POLICE have arrested 740 people in a crackdown on fake businesses in Spain, in the biggest such operation ever.

Spanish police targeted 135 companies created solely to obtain social security benefits as well as residence and work permits for foreigners.

Police put the overall cost to the state of the frauds under investigation at €20.5 million.

The illegal companies were supposedly disguising themselves as hotels, courier services, gardening and cleaning, and construction businesses.

A police spokesperson said: “Among those arrested are 30 managers of the fake businesses, which, without undertaking any real activity, registered employees with Social Security so as to illicitly obtain benefits or to obtain residence or work permits for foreign citizens.”

According to police, the companies registered more than 8,400 new hires with Social Security, obtaining 2,100 benefit payments or unemployment subsidies.