Cyprus classifies cryptocurrencies as "crypto assets" under Article 20E of its Income Tax Law, aligning with the EU MiCA Regulation. The country has a regulated status for digital assets, meaning a dedicated tax framework is being established, and the Cyprus Securities and Exchange Commission (CySEC) oversees related financial services. The Tax Department of the Ministry of Finance (TDMF) is the responsible authority for crypto taxation in Cyprus, operating under the framework of Article 20E of the Income Tax Law. For individuals and corporations, a flat 8% tax rate applies to net profits from the disposal of crypto assets. This rate covers all crypto disposals, with no distinction made between short-term and long-term holding periods. There are no general capital gains tax exemptions or thresholds for crypto. Selling crypto for fiat currency or exchanging one cryptocurrency for another are both considered taxable disposal events, subject to the 8% flat rate on net profits. Cryptocurrency exchanges are exempt from VAT, though certain crypto-related services may still be subject to VAT. Any losses from crypto disposals can only be offset against crypto gains in the same tax year and cannot be carried forward. Regarding specific activities, staking rewards are treated as business income and taxed at standard progressive personal income tax rates if the activity is professional. If staking is passive, the disposal of staked assets is taxed at the 8% rate. Mining rewards are also considered business income and are taxed at standard progressive rates for individuals or the 15% corporate rate for companies, with acquisition costs and expenses being deductible. DeFi activities, such as yield farming or liquidity provision, trigger taxable events for disposal profits at the 8% rate, with each interaction potentially being a disposal event. Non-fungible tokens (NFTs) are classified as crypto assets, and profits from their sale, swap, or use are subject to the 8% disposal tax. A significant development is the implementation of Article 20E of the Income Tax Law, which is scheduled to become effective on January 1, 2026. This new regime, which includes the 8% flat tax on crypto disposals and a corporate tax rate increase to 15%, has been approved by the Council of Ministers and awaits final parliamentary approval.
Tax Rates
| Effective individual rate | 8 |
| Capital gains tax | 8% flat rate on all crypto disposals, no holding period distinction |
| Income tax on crypto | 8% on disposals, progressive rates on mining/staking business income |
| Corporate tax | 15% standard rate, 8% on crypto disposal profits |
| VAT | Exempt from VAT, services may be subject to VAT |
Activity Taxes
| Staking | Business income if active, 8% on disposal profits if passive |
| Mining | Business income taxed at standard rates, acquisition cost and expenses deductible |
| DeFi | 8% tax on disposal profits, each interaction triggers taxable event |
| NFTs | 8% tax on disposal profits, classified as crypto assets |
Taxable Events
| Crypto → Fiat | Taxable, 8% flat rate on net profits from sale |
| Crypto → Crypto | Taxable, 8% flat rate on net profits from exchange |
Holding Period
| Holding period benefit | None, flat 8% applies to all disposals regardless of holding period |
Sources