File photo of snus. Photo: Stian Lysberg Solum/NTB scanpix/TT

Three people are being held after a raid on illegal production of Sweden's moist tobacco 'snus'.

Police and the Swedish Economic Crime Authority raided several venues in the Gothenburg area on Tuesday, August 28th, after months of gathering intelligence on the black market snus factory.

"We suspect that the operation has made multi-millions in unpaid tax revenues. We also suspect that most of the workers in the factory were paid under the table," said prosecutor Daniel Larsson.

The trio is now being questioned for serious tax crimes linked to illegal snus production in 2017 and 2018.

All three deny any allegations of criminal activity.

Most of the snus is believed to have been produced at a small factory in an industrial area of Gothenburg. Authorities suspect that the people responsible only reported a small part of their operations to the Swedish Tax Agency, thereby not paying tobacco tax which is mandatory for snus production.

Snus, also known as Swedish snuff, is more popular than cigarettes in Sweden. Its sale is illegal across the EU but Sweden has been granted an exception and is allowed to sell the product within its borders.

OPINION: Snus, the disgusting Swedish habit I just can't stand