Police arrested the 54-year-old, who has not been named, as well as six other suspects as they raided around 100 offices and homes and seized assets worth several million euros, a spokesman for the prosecutors said.
The man is believed to have exerted strong personal control over members of a "highly hierarchical" farming commune in Aichstetten in southern Germany known as St. Michaelshof, prosecutors in the southern city of Ravensburg said.
He is suspected of hiding millions of euros from the tax authorities with methods such as fictitious bills and ghost workers using a complex web of companies he created, they said.
According to its website, St. Michaelshof produces organic cheeses, breads and other foodstuffs made using "cosmic-biodynamic" methods and the "energetic power of the stars."
The raids took place at 35 different locations including food markets, a doctor's practice and accountants offices. Prosecutors said the operation was prompted by allegations of money laundering made last year by a local bank.