Thirty-one people have been put under house arrest, two years after the investigation began, police said in a statement.
They are accused of writing thousands of fake reports to create phony businesses in agricultural industries and the service sector.
The gang then allegedly registered their fictitious employees – around 10,000 in total – for state benefits such as maternity and sick leave.
Those under house arrest include two employment consultants, Latino Giuseppina and Zaccaria Rosario, who were each charged with €4.8 million worth of fraud.
Businessmen and other professionals were also involved in the scam, police said.