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iPhone tax fraud scheme sparks huge raid

Frankfurt prosecutors announced Wednesday that nationwide police raids had brought down a major fraud scheme based on buying the latest mobile phones overseas without paying sales tax and then reselling them in Germany.

iPhone tax fraud scheme sparks huge raid
Photo: DPA

Twenty-three people from 13 firms are being investigated in connection with the tax evasion and money laundering scheme, which netted at least €13 million, prosecutors said. Four people have already been arrested.

Since the beginning of last year, the ring had been buying up mobile phones overseas, in particular Apple’s latest iPhone. They then recouped sales tax in Germany even though it had not been paid in the countries where the phones had been purchased.

They then resold the phones via a complex chain of intermediary firms in order to make it difficult to trace whether tax had actually been paid. According to investigators, the companies had filed no sales tax declaration when they bought the phones.

“The mobile phones were apparently resold through a chain of intermediary companies,” the prosecutors said.

The final link in the chain, a German firm, retrieved the regular sales tax from the fiscal authorities in Germany.

Across the country, 147 offices and homes had been raided early this week, prosecutors said. Arrest warrants had been issued for four suspects from Frankfurt, Mörfelden-Walldorf in Hesse and Kaufbeuren in Bavaria.

DAPD/DPA/djw

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TECH

What steps is Germany taking to improve internet speed?

Germany is known for being behind when it comes to internet speed, coverage and embracing digital changes. But the German government is trying to change that. Here's a look at what's going on.

What steps is Germany taking to improve internet speed?

Anyone who’s been in Germany will probably have faced issues with their wifi, whether it’s a slow connection or lack of it. 

The country is also known for being slow on the uptake of moving paperwork to a digital format, with some services even requiring a fax machine at times.

And for years, people have been dreaming of being able to have an electronic patient file that would bundle all medical results and make it easy to pass them on to doctors with just one click.

Germany’s digital strategy, put forward by the coalition government of the Social Democrats (SPD), Greens and Free Democrats (FDP) aims to address these things. 

It was set to be discussed in the Bundestag on Thursday – but does it go far enough?

What do the plans say?

By 2025, at least half of all households in Germany should have a fiber-optic connection, and by 2026, there should be interference-free smartphone coverage throughout the country, under the plans. 

This is not new – the expansion has been going on for some time and is part of the gigabit strategy, which is also being discussed in the Bundestag.

It involves things like new laying techniques, which would make it possible to expand much faster, Maik Außendorf, head of the Green party’s Digital Affairs told German broadcaster, Tagesschau. By 2030, the entire country should have fibre-optic lines.

READ MORE: How Germany is facing up to its slow internet problem

Nadine Schön, digital policy spokesperson for the opposition CDU/CSU, says that Germany needs to become a less paperwork-orientated country. 

“The Finns are the happiest people in Europe, and when you ask them why, they say – ‘the state relieves us of all the paperwork’,” she told the Tagesschau. “They can do their tax returns on their mobile phones in eight minutes; they can do everything digitally.”

The digital strategy portrays a convenient, new world that many people in Germany have been craving for a long time. For instance, thanks to digital identity setups, people could authenticate themselves at a public authority from home. They could then apply for a new registration (Anmeldung) after moving, or get a new resident’s parking permit from their couch.

Companies and startups would receive better support to simplify the often time-consuming processes with government agencies.

But both Schön (CDU/CSU) and Außendorf (Greens), who sit on the Digital Affairs Committee in the Bundestag, are not yet satisfied with the strategy.

The conservatives are introducing their own motion to the debate, and are pressing for even better business support for the digital transformation. 

Außendorf, on the other hand, is concerned that there is still no defined digital budget, even though this is stipulated in the coalition agreement.

In his view, this is a key point for advancing important IT projects in a targeted manner.

Sustainability is also an important factor to Außendorf when it comes to the digital strategy. He is keen on unconventional ideas, citing the example of a greenhouse on the roof of a data centre in North Friesland that uses the waste heat from a server farm.

“Data centres consume an enormous amount of energy, and a large part of it goes into the environment as waste heat,” he says. “This waste heat can be used in a variety of ways, for example by coupling it to local and district heating networks or for heating greenhouses.”

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