Bitcoin portal skimmed by tax investigation: voluntary disclosures now an issue

Crypto tax evaders no longer get a grace period. The NRW tax investigation department (specifically Bielefeld for the federal territory) is actively investigating crypto investors. The identified data is then matched with personal tax returns.

Tax investigation: Bitcoin collective information request

Since June 2023, the North Rhine-Westphalian tax administration has been evaluating a data package with information on crypto investors who have often not paid tax on their profits correctly. This is a collective request for information. This includes trading data from the entire federal territory, a well-known and globally traded cryptocurrency (specifically: Bitcoin).

About 4000 crypto investors in focus

The NRW tax authorities are currently sifting through the data and forwarding it to the relevant tax authorities. By means of a newly developed software, according to Finanzverwaltung NRW, the data is currently being evaluated. Approximately 4,000 crypto investors are said to have come under close scrutiny, although it is unclear whether each of these investors is also a tax evader. According to reports, the investment threshold is said to have been EUR 50,000. In the future, however, it is to be expected that all investors will come under scrutiny, as collective requests for information are now a tried and tested method.

The ministry does not want to comment on specific individual cases, citing tax secrecy. Research by the Handelsblatt provides details. According to the report, the data originates from the German crypto exchange Bitcoin.de from the period between 2015 and 2017, with the North Rhine-Westphalia tax authorities focusing on users who turned over at least 50,000 euros per year via the trading platform. About 4,000 users fell into the grid. 

The NRW Finance Ministry recommends checking voluntary declarations if income from crypto transactions has been taxed incorrectly. Politicians are also increasingly demanding that crypto investors no longer remain anonymous.  

Practice note: LHP Rechtsanwälte Steuerberater would like to emphasize this recommendation in principle, although the requirements and the implementation of the voluntary disclosure should be discussed and examined in each individual case. For example, the requirement of completeness applies (correction for all years not subject to the statute of limitations under criminal law, but at least for the last 10 calendar years). If the offence is discovered, the voluntary disclosure is no longer exempt from punishment. In most cases, this question cannot be answered clearly in advance in the case of collective information requests. In any case, maximum cooperation has the advantage that the possibility of mitigating the penalty remains. We prepare so-called proofs of origin for cryptocurrencies and represent you in opposition and fiscal court proceedings as well as vis-à-vis criminal prosecution authorities.