Volkswagen under investigation for tax evasion

German prosecutors are widening their investigation into Volkswagen to include suspicion of tax evasion.

Volkswagen has subsequently revealed that beyond the nitrogen oxide scam, it had also understated carbon dioxide emissions, including in petrol cars.

Prosecutors say their investigation is focused on five Volkswagen employees. Last month, the same German investigators raided the company’s headquarters following the dieselgate scandal looking for more incriminating probes in the ongoing case.

The global emissons scandal could potentially cos Volkswagen tens of billions of euros in fines and litigation, in addition to the expense of installing new software and hardware.

The focus of the investigation is on tax breaks Volkswagen received for producing low-polluting cars that it might not have qualified for if the emissions had been correctly reported, Seel said.

The damage caused by the tax evasion is “not small”, he said.

The installation of a software that provided artificially low Carbon dioxide readings allowed auto owners in Europe to enjoy tax incentives when they were not entitled to it, according to Braunschweig prosecutors.

The company acknowledges that so-called “auxiliary emissions control devices” – the software used to help the cars pass the tests – were “not sufficiently described and declared” for US approval, and that one “is regarded as a defeat device according to applicable USA law”. The EPA had alleged that Volkswagen cheated on tests on other six cylinder vehicles and said that it would be carrying out further investigations on cars in the near term. Volkswagen has created a fix for cars affected by the emissions scandal, and hopes to recall United Kingdom cars in 2016.