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The Council of Ministers, at its meeting on 29 October 2025, approved a series of legislative proposals forming part of Cyprus's 2025 Tax Reform. Among these measures, which have not yet been enacted by Parliament, is the introduction of a specific tax regime for crypto assets through the addition of Article 20E to the Income Tax Law.
The bill has been submitted to the House of Representatives for consideration and vote.
The following summary reflects the content of the proposed law.
1. New Article 20E – Taxation of Gains from Crypto Assets
According to the amendment, a special method of taxation is established for profits arising from the disposal of crypto assets.
- These profits will be taxed at a flat rate of 8%.
- Losses from the disposal of crypto assets may be offset only against gains from similar disposals within the same tax year. These losses cannot be carried forward to subsequent years.
This measure applies to both individuals and legal persons.
2. Definition of "Crypto Asset"
The new law directly references the EU Regulation (EU) 2023/1114, incorporating its definitions into the Cypriot tax framework. According to the Regulation:
"'Crypto-asset' means a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology." (Article 3(1)(5), Regulation (EU) 2023/1114)
3. Scope of Disposal
The law specifies that a disposal includes:
- Sale or exchange of crypto assets,
- Use of crypto assets as a means of payment,
- Donation or transfer without consideration.
4. Legislative Intent
This amendment forms part of the broader 2025 Tax Reform, aimed at:
- Creating a fairer and more balanced tax system,
- Encouraging innovation and aligning Cyprus's framework with technological and financial developments,
- Strengthening compliance and reducing tax avoidance,
- Providing certainty for new economic activities, including those involving digital and crypto assets.
Conclusion
Once enacted, the 8% flat tax on crypto-asset gains will mark the first explicit and harmonised framework for the taxation of digital assets in Cyprus. By introducing clear and transparent rules aligned with EU standards, the measure will bring legal certainty to individuals and entities dealing in crypto assets, positioning Cyprus at the forefront of modern, innovation-driven tax reform.
At Nikita & Partners, we specialise in crypto accounting, audit, and Cyprus taxation helping individuals and companies align with evolving regulations while optimising their tax position.
Contact us to speak with our team and understand how the proposed 8% flat tax on crypto gains could apply to your holdings.
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.
