Tobacco trader suspected of dodging €1.6m tax in duty free scam

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Fraud investigators suspect a company that supplied offshore cigarettes to sailors of running a tax scam that cost the treasury at least €1.6 million in lost revenue.

The tax office’s fraud detection service, FIOD, is investigating whether Botlek Stores sold cigarettes under the counter to supermarkets, late-night shops and private customers on the pretence that they were being shipped offshore.

Sailors are allowed to buy cigarettes for personal use without paying tax, enabling them to pay around €22 a carton, a quarter of the retail price. Botlek Stores had a special permit from the tax office to supply ships that dock in Rotterdam tax free.

Investigators became suspicious when the company’s turnover increased dramatically during the coronavirus pandemic, even though shipping traffic was drastically down, the Financieele Dagblad (FD) reported on Wednesday.

Analysis of its records show discrepancies in deliveries, such as implausibly large orders or ships taking delivery of cigarettes after the time when they are stated to have left port.

In one case in December 2020, 750 cartons were recorded as being delivered to a ship for a sum of around €15,000, a huge quantity for a container vessel that typically has a crew of 10 to 20.

Botlek Stores was obliged to report any orders larger than 50 cartons directly to its wholesalers at Philip Morris, but often failed to comply, FD said.

Records seized

Fraud investigators believe the records were manipulated to cover up illegal sales of cigarettes to onshore customers. FIOD and the customs department would not confirm to the FD that it was investigating Botlek Stores or illegal cigarette sales, only that it was dealing with suspected irregularities involving ‘duty-free goods.’

But administrative bureau Gielen en Kole, which handled Botlek’s books, confirmed to the newspaper that FIOD had sent a five-man team of investigators to its offices and seized the company’s records.

The company was declared bankrupt last month after employees filed papers at the district court in Rotterdam because they were due large amounts of back pay.

Former employees told the FD they had been interviewed as witnesses at Botlek’s offices in Rotterdam. ‘I saw strange things happening,’ one said. ‘Profits were made on paper from ships that we never went to. It looked as if cigarettes had been sold on board, but they weren’t. That became a revenue stream.’