Collective Information on Crypto Income in Germany
How to handle tax office letters titled “audit in taxation proceedings”?
In the past few months, tax authorities have issued collective information requests and submissions to renowned crypto trading exchanges to gather information on customers who have generated income from trading cryptocurrencies and NFTs, but have yet to declare it. Through so-called golden bridge letters (Goldene-Brücke-Schreiben), tax authorities are now prompting taxpayers to declare any undisclosed income.
Those affected, as well as all investors who have not yet received such a letter but have yet to declare their crypto income to the tax office, should act immediately to avoid criminal repercussions.

What is a “Golden Bridge letter”?
The letters dispatched to taxpayers are often innocuously titled “Audit in tax proceedings”. Their purpose is to “encourage” taxpayers to declare previously undisclosed crypto income to avert criminal liability for tax evasion.
Letters to taxpayers follow collective information and submission requests to crypto exchanges
As a result of the collective information and submission requests sent to crypto trading exchanges by tax investigators in line with sections 93(1), 97 and 208(1) no. 3 of the German Fiscal Code (Abgabenordnung, AO), investigators now have access to customer transaction data from past years.
How the tax office becomes aware of crypto profits
Information on undisclosed gains is gradually reaching the tax authorities or is already at their disposal. The notion of anonymous crypto transactions is thus finally dispelled, at least for all those investors who have traded via centralized trading platforms, known as CEXs.
The tax authorities utilize the data and information they receive to identify delinquent taxpayers. This is because, according to Section 208 para. 1 no. 3 AO, tax officials are tasked with verifying, as part of general tax supervision, whether - among other things - taxable profits or losses from private sales transactions as defined by Section 23 para. 1 German Income Tax Act (Einkommensteuergesetz, EStG) have resulted from trading in cryptocurrencies.
The tax offices therefore contact the customers whose data they possess and indicate that not all income may have been declared to date. Simultaneously, they request taxpayers - setting a deadline - to declare income that has not yet been declared or that has been underdeclared.
What action should I take upon receiving a tax office letter regarding my crypto profits?
Upon receipt of such a letter, you should act immediately if you suspect that you have not declared all crypto income in the past. Time is of the essence. The deadline stated in the letter is typically only a few weeks in length. And as you know, processing crypto transactions can be highly complex and time-consuming.
In many cases, it is not feasible to process a large volume of transactions spanning several years in just a few weeks. The sooner you consult an experienced tax advisor, the better. They will determine how to respond to the letter. You should never extend the deadline of your own accord or provide the tax authorities with information over the phone.
Self-disclosure for overlooked crypto income
There is often an option to submit a so-called voluntary disclosure to avoid prosecution. A voluntary disclosure provides an opportunity to return to legality through the “golden bridge”. An effective voluntary disclosure results in exemption from punishment. The taxpayer only needs to pay the outstanding taxes from the undeclared income, without any penalties. The specific procedure for voluntary disclosure can be read here.
A voluntary disclosure might be ruled out under certain circumstances. This is the case if the tax authorities already have enough information to assume that the offense has been discovered. For this, the tax authorities need specific transaction details and the resulting tax charges, and they need to check the tax files to see whether this income was included in the submitted tax returns.
This is often not (yet) the case with the “golden bridge letters”, all referring to Section 208 (1) sentence 1 no. 3 AO. These letters are so-called preliminary investigations, as there are not yet any concrete indications of a criminal offense or administrative offense, but the possibility of tax evasion can be considered (see No. 12 of the decree concerning the instructions for criminal and fine proceedings). The letter therefore represents a serious opportunity to return to tax honesty without being penalized.
What do I need to include in my reply to the letter?
If you have already declared all crypto income (correctly), you can relax. Unfortunately, in our experience, this is often not the case. It is therefore important to come clean. This is done as part of a voluntary disclosure in accordance with Section 371 AO, in which all income from those years in which tax offenses have been committed that are not time-barred must be disclosed.
The voluntary disclosure must relate to at least the last ten full calendar years (in individual cases also the last 15 years). It is advisable to coordinate the contents with an experienced advisor, as there are numerous pitfalls to consider. We will be happy to assist you!
With regard to crypto investments, this means that the transactions of recent years must be carefully analyzed if they have not yet taken place. We usually use special software tools for this - bearing in mind that we always have to critically scrutinize the correctness of the tools’ evaluations because the software tools’ so-called tax reports often contain errors, but errors are not forgiven in the context of a voluntary disclosure.
What if I don’t respond to the letter?
If you do not respond to the letter, the German tax authorities can take further steps (tax audit, search or other coercive measures such as asset seizures) to collect the tax arrears. As a rule, this can and will lead to criminal prosecution (especially in the case of undeclared income).
In any case, a voluntary disclosure is excluded as soon as the tax investigation is sufficiently advanced (see above). In this sense, the “Goldene-Brücke letter” represents a final “warning” that must be taken seriously.
Increasing pressure on the stock exchanges
Incidentally, the common centralized trading platforms are also forced to provide information. Hoping that the exchanges will not disclose customer data is therefore illusory. It can also be assumed that the law enforcement authorities are already using software products to track transactions that are publicly visible on the blockchain. The investigators’ next targets are therefore obviously the decentralized exchanges and therefore many more taxpayers who are active there.
Beware of the threat of tax evasion
Have you reaped profits from selling cryptocurrencies or NFTs (even if you haven’t converted your cryptocurrencies into euros or U.S. dollars)? Are you involved in staking, lending, or utilizing other DeFi protocols such as liquidity mining? Or have you already received a “golden bridge” letter from your tax office?
Regardless, it’s imperative to be transparent, as the penalty for tax evasion is primarily based on the extent of the tax loss, which can lead to severe penalties. The law also stipulates imprisonment sentences.
However, as determining income from crypto investments can be highly challenging and incredibly time-consuming, you should act promptly - especially considering the very short deadlines of just a few weeks typically stipulated in the letters.
Your advisors for tax office investigations in Germany
You can take advantage of our extensive expertise, as our experienced crypto tax team is perfectly equipped to clarify your income with the relevant tax office and thereby eliminate any potential criminal liability.
In collaboration with you and our software partner CoinTracking, we assemble a comprehensive list of all your transactions and movements concerning your crypto portfolio and engage in a dialogue with you to identify, correctly categorize, and declare both taxable and potential tax-free income.
Feel free to reach out to us and schedule an appointment today. The most convenient way to contact us is at info@winheller.com or +49 69 76 75 77 85 28.
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