Cryptocurrency Tax In Cyprus: Individuals & Firms

Cyprus offers one of the most competitive tax environments in the European Union for cryptocurrency activity. From 1 January 2026 the tax treatment of crypto-assets is no longer a matter of interpretation: Cyprus has introduced a dedicated statutory regime that taxes gains from the disposal of crypto-assets at a flat rate of 8%.

Article 20E of the Income Tax Law, introduced by the Income Tax (Amending) (No. 4) Law of 2025 and published in the Official Gazette on 31 December 2025, applies from 1 January 2026. It is the first provision in Cypriot law written specifically for the taxation of crypto-assets.

This article explains how the 8% regime works for individuals and for companies, what counts as a taxable disposal, how mining and staking are treated, and how losses are handled. The new rules replace the previous framework, under which crypto had no dedicated legislation and the tax result depended on whether an activity was capital or trading in nature.

Cryptocurrency Taxation for Individuals

For individuals who are Cyprus tax residents, gains from the disposal of crypto-assets are taxed at a flat 8% under Article 20E. The provision applies to "any person", so the previous distinction between long-term investors and frequent traders no longer determines the tax outcome.

What counts as a disposal:

A taxable disposal includes selling crypto-assets for fiat currency, exchanging one crypto-asset for another, using crypto-assets to pay for goods or services, and gifting or donating crypto-assets. Each of these events can crystallise the 8% tax on the gain realised.

How the gain is taxed:

The 8% applies to the net profit, meaning the disposal proceeds less the allowable acquisition cost and directly related expenses. The taxed gain is ring-fenced and is not added to the individual's other income, so it does not push salary or other earnings into higher tax bands. Mechanics such as the accepted cost method are expected to be clarified through Tax Department guidance.

Mining and staking:

Crypto-assets obtained through mining are excluded from Article 20E and are taxed under the general income tax rules, at rates of up to 35% for individuals. Staking and similar rewards are generally treated as ordinary income when received rather than as disposals, and a later disposal of those assets then falls within the 8% regime.

Cryptocurrency Taxation for Companies

Cypriot companies fall within the same regime. Because Article 20E applies to any person, a company that is a Cyprus tax resident pays a flat 8% on the net profit from disposals of crypto-assets, whether it holds them as investments or trades them actively.

Income outside the disposal rule:

Company income that does not arise from a disposal of crypto-assets remains under the ordinary corporate tax rules. Mining income and staking rewards, for example, are taxed at the standard corporate income tax rate of 15%.

Losses from crypto-asset disposals are ring-fenced. They can be set off only against gains from crypto-asset disposals in the same tax year. They cannot be carried forward to future years, cannot be carried back, cannot be set off against other income, and cannot be surrendered through group relief.

"Tax Ruling" Decisions

Even with a dedicated regime in place, questions of characterisation can still arise, for example whether a particular activity is a disposal within Article 20E, a mining activity, or the provision of a service. Taxpayers (individuals or companies) can request a "tax ruling" from the Tax Department to confirm the treatment of specific transactions before they file.

Tax rulings can be issued through a fast-track process within one month, costing €2,000, or through a standard process that takes two to three months, costing €1,000.

Consider obtaining a tax ruling where a structure or transaction type is novel, so that your Article 20E position is confirmed in advance.

Benefits of Establishing a Company for Cryptocurrency Transactions in Cyprus

For those active in crypto-assets, Cyprus combines a low headline rate with a clear and predictable framework:

Competitive 8% Disposal Tax:

Gains from crypto-asset disposals are taxed at a flat 8% for both companies and individuals, one of the lowest dedicated crypto rates in the European Union, with no holding-period condition and without stacking onto other income.

Standard Corporate Tax on Other Activity:

The corporate tax rate in Cyprus is 15%, which applies to company income that falls outside the disposal rule, such as mining and staking.

Dividend Benefits:

Dividends paid to shareholders who are Cyprus tax residents and hold Non-Dom status are only subject to a General Healthcare System contribution of 2.65%, capped at €4,770 per year.

Dividends received by non-Cyprus tax resident shareholders are taxed in their country of tax residence, with no withholding tax in Cyprus.

Conclusion

Cyprus has moved from an interpretive framework to a dedicated statutory regime for crypto-assets. From 1 January 2026, Article 20E taxes gains from crypto-asset disposals at a flat 8% for both individuals and companies, while mining and staking are taxed under the ordinary rules and losses are ring-fenced to same-year crypto gains. The result is a low and predictable rate combined with the certainty of clear legislation, keeping Cyprus among the most attractive jurisdictions in the European Union for crypto-related activity.

At Philippou Law Firm, we provide tailored guidance for individuals and businesses across the crypto-asset sector, from confirming the correct Article 20E treatment to structuring and compliance. Contact us today to ensure your crypto-related activities in Cyprus are both compliant and tax-efficient.

Frequently Asked Questions

How are individuals taxed on cryptocurrency transactions in Cyprus?

From 1 January 2026, gains from the disposal of crypto-assets by Cyprus tax resident individuals are taxed at a flat 8% under Article 20E of the Income Tax Law, regardless of how long the assets were held or how frequently they trade. Mining income is taxed under the ordinary income tax rules instead, at rates of up to 35%.

What tax advantages do companies have for cryptocurrency transactions in Cyprus?

Cyprus tax resident companies pay a flat 8% on gains from crypto-asset disposals under Article 20E, whether they hold crypto as an investment or trade it actively. Other income, such as mining and staking, is taxed at the standard 15% corporate tax rate.

What is a 'tax ruling' decision in Cyprus?

A 'tax ruling' is a decision from the Tax Department confirming how specific transactions are treated. It is useful for confirming an Article 20E position in advance and reducing uncertainty.

Are dividends from cryptocurrency companies taxed in Cyprus?

Dividends paid to Cyprus tax residents with Non-Dom status are subject only to a 2.65% General Healthcare System contribution, capped at €4,770 per year, while non-residents are taxed in their country of residence.

How are cryptocurrency losses treated in Cyprus?

Losses from crypto-asset disposals are ring-fenced. They can be set off only against gains from crypto-asset disposals in the same tax year, and cannot be carried forward, carried back, or set off against other income.

Official sources

• Income Tax Law N.118(I)/2002, the principal Cyprus income-tax statute (as amended by the 2026 tax reform, which raised corporate income tax to 15%)
• Special Contribution for the Defence Law N.117(I)/2002, governs the Special Defence Contribution on dividends, interest and rent (dividend rate reduced to 5% from 1 January 2026)
• General Healthcare System (GESY) Law N.89(I)/2001, the 2.65% employee GHS contribution, capped at €180,000 of income
• Cyprus Tax Reform 2026, enacted 31 December 2025, effective 1 January 2026