A "class variable" needs to belong to a class. So it has to be declared in the class definition. If the class definition is in a header file, then it follows that the class variable declaration must also be in a header file.
The class variable's definition should go in an implementation file, typically the one in which the class' members are defined. Here's a simplified example:
Foo.h
struct Foo
{
void foo() const;
static int FOO; // declaration
};
Foo.cpp
void Foo::foo() {}
int Foo::FOO = 42; // definition
What you have here:
static int counter = 0;
is a static variable that is not a static member of any class. It is only non-member static variable, static to the compilation unit of CDummy.cpp
.