Germany's Crypto Tax Cut-Off Date Sparks Debate Over Lump Sum vs Savings Plan

Investors in Germany now face a critical decision when it comes to putting money into Bitcoin. With three different routes available, they must choose between a lump sum, a monthly instalment, or an exchange-traded security (ETN) in a securities account.

The German finance ministry's draft bill on crypto taxation has introduced a new tax cut-off date of December 31, 2026. After this date, the one-year holding period will no longer apply to new purchases, and instead, a flat-rate withholding tax will be imposed.

This means that investors who purchase Bitcoin after the cut-off date will face a higher tax burden compared to those who bought before the deadline. The draft bill also introduces stricter reporting obligations for trading venues and providers, requiring them to report customer accounts and transactions to the tax administration.

Using historical data from 2013, we recalculated the performance of a lump sum versus a savings plan over different time periods. While the lump sum performed better in the long term, the savings plan outperformed in certain years, such as between October 2021 and 2026.