Cryptocurrency Tax in Cyprus at 8% from 2026: Full Overview

From 1 January 2026, a new cryptocurrency taxation system will apply in Cyprus, introducing a fixed rate of 8% on profits from the disposal of crypto-assets in accordance with amendments to the Income Tax Law of Cyprus (Income Tax Law 118(I)/2002). The tax applies to the sale of cryptocurrency for fiat currency, exchange of one cryptocurrency for another, payment for goods and services using crypto-assets, gifting crypto-assets.

At the same time, holding cryptocurrency is not taxed, making the crypto tax Cyprus regime one of the most attractive in the European Union for investors and holders of digital assets.

What Is Considered a Crypto-Asset Under EU Legislation

As part of the reform, the definition of a crypto-asset from the European MiCA regulation applies. According to EU Regulation 2023/1114:

A crypto-asset is a digital representation of value or rights that can be transferred and stored electronically using distributed ledger technology (DLT) or similar technology.

8% Tax on Crypto Profits

Profits from cryptocurrency transactions may be taxed at a rate of 8%. This rate applies to profits obtained from the disposal of crypto-assets, but it does not automatically apply to all cases of holding digital assets and is determined based on the nature of the transactions and their classification for tax purposes.

The tax is charged only on net profit from the disposal of crypto-assets, not on transaction turnover. The 8% rate is fixed, does not depend on the amount of income received, and is not included in the progressive personal income tax scale.

This regime applies to both individuals and legal entities, and profits taxed at the 8% rate are not aggregated with other categories of taxpayer income.

When Cryptocurrency Tax Arises

Tax arises only at the moment of disposal of a crypto-asset. Such transactions include:

1. Sale of cryptocurrency for fiat currency (for example EUR, USD, GBP)
2. Exchange of one cryptocurrency for another (for example BTC to ETH)
3. Payment for goods or services with cryptocurrency (if cryptocurrency is used as a means of payment)
4. Transfer of cryptocurrency to third parties (gift*, donation, gratuitous transfer)

*For example, if on the date of gifting the market value of the cryptocurrency exceeds its acquisition cost, the donor realizes a profit taxed at 8%. At the same time: the recipient of cryptocurrency usually does not pay tax at the time of receipt. However, a new tax base is formed for the recipient: the market value of the crypto-asset on the date of receipt. This value will be used in the event of a future sale.

When Cryptocurrency Tax Does Not Need to Be Paid

As long as cryptocurrency simply remains in your portfolio, an increase in its market value does not, by itself, create a tax liability. The tax question arises only when the gain is actually realised.

For example, you purchased Bitcoin for €70,000 and its market value increased to €90,000. As long as the Bitcoin remains in your portfolio and you do not sell, exchange, or otherwise dispose of it, the €20,000 increase in value represents an unrealised gain. An increase in market price alone does not trigger taxation.

The principle is quite simple:

• Buy → Hold → No tax on the increase in value.
• Realise the gain → The question of taxation at the 8% rate arises.

It is also important to note that when cryptocurrency is disposed of, you need to determine not only the amount of profit earned but also the nature of your activity. If the transactions have the characteristics of active trading and fall within the scope of Section 20E, the 8% tax rate may apply. However, if the disposal relates to a long-term investment and the resulting profit is classified as a capital gain, the tax treatment may be different — potentially as low as 0%.

Therefore, the key question is not simply “Did you sell your cryptocurrency?”, but rather “Were your transactions part of investment activity or active trading?”

Record-Keeping and Tax Compliance for Crypto Transactions

With the introduction of automatic reporting under the DAC8 Directive and the new crypto-asset taxation regime in Cyprus, tax residents are expected to maintain proper records of all crypto-related transactions.

To ensure accurate calculation of taxable gains, taxpayers should retain at least the following information:

• acquisition date of each crypto asset
• quantity of assets acquired
• acquisition cost (in EUR)
• transaction fees and related expenses
• disposal date of the asset
• disposal value (in EUR at the time of the transaction)
• type of transaction (sale, exchange, transfer, payment for goods or services, etc.)
• gain or loss calculation for each transaction

Particular attention should be given to determining the fair market value in EUR at the time of crypto-to-crypto exchanges or when crypto assets are used to pay for goods or services.

How Is Mining Taxed in Cyprus?

Cryptocurrency obtained through mining does not fall under the special tax regime. Income is assessed at the market value of the cryptocurrency on the date of receipt and taxed according to the general provisions of tax legislation.

• If mining is carried out by an individual, such income is generally classified as self-employment income and taxed according to the progressive personal income tax scale at rates of up to 35%. Additionally, obligations arise to pay social insurance contributions, contributions to the state healthcare system GHS.
• If mining is carried out through a Cyprus company, corporate tax at 15% applies to net profit after deduction of operating expenses.

This means that different types of activities involving virtual assets may be taxed under different models.

Is a License Required to Work With Cryptocurrency in Cyprus?

If an individual carries out transactions with their own crypto-assets, no license is required. However, companies that provide services related to crypto-assets on a professional basis must register with CySEC as a CASP (Crypto-Asset Service Provider). Ordinary investment activity by a private individual does not require licensing.

Cryptocurrency Taxation in Cyprus in 2026: Key Conclusions

From 2026, the cryptocurrency taxation system in Cyprus provides for a fixed rate of 8% on profits from the disposal of crypto-assets in cases of active transactions, while long-term holding of cryptocurrency does not create tax obligations until the moment of sale.

This makes crypto tax Cyprus one of the most attractive tax regimes for private investors and crypto companies in Europe.

Key Advantages of Cyprus for Crypto Investors

• fixed 8% tax rate on profits from crypto-asset transactions — one of the lowest in the EU
• no tax on long-term holding of cryptocurrency until disposal
• possibility to structure activities through a Cyprus company with 15% corporate tax
• application of European MiCA regulation, ensuring legal certainty
• no licensing required for transactions with personal crypto-assets
• availability of Non-Dom status, allowing optimization of taxation on dividends and interest income

Comprehensive Services of Feod Group

Feod Group provides a full range of legal, corporate, and tax services for private investors and companies working with cryptocurrencies and digital assets.

We support clients at all stages, including:

• consultations on cryptocurrency taxation in Cyprus
• obtaining Cyprus tax residency and Non-Dom status
• structuring ownership of crypto-assets through an individual or a Cyprus company
• company registration in Cyprus
• assistance with opening bank and payment accounts
• legal support in compliance with MiCA and Cyprus legislation

Schedule a free introductory consultation