Germany has become a haven for criminal and terrorist organisations that are using tax fraud to siphon off tens of billions of euros from state coffers, Germany’s highest audit court has warned.

In a confidential report, the Federal Audit Court, the country’s public finance watchdog, said it had “clear indications” that terrorist organisations were increasingly engaging in sophisticated value-added tax fraud, costing a type of fraud that cost the German the state €17.6bn ($23bn, £12bn) in 2003.