Crypto assets in Cyprus are generally treated as intangible assets rather than currency for tax purposes. Tax treatment depends on whether the activity is classified as investment or trading under the Cyprus Income Tax Law (Law 118(I)/2002).
Historically, Cyprus did not have specific legislation governing cryptocurrency taxation. Instead, crypto transactions were assessed using general tax principles, including the “badges of trade” test, to determine whether profits should be treated as trading income or capital gains.
From 1 January 2026, Cyprus introduced a specific tax regime for realised crypto disposal gains, which are taxed separately from other income.
Capital Gains Rules for Crypto Disposal
Under the 2026 Cyprus tax reform framework, gains realised from the disposal of cryptocurrencies are subject to a flat tax rate of 8%.
A taxable gain arises when a crypto asset is disposed of, meaning ownership is relinquished and the asset’s value is realised.
Common crypto disposal events include:
- Selling cryptocurrency for fiat currency such as EUR or USD
- Swapping one cryptocurrency for another
- Using cryptocurrency to purchase goods or services
- Transferring crypto to another person as payment or gift
These actions are treated as realisation events, meaning any profit generated from the transaction may be subject to the crypto disposal tax.
Holding crypto assets without selling or transferring them does not create a taxable event, and unrealised price increases are not taxed.
How Crypto Gains Are Calculated
The taxable gain from crypto disposal is generally determined by calculating the difference between the sale proceeds and the acquisition cost of the crypto asset.
The cost base typically includes the purchase price of the cryptocurrency and transaction or exchange fees incurred during acquisition
The basic calculation follows this structure:
Selling Price – Cost Base – Selling Fees = Taxable Gain
Where multiple trades occur during the same tax year, the net taxable gain is calculated by subtracting total losses from total gains.
Under the 2026 reforms, losses from crypto disposals may only be offset against gains from crypto disposals within the same tax year and cannot reduce income from other sources.
Income Tax Rules
Crypto-related income may be taxed under the general provisions of the Cyprus Income Tax Law (Law 118(I)/2002) where the activity is considered a trading or commercial activity.
Under Section 5 of the Income Tax Law, taxable income includes income derived from:
- Business activities
- Professional services
- Employment
- Investments and other economic activities
Where crypto trading is conducted in a systematic and commercial manner, the profits may be treated as trading income rather than capital gains.
In such cases, profits would be subject to Cyprus personal income tax rates, which are progressive.
Following the 2026 tax reform, the personal income tax bands are structured as follows:
| Chargeable Income (EUR) | Tax Rate |
| 0 – 22,000 | 0% |
| 22,001 – 32,000 | 20% |
| 32,001 – 42,000 | 25% |
| 42,001 – 72,000 | 30% |
| Over 72,000 | 35% |
Companies carrying out crypto-related trading activities may also fall under corporate income tax rules, where the corporate tax rate has increased to 15% from 2026 unless a special regime applies.
Mining and Staking Treatment
Income derived from crypto mining, staking rewards, or other blockchain validation activities is generally treated as ordinary income when received.
Where mining or staking is performed as part of a commercial or organised activity, the value of the crypto received may be included in taxable income under the general income provisions of the Cyprus Income Tax Law.
The taxable amount is typically based on the market value of the crypto at the time it is received.
When the mined or staked crypto is later sold, a separate disposal event may occur, triggering the 8% crypto disposal tax on any realised gain.
NFT Taxation
Cyprus tax law does not currently provide specific legislation for NFTs, but they are generally treated similarly to other digital assets.
Where an NFT is purchased and later sold as an investment, the transaction may fall within the crypto disposal taxation framework introduced in 2026.
A taxable event may occur when the NFT is sold for fiat currency, exchanged for another crypto asset or used to purchase goods or services
If NFTs are created and sold as part of a business activity, such as by digital artists or developers, the proceeds may be treated as business income under the Income Tax Law.
Reporting Requirements
Crypto-related gains and income must be reported to the Cyprus Tax Department in accordance with the Income Tax Law (Law 118(I)/2002).
Taxpayers must generally:
- Calculate gains based on the difference between disposal proceeds and acquisition cost
- Maintain records of crypto purchases, disposals, and exchange transactions
- Report taxable income in their annual tax return
Accurate record keeping is essential for compliance. Taxpayers should retain documentation which includes dates of acquisition and disposal, transaction values, exchange records and wallet transaction IDs, and fees associated with transactions.
These records support the calculation of taxable gains and may be required during tax audits or reviews.
Penalties
Failure to properly report taxable crypto income or disposal gains may lead to penalties under the Assessment and Collection of Taxes Law of Cyprus.
Penalties may apply where a taxpayer:
- Fails to declare taxable income
- Submits inaccurate tax information
- Understates gains from crypto transactions
Interest and additional charges may also apply to unpaid tax liabilities until the obligation is settled.
