Cryptocurrency taxes in Cyprus. Rules for investors in 2026

Cryptocurrency taxes in Cyprus: The ultimate guide 2026

From the beginning of this year Cyprus has rolled out a comprehensive crypto tax reform. The new Article 20E has simplified crypto taxation and removed ambiguity, previously associated with classifying and reporting crypto profits. In this guide we’ll take a closer look at this amendment and see what's new, what hasn't changed and what needs to be done in order to stay on top of your crypto taxes in 2026. Let's dive into it!

The current state of crypto tax in Cyprus

Before 2026 Cyprus didn't have a dedicated crypto-specific tax legislation, which has led to ambiguity when it came to the classification and reporting of crypto profits. Since January 1 2026, the government has introduced a dedicated Cyprus crypto tax framework with the new Article 20E of the Income Tax Law, bringing clarity and transparency and stronger alignment with EU crypto laws and regulations. The key feature of this crypto tax reform is the introduction of a unified 8% tax rate on all crypto disposals for businesses and individuals.

The badges of trade

The «badges of trade» is a commonwealth law concept, typically used to determine whether to qualify you as an investor or a trader. Whilst they are not so extensively used under the new amendment, badges of trade could still be relevant in certain cases. For example, when it comes to non-disposal crypto activities, the badges of trade can be applied in order to determine if the profits are capital gains or trading income.

Usually, a combination of several badges of trade is taken into account. For example:

—Transaction frequency and volume

How often you buy and sell your assets can also help determine your taxation scope. Frequent or repetitive transactions in similar assets are a strong indication of trading activity.

— Holding period

An interval between purchase and sale can also be a strong sign of trading activity. Very short periods of ownership (minutes, hours, days) indicate trading activity.

Whereas long-term holding of assets — months or years, would most likely be treated as an investment.

— Subject matter of the transaction

The tax authorities might also consider the type of asset being traded. Certain assets are associated exclusively with trading, whilst others sustain long-term investment.

— Organization

Running a dedicated home office for crypto transactions or marketing yourself as a trader as well as having trading profits as your main source of income would definitely classify you as a trader.

— Financing

Another strong trading badge is using leveraged products or borrowing to acquire crypto.

— Motive and documentation

Your motives could also be assessed as a trading badge. For example, using dedicated trading platforms and strategies, as well as the intention to profit from market price fluctuations, rather than holding. On the other hand, a well-documented investment portfolio plan will result in capital gains treatment.

Capital gains vs trading income: a crucial distinction

Capital gains

In Cyprus, the capital gains tax treatment refers to passive crypto investments.

The examples of such gains may include: crypto, received as a gift, crypto airdrops, or certain corporate reorganisations (transactions) might be subject to ordinary capital gains rules.

Trading income

From January 1 2026, If your crypto activity doesn't fall under «disposal» category, for example — yield farming, DeFi interest, mining, holding (HODL), it will be taxed according to the standard rate:

— For individuals: a progressive tax rate can reach up to 35%. Some gains can be offset by the losses, however, the special conditions apply.

— For crypto companies: a corporate tax rate of 15%, as of 2026, is applied with deductible expenses.

Crypto taxation for individuals: A detailed breakdown

Taxation of crypto trading gains classified as income

Before 2026, crypto gains in Cyprus didn't have a standalone taxation policy.

Instead, all crypto trading gains have been assessed using badges of trade to determine whether they classify as a capital gains income from investment, or, as a trading income. If your profits fell under the latter, your crypto trading gains were classified as income and taxed progressively — at a 35% rate, in addition to your other taxable income.

From January 1, 2026, however, all

realised disposal gains will be taxed at a flat rate of 8%. This new regime applies to both individuals and companies and is ring-fenced, meaning that such profits will not be included in your other income streams for progressive tax.

And whilst under the new law you cannot offset losses against your other income streams, you will be able to offset crypto disposal losses against crypto disposal gains in the same tax year.

It's important to note, that non-disposal crypto income, such as mining rewards or other yield streams, is still likely to incur ordinary progressive Cyprus income tax rates under the general law.

What constitutes a taxable event/«disposal»

In Cyprus, the term «disposal» refers to any action, where you give up ownership of an asset and its value is realised. This does not only refer to selling your crypto asset, but also for using it for payments and transferring it to another person, even as a gift.

Here are some of the most common «disposal» events:

— Crypto to fiat

This is the most common type of transaction involving selling your crypto assets, such as Bitcoin for fiat currency — USD, EURO, etc. This event is always taxable if there is a gain, incurring an 8% flat rate, if it's classified as an investment activity.

— Crypto to crypto conversions

This event constitutes an exchange of one cryptocurrency to another. For example, swapping BTC (Bitcoin) for ETH (Ethereum) is classified as a taxable «realisation event».

