Cyprus continues to evolve as a forward-looking jurisdiction for fintech, blockchain projects, and high-net-worth crypto investors. While the country remains competitive for crypto structuring, the tax landscape in 2025 has become more defined, with proposed reforms, EU reporting rules, and global transparency standards pushing Cyprus toward greater clarity and alignment with OECD practices.
As of today, Cyprus has not adopted crypto-specific tax legislation or introduced a flat tax on cryptocurrency gains. However, the Cyprus Tax Department has confirmed that crypto-related income will be taxed under existing tax law depending on the nature of the activity, and pending reforms will explicitly integrate crypto gains into the standard income tax framework. Businesses and investors involved in crypto activities should carefully assess how their activity is classified and ensure compliance with both current and upcoming rules.
How Crypto Is Taxed in Cyprus Today
Crypto gains in Cyprus are not subject to a standalone tax regime. Instead, they are taxed under general principles of income and capital taxation. The key question for both individuals and companies is whether crypto activity constitutes a capital holding or a trading activity.
Where the activity is passive in nature—such as long-term holding of crypto assets as a store of value—it may fall outside the scope of income tax. Cyprus does not tax capital gains other than those arising from immovable property situated in Cyprus or from shares of companies deriving their value from such property. Since crypto assets do not fall under these categories, gains from occasional disposals of crypto assets may not be taxable, provided the activity does not amount to trading.
However, if the taxpayer is actively trading cryptocurrencies—frequently buying and selling, using leverage, operating on multiple exchanges, or participating in staking, DeFi protocols, mining, or yield farming—the activity is likely to be classified as "revenue in nature" and taxed as income.
In such cases:
- Individuals are taxed at progressive income tax rates ranging from 0% to 35%, depending on their total income.
- Companies are taxed at the standard corporate tax rate of 12.5%, which is expected to increase to 15% from 2026 under the proposed tax reforms.
The Cyprus Tax Department applies a "badges of trade" test to determine whether an activity is trading in nature. Factors considered include the frequency and volume of transactions, the intent behind holding the assets, and the degree of commerciality or organisation behind the activity.
Treatment of Other Crypto Activities
Mining income is generally taxed as self-employment income or business income, depending on the structure through which the activity is conducted. The same applies to income from staking, airdrops, token rewards, or participation in decentralised finance (DeFi) platforms. If these are received in exchange for active participation or provision of services (such as validating transactions or lending assets), they are likely to be considered taxable upon receipt.
Crypto-to-crypto conversions may also be considered taxable events if they represent the disposal of one asset and the acquisition of another with a realisation of value.
VAT is generally not applicable to transactions involving cryptocurrency exchanges. In line with EU Court of Justice precedent (C‑264/14), Cyprus treats crypto exchange transactions as VAT-exempt financial services. This applies to exchanges between fiat and cryptocurrency, and to platform fees charged by registered providers.
Crypto Tax Reform Underway in Cyprus
Although no special crypto tax regime exists today, Cyprus has initiated a broader tax reform process in 2025 that includes formal recognition of crypto trading activity as taxable under general income rules. While some sources had speculated about a dedicated flat tax for crypto, the draft proposals released by the Ministry of Finance do not include a separate crypto rate. Instead, crypto income will continue to be taxed based on whether it is trading income or capital in nature.
Key elements of the reform relevant to crypto holders and businesses include:
- An increase in the corporate income tax rate from 12.5% to 15%, expected to take effect in 2026, aligning with the OECD global minimum tax standards.
- Clear legislative provisions stating that income derived from trading in digital assets, including cryptocurrencies, is taxable under normal income tax rules.
- Enhanced reporting obligations in line with EU Directive DAC8 and the OECD Crypto-Asset Reporting Framework (CARF), which will require exchanges and intermediaries to identify users and report transaction data to tax authorities.
EU Reporting Obligations: What to Expect
From 2026, Cyprus-based crypto exchanges, brokers, and wallet providers—classified as Crypto-Asset Service Providers (CASPs)—will be required to collect user data, verify taxpayer residency, and report annually on transfers, gains, and balances involving crypto-assets. This aligns with the EU's adoption of DAC8 and the OECD's CARF, which establish global standards for cross-border crypto transparency.
Even if crypto investors do not owe tax in Cyprus, their account data may be shared automatically with other countries under exchange of information agreements. As such, individuals and entities with Cyprus structures should start preparing for full disclosure and accurate recordkeeping.
Tax Planning Considerations
For individual crypto holders, Cyprus remains an attractive jurisdiction—particularly when activity is passive in nature and when structured properly. Individuals who are Cyprus tax residents but qualify as non-domiciled may also benefit from exemption from Special Defence Contribution (SDC) on dividend or interest income distributed from crypto-related companies.
For active traders, proprietary trading operations, or service providers, structuring through a Cyprus company remains advantageous. The low corporate tax rate, ability to deduct business expenses, and access to the EU market make Cyprus a viable home for crypto entrepreneurs and investment groups.
Companies should also consider applying the Notional Interest Deduction (NID) regime or the IP Box (where applicable) to optimise the taxation of crypto-adjacent business models involving intangible asset development or licensing.
How Savva & Associates Can Help
The regulatory and tax treatment of crypto-assets in Cyprus is still evolving. At Savva & Associates, we assist clients in assessing their crypto activity under Cyprus tax law, structuring crypto trading and investment vehicles, and preparing for compliance with upcoming EU and OECD reporting frameworks.
We also support businesses seeking CySEC registration as Crypto-Asset Service Providers and offer tax and legal guidance tailored to the rapidly changing digital asset space.
To speak with our team about tax classification, structuring options, reporting obligations, or broader regulatory issues, please contact us at info@savvacyprus.com.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
