German prosecutors have launched an investigation into suspected tax evasion in VW's and Co2 Levels.

German prosecutors have launched an investigation into suspected tax evasion related to the understating of CO2 levels in Volkswagen Group vehicles that focuses on five VW employees. The employees were not identified.

The prosecutors in Brunswick, near Volkswagen Group's Wolfsburg headquarters, are examining whether VW was responsible for the German government not receiving its due share of automotive taxes after the carmaker understated the CO2 emissions in a large number of its vehicles, many of which were sold in Germany.

A vehicle's CO2 emissions help determine how much tax car owners must pay every year in some markets, including Germany. 

The main focus of the investigation is tax evasion, but it could also involve fraud, a spokesman for the prosecutor's office said.

The damage caused by the tax evasion is "not insignificant," a member of the prosecutor's office told Automotive News Europe.

Europe's largest automaker admitted on Nov. 3 that CO2 emissions data from about 800,000 cars were false and said compensation payments to customers and other costs related to the malfeasance could amount to 2 billion euros ($2.13 billion).

Prosecutors in Brunswick are already looking into VW's diesel engines. Investigators last month raided the automaker's headquarters and other offices as part of their probe into the carmaker's rigging of diesel-emissions tests.

VW revealed in September that a number of its diesel engines were equipped with software designed to fool emissions testers, affecting about 11 million vehicles worldwide.

Automotive News Europe, Reuters and Bloomberg contributed

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