— Crypto used as payment for goods/services

In Cyprus, paying for services or goods with crypto currency is also classified as a «disposal» as it implies that you sold your asset at market value on payment date and realised a gain or loss.

Any of the above actions are subject to taxation rules, provided that they have resulted in a gain.

Now that we’ve looked at what constitutes a disposal event, let's see which actions do not qualify as a «disposal»:

1. Holding crypto
2. Price fluctuations
3. Unrealised gains
4. Fork announcements (until disposal)
5. Airdrop receipt (taxed as income, not disposal)

Calculating your taxable base and offsetting losses

Now that we've looked at which Cyprus crypto transactions are taxable under the current law, let's learn how to calculate the taxable base and how to offset losses in 2026.

— Cost base

To put it in simple terms, a cost base is equivalent to the money you’ve paid to acquire your crypto assets. It is calculated with this easy formula:

Purchase Price of Crypto + Purchase Fees = Cost Base

Now, to calculate your taxable income or «gain», you just need to subtract the sum of your cost base and the selling fees from the selling price:

Selling price — Cost Base — Selling Fees = Taxable Gain

— Offsetting losses against gains

It so happens that sometimes our trading efforts result in a loss instead of a gain. Luckily, there is a way to offset your losses for crypto tax. In order to calculate your net losses for taxation purposes, you would need to subtract your total losses from the total gains from all trades in a given taxation year, as described in the formula:

Total Gains from all trades — Total Losses from all trades = Net Gain/Loss

Important note: According to the recent Cyprus tax reform, from January 2026 crypto losses from the disposals can only be offset against crypto gains from the same tax year. Also, they cannot be used to reduce taxable income from other sources.

— Carrying losses forward

Before 2026, in Cyprus it was possible to carry losses from one year to the consecutive years in order to offset the gains. However, after the 20E amendment, from 2026 onwards, it is no longer possible to carry crypto losses forward to future years. Therefore, any unused loss at the end of the taxation year would expire. As per new law, losses can only be offset against gains in the same tax year.

Cyprus personal income tax rate (progressive scale)

In the light of the recent changes, although most crypto gains are now taxed at a flat 8% rate, they are not included in your progressive income tax base, since they are considered «ring-fenced» under the new law.

However, if crypto income, such as mining rewards, staking profit or other income types, falls under general personal income tax, the following progressive rates will apply:

1. Up to 22,000 euro — 0%
2. From 22,001 to 32,000 euro — 20%
3. From 32,001 to 42,000 euro — 25%
4. From 42,001 to 72,000 euro — 30%
5. Above 72, 000 — 35%

Non-domicile advantage: A game changer for crypto investors

Cyprus boasts one of the most favourable taxation regimes not only in Europe, but worldwide. It is not surprising that it has become a magnet for crypto investors and companies, especially those dealing with crypto trade. One of its most attractive features is a Non-dom taxation regime, which offers a plethora of benefits and tax exemptions for those who qualify. Let's take a closer look at who is not considered a Cyprus tax resident.

In Cyprus, a Non-domicile (Non-dom) status is a special tax status for people who are residents of Cyprus, but are not considered Cypriot domiciled. To put it simply, you must have residence in Cyprus but it shouldn't be your sole place of residence — your permanent home (domicile) should be elsewhere.

It's good to point out that most new Cyprus residents (expats) can qualify as Non-dom for as long as 17 years after moving here.

How to qualify

In order to qualify for Non-dom you must meet one of the following criteria:

—A 183-day rule:You must spend more than 183 days in Cyprus in a calendar year.

Or, alternatively:

— A 60-day rule: You must spend at least 60 days in Cyprus and meet all of the below conditions:

1. You mustn't reside in any other country for more than 183 days.
2. You must maintain a permanent home in Cyprus (own or rent).
3. You must show significant ties to Cyprus (work, business, appointed as a company director).

In addition, you shouldn’t have been a Cyprus tax resident for 17 years or more during the last 20 years.

The application process is simple — once you meet the above selection criteria, you just need to submit a Non-dom declaration to the Cyprus Tax Department with supporting evidence about your residence status, Cyprus ties and domicile history.

Acquiring a Non-dom status unlocks many taxation benefits:

1. No SDC contribution on dividends. For example, if your crypto profits are held in a company and distributed as dividends, there's 0% tax on their distribution.
2. No tax on holding of crypto assets
3. Zero tax on transferring crypto between your own wallets or on intra-family transfers.
4. No gift tax or inheritance tax
5. Non-dom status helps to avoid double taxation on foreign dividends/interest
6. Simplified tax reporting, with no reporting on passive income

So, even though Non-dom status does not exempt you from paying the 8% crypto tax on disposals, it can eliminate tax on dividends and profits and significantly optimise the tax-reporting process. That's why acquiring the Non-dom status is the first step for Cyprus-registered companies and investors for optimising their taxation.

