EU funds related to agriculture and cohesion programmes saw the largest share of expenditure fraud, the prosecutor said in its annual report.
The estimated damages to the financial interests of the European Union totalled €14.1 billion by the end of 2022, with almost half of the losses stemming from cross-border VAT fraud, the European Public Prosecutor's Office (EPPO) said in its annual report.
The amount derives from 1,117 ongoing investigations, of which 865 were opened last year and 316 had a cross-border dimension.
Over the course of 2022, the office secured 87 criminal indictments and had 59 of its cases dismissed by national courts. Assets worth nearly €360 million were frozen as a result of the probes.
According to the annual report, which was released on Wednesday morning, the most frequent type of crime was expenditure fraud not related to procurement, with 679 active cases.
This crime refers to the use of false, incorrect or incomplete documents to unlock access to EU funds.
Agriculture and cohesion funds, by far the two largest envelopes in the EU budget, took up the biggest share of all expenditure fraud cases, gathering 231 and 156 offenses, respectively.
However, it was cross-border VAT fraud — where companies and organisations exploit European VAT rules to manipulate taxes — that caused the greatest financial damages, with over €6.7 billion, despite representing just 16.5% of all active investigations.
Almost 60% of the reports and complaints received by the EPPO in 2022 were submitted by private parties, with the rest coming from public authorities at EU and national levels.
"These are encouraging numbers," Laura Codruța Kövesi, the European Chief Prosecutor, said in the report's foreword, noting the figures are likely to increase as the bloc continues to roll out its €800 billion pandemic recovery fund, which is now being repurposed to turbocharge the energy transition.
"These numbers should not make us believe that we are already as efficient as we should be," Codruța Kövesi added. "We are on the right track, but we need to do more. The EPPO is far from having deployed its full potential."
The EPPO has a mission to investigate and prosecute crimes against the EU's financial interests, such as cross-border VAT fraud, money laundering, corruption and misappropriation of EU funds.
The office has made headlines in recent months after launching fraud investigations against several members of the European Parliament, including Eva Kaili, the Greek legislator at the centre of the cash-for-favours scandal known as Qatargate.
Headquartered in Luxembourg, the EPPO operates through a decentralised structure of delegated prosecutors who work across the 22 participating member states and appear before national courts.
Poland, Hungary and Sweden have so far refused to join the prosecutor's office, which is independent of other European institutions, while Denmark and Ireland have long-standing opt-out clauses on common matters of security and justice.
The idea of establishing a public prosecutor's office with powers to investigate cross-border offenses dates back to the 2007 Treaty of Lisbon.
The proposal underwent protracted negotiations until its official establishment in June 2021, when the COVID-19 recovery fund suddenly boosted the EU's financial firepower and deepened the need for stricter surveillance on spending and accountability.
For Codruța Kövesi, the stats compiled in the 2022 report demonstrate the EPPO's "unprecedented capacity to identify and trace volatile financial flows and opaque legal arrangements."
"One year-and-a-half after the start of our activities, the potential of the EPPO can be underexploited, but not ignored," Codruța Kövesi said.
The previous annual report had uncovered €5.4 billion in financial damages across 576 investigations.