Tax haven, Liechtenstein has attacked Germany for buying data on clients that have accounts at the nation's banks.
Prince Alois said Germany had attacked Liechtenstein's sovereignty
Germany has begun an investigation into tax evasion using information from an anonymous informant, who was reportedly paid 5m euros(£3.75m; $7.3m).
Prince Alois von und zu Liechtenstein, the country's leader, said Germany had broken the law by buying the data.
Liechtenstein considers the informant a criminal and is conducting its own investigation into the affair.
"Germany will not be able to solve the problems it has with its taxpayers by attacking Liechtenstein," Prince Alois said.
The growing tension between the two countries comes as Liechtenstein's Prime Minister Otmar Hasler prepares to travel to Berlin to meet German Chancellor Angela Merkel.
She has promised to urge Mr Hasler to raise the levels of financial transparency in the principality.
However, in a news conference on Tuesday Prince Alois said Liechtenstein would not introduce "over-regulated controls".