Taxation of staking mining and yield farming rewards

Staking is essentially locking up your crypto in a blockchain network for a period of time and receiving rewards in the same crypto currency upon completion of that period.

Whilst yield farming, otherwise known as «liquidity mining» involves lending crypto to decentralized finance (DeFi) protocols, so others can borrow it. In return, you earn interest or additional tokens.

Now, let's look how these activities translate into Cyprus taxation law.

Under the current amendment 20E, staking rewards and yield farming returns do not fall under an 8% tax threshold, as they can't be technically classified as «disposals». Instead, they are classified as «income» and are taxed based on their market value (in EUR) at the time they are credited to you. This income is taxed under the progressive scale.

1. For individuals, depending on the total amount of profit, it can incur up to 35% in tax rates.
2. For companies, the standard 15% rate applies as of 2026.

Likewise, mining also falls under the same category, being taxed on a progressive scale.

However, once you decide to sell (dispose of) your staking or yield farming assets, that profit would be taxed at an 8% rate as a «disposal tax».

Crypto taxation for companies in Cyprus

Why set up a Cyprus company for crypto activities

Cyprus based companies and crypto holdings can enjoy the island's favourable taxation regime with a flat Cyprus corporation tax of 15%. In addition, the island is a recognised banking jurisdiction, which is a part of the EU's broader crypto law framework (MiCA). This provides additional security and transparency

The 15 % corporate income tax on crypto profits

Previously, the corporate income tax constituted a flat rate of 12,5%, it was recently raised to 15% starting from January 1, 2026. According to Article 20E of the income Tax Law, all profits from crypto disposals will be taxed at a standard rate of 8% — this goes for both companies and individuals.

It's also important to note that crypto disposal profits taxed at the 8 % rate do not count toward the general 15 % tax base, as they are ring-faced.

Mining or staking profits are also likely to be subject to the ordinary corporate tax rate of 15 % unless otherwise specified.

Claiming deductible expenses for your crypto business

In Cyprus, crypto businesses can claim deductible expenses which can be, but not limited to the following:

1. Office and utilities
2. Software and platforms
3. Salaries and contractors
4. Employee wages and benefits
5. Professional fees (for accounting and auditing services, legal fees)
6. Marketing and advertising
7. Banking and financial services
8. Depreciation of assets
9. Computers, servers, laptops
10. Travel and training
11. Business insurance
12. Cybersecurity and data protection services

In order to claim your deductible expenses, you must carefully track all your crypto-related spending. Then, deduct these expenses from your gross profits and file them in your corporate tax return.

Practical compliance guide: reporting, deadlines and record-keeping

How and when to declare crypto income

In Cyprus, crypto gains, realized in 2026 must be included in your tax return for that year, which runs on the calendar year. Filing deadlines for crypto gains follow standard Cyprus tax return deadlines, meaning the tax declaration must be submitted during March/April of the following year.

Under Article 20E, profits from «disposal» of crypto assets are taxable at a flat 8% rate for both individuals and companies.

To reiterate, the following actions qualify as «disposal» under the Cyprus law:

1. Selling crypto for fiat currency
2. Exchanging one crypto for another
3. Paying for goods or services with crypto
4. Gifting or donating crypto asset.

Other crypto profits, such as staking profits or yield farming profits, are not considered a «disposal» event, and, therefore, are subject to the standard corporate rate of 15% (as of January 1, 2026).

Essential record-keeping for every crypto transaction

It is important to keep the following transaction records and information:

1. Date and time of acquisition and disposal.
2. Type of transaction (sale, swap, payment).
3. Amount of crypto and value in euros (EUR) at both acquisition and disposal.
4. Exchange or wallet details (wallet addresses, exchange names).
5. Proof of how value was calculated (exchange rate API or published rate).

According to Cyprus law it is advisable to keep these records for the period of 5—7 years for taxation purposes.

Penalties for non-compliance

Being a part of the larger EU’s framework of crypto-transparency regulations, Cyprus authorities are closely monitoring digital asset activity. Whilst there are no specific crypto penalties, a failure to comply with taxation laws will incur general taxation penalties:

1. Incomplete or incorrect reporting — 1,000–10,000 euro
2. Failure to file a return —10,000–20,000
3. Delays in filing:

— for the first 90 days — 1,000–5,000

— after the 90 days — 5,000–20,000

The outlook: the new Crypto Tax Bill 2026

The new crypto tax bill has been introduced as a part of a wider tax reform package passed by the House of Representatives in late 2025.

The new amendment, regulating crypto transactions — Article 20E, is now in effect, starting from January 1 2026.

Let's take a closer look at its core elements.

