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Crypto Profits in Germany: What to Do in Case of Official Investigations And Criminal Proceedings?

Crypto Profits in Germany: What to Do in Case of Official Investigations And Criminal Proceedings?Accusation of tax evasion

In 2020, many people are still investing in cryptocurrencies. Some are realizing substantial profits through clever buying and selling. The high volatility of Bitcoins and Altcoins has not changed in recent months.

Contrary to the widespread opinion that the tax authorities would not be able to “get to the bottom” of owners of Bitcoins and other cryptocurrencies if they do not declare profits, we have an increasing number of cases in our firm where there are allegations of tax evasion. In most cases, tax authorities are very alert when large sums of money are returned to the financial system.

Authorities have found wallets and transfers – What to do?

It is true that in many cases the tax investigators do not yet seem to have these undiscovered sources of income in view and that these transactions are difficult to detect and thus difficult to prove. However, this does not change the fact that – as in other cases without cryptographic reference – unfortunate coincidences repeatedly give rise to suspicions of tax evasion, which entitle the tax investigation department to take investigative measures. The results of these investigations are usually the discovery of wallets and complete transfer lists.

As soon as the suspects are informed of an investigation (by letter or a house search), it is usually too late for a self-declaration that would relieve them of their punishment. However, the accused should then make use of their right to silence and immediately consult a criminal tax defense lawyer who will come up with a defense strategy.

Self-declaration leads to exemption from punishment

Those involved in an investigation have to decide on a case-by-case basis what the right defense strategy is. If, on the other hand, no preliminary investigation has yet been initiated – or not for all the years concerned – a self-declaration that exempts them from punishment can be useful. Such a self-declaration leads to exemption from punishment, provided that all requirements for effectiveness are met.

The question of whether taxes are to be paid on the basis of the voluntary declaration can then be discussed with the tax office. In some cases, we have already succeeded in reducing the tax burden to zero.

Early consultation prevents unpleasant actions

Without clarification with the tax office there is always the danger of unpleasant procedures such as

  • Arrest,
  • Search,
  • Account suspension,
  • Ban on leaving the country,
  • Questioning of neighbors, friends or family members.

We will be happy to discuss with you if your case requires clarification with the tax office. We also assist accused persons with the right defense when investigations are already being conducted. Feel free to contact us with your questions!

Continue reading:
Bitcoin Taxation in Germany
Cryptocurrency Tax Evasion in Germany

Bartosz Dzionsko

Bartosz Dzionsko

Bartosz Dzionsko is a German attorney at law at WINHELLER headquarters in Frankfurt/Main. He specializes in German tax law, criminal tax law, money laundering and German customs law.

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