Author: Mr. Charalambos Papasavvas
Advocate – Legal Consultant
Managing Partner of PAPASAVVAS & LISKAVIDOU LLC
Founder of RELOTECH EXPERTS
Founder of NEOCOURSES INNOVATION CENTER
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For individuals and companies involved in crypto in Cyprus, the primary recommendation is to prepare for a new, clear, flat 8% tax on profits from the disposal of crypto assets, expected to be effective from January 1, 2026. This change, part of a wider tax reform, replaces the current subjective “badges of trade” test with a specific statutory rate, providing much-needed clarity.
- Understand the New 8% Flat Tax
Be aware that profits from the disposal of crypto assets (selling, exchanging, donating, or using them as payment) will be subject to a flat 8% tax for both individuals and companies. - Plan for Loss Limitations
A critical new rule is that losses from crypto asset disposals can only be offset against other crypto gains within the same tax year; they cannot be carried forward to future years or used to offset other types of income. - Distinguish Between Disposal and Mining
Profits from crypto mining activities will be taxed separately under general income tax rules (which can range up to 35% for individuals or 15% for companies from 2026), not the flat 8% rate. - Ensure Meticulous Record-Keeping
Given the new tax and reporting obligations (driven by EU Directive DAC8 and OECD CARF, effective from 2026), it is crucial to maintain detailed records of all transactions, including acquisition costs, dates, and disposal events. - Consult with a Tax Professional
The classification of activity (passive holding vs. active trading/mining) has significant tax implications. Seek professional advice tailored to your specific circumstances to ensure compliance and optimize your tax strategy. - Review Corporate Structure
For active traders or service providers, operating through a Cyprus company may still offer benefits, especially considering the competitive post-reform corporate tax rate of 15% (from 2026) and the ability for non-domiciled individuals to be exempt from Special Defense Contribution (SDC) on dividends. - Prepare for Enhanced Reporting
Be ready for increased transparency, as Cyprus-based crypto exchanges and service providers will be required to report user data to tax authorities from 2026. This means full disclosure is becoming the standard.
Are there any exceptions to the Law?
Mining exception
This special crypto tax does not apply to crypto obtained through mining — those profits are taxed under the general income tax rules instead.
IMPORTANT RULES AND LAWS
Fallback rule
Any crypto-related profit not covered by this article is taxed under the normal provisions of Cypriot tax law (Parts III & V).
Law Enforcement
The proposed tax reform bills have been presented to the House of Representatives and are expected to become law and be applicable from January 1, 2026. Monitor legislative developments closely and adjust your tax planning strategies accordingly.