Understanding the 8% capital gains tax 20E

As mentioned earlier, the Cyprus government has introduced a flat tax rate of 8% on all disposal transactions for both individuals and companies. This creates a uniform tax framework, eliminating the need to assess each disposal against badges of trade. This flat rate is ring-fenced, meaning that crypto profits are treated separately and are not aggregated with other non crypto income for progressive tax purposes.

However, this standard rate does not apply to other crypto activities, such as staking, mining and yield farming. In these cases, the profits will be treated as individual income and taxed accordingly.

Current status and expected timeline

Passed by the parliament just before the new year, the Article 20E took effect from January 1, 2026. This means that the new taxation rates will apply to all crypto profits of this financial year. However, a more detailed tax department guidance, including official circulars and information, is expected to be released towards mid 2026. This guidance will shed light on valuation, reporting, documentation, and practical compliance.

Currently, tax advisors are waiting for more information so they can start implementing the new rules.

Cyprus vs the world: A comparative tax analysis

Cyprus has one of the lowest flat tax rates in Europe, with a uniform 8% tax on all disposals, regardless whether they are from personal investment or crypto trading activity.

Whilst in the rest of the EU, the average tax can range from 10 to 30%, with a whopping 45% tax on short-term disposals in Germany and a standard flat rate of 30% on capital gains in Ireland and France.

Below are some EU countries sample crypto tax rates:

1. Germany – 0 % if held more than 1 year, and up to 45 % for short-term gains of less than 1 year.
2. UK – 10–20% capital gains tax on crypto profits above £12,300 in 2026.
3. France – 30% flat rate on crypto gains.
4. Ireland – 33 % flat rate on crypto capital gains.
5. Spain – 19–28% progressive capital gains tax.
6. Belgium – 10% on capital gains from crypto for individuals.

At the same time, in the USA crypto transactions are treated as property and are taxed at ordinary income rates, which constitute 10–37% on the short-term gains and 0–20% — on the long-term.

Whilst in Asia, Japan has the highest taxes with 15—55% and S. Korea — with 22% tax rates on annual gains of +1,900 USD.

There is zero capital gains tax on personal investments in the following countries: UAE, Cayman, Bermuda and British Virgin Islands, Monaco, Switzerland and Hong Kong. With that in mind, some of them will tax crypto profits derived from trading as a business.

In the light of these global rates, Cyprus tax framework offers one of the world's best and lowest flat rates for both private individuals and companies, regardless of whether their disposals are treated as investment or trading activity.

Advanced FAQs: Your crypto tax questions answered

Are airdrops and forks considered taxable events in Cyprus?

Generally, airdrops received not in exchange for services do not automatically incur an 8% tax. However, if they were received as a payment then they will be subject to general income tax rules.

Forks are typically not considered as a disposal event and do not incur tax automatically. However, they may be subject to general income tax at the moment of a disposal.

How are non-fungible tokens (NFTs) taxed in Cyprus?

For individuals holding and selling NFTs occasionally, the profits are generally treated as capital gains. However, if they are sold more frequently, they might be treated as trading income and taxed accordingly.

For businesses, profits from the sale of NFTs are treated as a business income and incur a standard corporate tax rate of 15%.

What's the tax treatment for crypto received as payment for services?

For individuals, these crypto payments will be taxed on a progressive personal income scale. For businesses — they are taxed at a standard corporate rate of 15%.

I am a non-resident of Cyprus, but trade on a Cypriot exchange. Do I owe tax?

If you just use Cypriot platforms, such as local crypto exchanges, you don't have to pay tax on your crypto gains in Cyprus. Non-residents are generally not taxed on crypto trading profits earned outside Cyprus if there is no permanent establishment in Cyprus.

Key takeaways and professional advice

Summary: Your Cyprus crypto tax strategy in 3 points

— Classify your crypto gains correctly

Whilst crypto taxation rules have become more straightforward since January 2026 with a flat 8% rate on all disposals, other crypto income may be taxed differently. Such crypto activities as mining, staking and yield farming as well as receiving crypto as payment for services would be taxed differently.

— Consider whether non-dom status is relevant if you earn passive crypto-related income

Acquiring a Non-dom status can significantly lower your taxes and streamline the reporting process. For example, as an investor you can take advantage of 0% tax on passive income like dividends and interest that would otherwise be subject to the Special Defence Contribution (SDC).

— Keep meticulous records for every transaction

In Cyprus, it is absolutely essential to keep detailed records of your crypto transactions in order to correctly calculate your gains and track when income was received, so you can prepare correct Cyprus tax returns. These records will also help you support claims for investment or trading classifications.

The importance of seeking professional tax advice

With crypto taxation laws changing fast, it is very important to seek professional taxation advice. As an individual, or, even as a business, it's not always easy to keep track of all the recent amendments.

A professional advisor will have the up-to-date information on all the recent changes, procedures and requirements and can advise you on your Cyprus tax residency status. A professional consultation can help you optimize your crypto taxation to suit your unique situation and needs.