Sie sind ein dreckiger Lügner!

Is it common to use the formal you “Sie” when using such a harsh insult?

If you use “Sie” for this Person, for example an older person or someone who is really foreign to you. You will also use “Sie” in this case.
And the other thing is Germans are really direct, it’s different to North America.
But it is not normal to talk to someone like this, especially if you’re talking to someone you do not know well (using “Sie”).

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Sie also signifies distance, not just formality / politeness.

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