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Food and Beverage Wholesale: Penny Margins, Fast Rotation — and 19 Per Cent at Stake

The sector is not the problem. The evidence position is.

Hardly any sector turns stock as fast and on margins as thin as food and beverage wholesale: penny margins, drop-shipments, day-to-day availability. Precisely that efficiency makes the trade attractive to carousel structures — where the commercial margin is small, the evaded VAT is the real “profit”. This does not put the sector under blanket suspicion: sector risk creates grounds for scrutiny, not guilt. But an honest wholesaler should be able to prove that honesty before anyone asks.

Why this sector is under scrutiny

The case list of the European Public Prosecutor’s Office (EPPO) has long reached the shelves:

For scale: at the end of 2025 the EPPO reported 981 ongoing VAT and customs fraud investigations worth around €45 billion in estimated damage; the Admiral complex alone stands for €2.9 billion. Food and beverages are not the lead sector of that statistic — but they are firmly within the grid, and the authorities’ data analysis does not sort by sympathy. It sorts by patterns: price distance, company rotation, payment routes.

The typical constellations

Drop-shipment with fast rotation. Goods travel straight from the first supplier to the customer while invoices pass through intermediate stations — standard industry practice, entirely legitimate. Fraudulent chains use exactly this structure to insert an invisible missing trader. A trader who never touches the goods must be all the more in command of the paper trail.

Staple foods under price pressure. Ambrosia shows the pattern: oil and sugar, traded in bulk, pushed into discount supply chains at “tax-funded” combat prices. For the honest wholesaler, the cheap purchase becomes an evidential question: why was this price explainable?

Alcohol with a double exposure. Spirits and beverage chains combine VAT with excise duty (tax warehouses, EMCS accompanying documents). The major cases in Milan and Madrid ran through import and export legs — anyone trading here needs both paper trails complete.

The liability track. In the case of a Belgian drinks wholesaler, the CJEU confirmed that member states may hold a customer jointly and severally liable for VAT its supplier failed to pay, where the customer knew or should have known of the evasion (Dranken Van Eetvelde, C-331/23). The defence side of that coin: whoever proves having taken every measure that could reasonably be required escapes liability — the German parallels are Sections 71 and 69 of the Fiscal Code (AO) and Section 25f UStG.

Your red flags

What affected businesses should do now

If a chain in which you bought or sold as a buffer becomes part of an investigation, remember: you do not owe an explanation of other people’s crimes — you owe proof of your own diligence. Secure, per transaction, the pricing rationale, supplier and customer checks, the physical goods trail (delivery notes, CMR, temperature/batch data) and the payment route; do not stop current filings without advice; assess denial and liability exposure in parallel. The standard comes from supplier due diligence with the red-flag catalogue, the fast first read from the Supplier Traffic Light Check, the evidence structure from Proof of Check — and if a liability notice arrives: liability under Section 71 AO.

FAQ

Our supplier failed to pay its VAT — are we now liable for someone else’s tax debt?

Not automatically. Liability requires that you knew or should have known of the evasion — and the authority must prove that. Under the CJEU line (most recently Dranken Van Eetvelde), a trader who took every measure that could reasonably be required is relieved. That is exactly what documented supplier due diligence is for.

Are drop-shipments without physical access to the goods now suspicious?

No — they are standard industry practice and legitimate. But they shift the burden of proof entirely onto the paper and data trail: order, delivery note, CMR and payment route must tell one consistent story. Whoever holds that record turns the most attackable constellation into a resilient one.

What do investigators typically examine first in the food and beverage trade?

Recurring patterns: price distance to list and market, supplier rotation with identical goods, payments to third parties, gaps between the physical and the invoice trail, and — for alcohol — the excise paper position. Your own check architecture should address and document exactly these points in advance.

Your next step

Let us talk about your supply chain — a free 15-minute consultation: You describe. We assess. You know where you stand. → Confidential first assessment

Start the Supplier Traffic Light Check — ten questions on a new supplier, traffic-light result, evaluated in your browser only. → Traffic light check

Acutely affected?

Unannounced inspection, dawn raid or liability notice: emergency — the first 72 hours or call the emergency line directly.

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