Frivolous tax evasion
In addition to intentional tax evasion under Section 370 AO, tax law includes another group of cases: the frivolous tax reduction under Section 378 of the Tax Code.
Frivolous tax evasion - An overview of the experts from Kryptoanwalt.de
What does frivolous tax evasion mean?
In addition to intentional tax evasion under Section 370 AO, tax law includes another group of cases: the frivolous tax reduction under Section 378 of the Tax Code. Unlike traditional tax evasion, this is not a criminal offense, but an administrative offense. In the crypto sector, the boundaries between the two forms are narrow and often depend on the individual case — precisely because many investors only recognize the tax consequences of their transactions late on.
Exemption from intentional tax evasion
While tax evasion under Section 370 AO requires knowingly and willful action, gross negligence is sufficient for the frivolous tax reduction. Anyone who ignores the care to which he is required under the circumstances and his personal knowledge to an unusually large extent acts recklessly. Not punishable, but subject to fines.
Typical constellations in the crypto sector
Incomplete records
Transaction data is incomplete, meaning that income cannot be fully determined.
Failure to audit tax liability
Without further inquiry, investors assume that profits from crypto trades are generally tax-free.
Reliance on inadequate sources of information
Information from forums, social media or unspecific tutorials is adopted without verification.
Failure to ask questions despite uncertainty
Despite obvious questions of doubt, neither a tax advisor nor a specialized lawyer is involved.
Legal consequences
Fine instead of imprisonment
Back payment and evasion interest
Extended fixing period
Voluntary declaration exempting from fines
Particularly relevant for cryptocurrencies
The crypto market is young, international and technically complex. Especially in the early years, many investors processed transactions via a variety of wallets and stock exchanges without maintaining a central overview. Anyone who declares income incompletely in this situation quickly moves into the area of frivolous tax cuts — even without any bad intent. Through requests for information on crypto exchanges, the tax authorities are increasingly gaining access to historical data, which significantly increases the likelihood of subsequent discovery.
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conclusion
Frivolous tax evasion is not a minor offense, but it is also not a criminal offense. The individual standard of care is decisive: Anyone active in the crypto sector must deal with the basic tax rules — or seek professional support. If there is a suspicion of having acted negligently in the past, a structured subsequent declaration or voluntary declaration is almost always the most sensible way to resolve the situation in a legally secure manner.
This information serves as general guidelines and cannot replace individual tax advice from our experts. Tax treatment may vary depending on your specific situation and current tax regulations. It is highly recommended that you contact our lawyers to clarify your personal tax situation and meet legal requirements.