Major VAT carousel fraud case in Milan
Giambrone's commercial litigation team successfully represented S.G. Global s.r.l., one of Italy’s first full MVNO (Mobile Virtual Network Operator), in complex cross-border litigation against Colt Technologies Services and its Italian subsidiary, represented by Baker McKenzie.
This high profile case was described as one of the most recent Missing Trader / VAT Fraud disputes in Europe and is being closely watched by the telecoms operators and the legal commentators alike.
Between 2016 and 2017, SG Global sold over $45M million of VoIP traffic to Colt Group, which specialises in providing network and voice services to mid-to-large sized organisations and data-intensive businesses internationally.
Colt’s defence relies on the fact that the Italian telecoms operator knew or should have known that the transactions in which it was involved down the chain with its own suppliers were fraudulent and that our client failed to take sufficient care to ensure the bona fides of its counter-parties and suppliers. Colt has refused to pay the outstanding invoices on the basis that it challenged SGG’s business dealings with its immediate counter-parties, raising concern about transactions further down within the chain.
SGG claims that such concerns are totally irrelevant as a matter of Colt’s liability to settle the disputes invoices exists regardless of any allegation of potential VAT carousel fraud down the line in the chain.
Despite acknowledging that the traffic was regularly purchased by Colt (and sold to its own clients up in the chain), Colt’s position is that it is not obliged to pay its own supplier on the basis that any such payment would expose the company to possible wrongdoing: VAT carousel fraud is a criminal as well as a tax offence under Italian law. Colt is also seeking a declaration by the Italian Court to terminate the VoIP Wholesale Agreement.