have access), and therefore must comply with the same duties of prosecutors.

Employers’ associations, however, claim that these changes had no consequences and, on the contrary, since the introduction of the new rule, fraud has increased sharply. The three-month moratorium before the start of the reform caused an increase in fraud. However, as a result of the rule changes, the government’s ability to sanction companies is expanding.

Rapid growth. To understand how consumers perceive this “cheap” fuel sold in our country, World He assures that one of the companies that the Ministry of Finance is monitoring is Biomar Oil.

The company has been the talk of the industry for some time now, and has even been accused of buying Russian diesel fuel in order to lower its prices. Something they denied Confidential. Fuel sales have surged over the past two years, rising from €25 million in 2021 to over €1,000 million in 2022. Sales are estimated to double in 2023.

Such practices, employers claim, are made possible by the fact that VAT is not paid until the fuel can be removed from the tanks in which it is stored, thereby reducing the opportunity for fraudsters to do what they suggest. They also require monthly VAT calculations and the exclusion of sanctioned operators.

Image | Engin Akyurt

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