The Cyprus tax reform effective from 1 January 2026 introduces a special regime for the taxation of cryptocurrencies in Cyprus. For the first time, crypto gains are subject to a specific flat tax rate of 8%.

This guide explains in detail:

• Whether Cyprus taxes realised or unrealised crypto gains
• How the 8% crypto tax works
• How crypto losses are treated
• Whether crypto mining is taxed
• Whether losses can offset other income
• Practical examples

This publication is intended for investors, traders, companies and tax professionals analysing the Cyprus crypto tax framework.

What Was Happening Before 1 January 2026?

Before 1 January 2026, there was no specific legislative framework governing the taxation of cryptocurrencies in Cyprus.

The tax treatment depended on general principles of Cyprus income tax law and the facts of each case.

1. Capital Nature (Investment Holding)

If crypto assets were held as an investment and later disposed of, gains were generally not subject to tax in Cyprus, provided they were considered capital in nature.

In practice:

• Occasional investors could often realise crypto gains tax-free.
• There was no specific flat tax rate applicable.
• The analysis focused on intention, frequency of transactions and commercial character.

2. Trading Activity

If the crypto activity was considered a business or trading activity:

• Profits were subject to corporate tax (12.5% up to 2025, 15% from 2026 onward).
• Individuals were taxed at progressive income tax rates.
• Losses could generally be carried forward under normal income tax rules.

3. Mining Before 2026

Mining activities were treated as business income where conducted in a systematic and organised manner.

• Profits were taxable under normal income tax rules (i.e. taxable profit = income less allowable deductible expenses).
• Deductible expenses could include electricity costs, equipment depreciation (capital allowances), hardware costs, and other expenses incurred wholly and exclusively for the production of income.

There was therefore legal uncertainty and inconsistency in treatment prior to the introduction of the 8% Cyprus crypto tax regime.

1. Is Crypto Taxed in Cyprus?

Yes. As from 1 January 2026, gains from certain crypto transactions are taxed in Cyprus at a flat rate of 8%.

The law provides that gains arising from the following transactions are taxable:

• Sale of a crypto asset
• Gift of a crypto asset
• Exchange of one crypto asset with another
• Use of crypto as a means of payment

This creates a clear realisation-based taxation regime.

2. Are Unrealised Crypto Gains Taxed in Cyprus?

No.

The Cyprus crypto taxation regime applies only to gains arising from disposal events. This means that:

• Mere increase in market value while holding crypto is NOT taxable.
• Tax is triggered only when a disposal occurs.

There is no mark-to-market or annual revaluation mechanism in the Cyprus crypto tax framework. This means that taxpayers are not required to revalue their crypto holdings at year-end and pay tax on paper gains. Tax is only triggered when an actual disposal event occurs (sale, exchange, gift or use as payment).

Therefore, unrealised gains are not taxed in Cyprus.

3. What Is the Crypto Tax Rate in Cyprus?

Cyprus applies a flat 8% income tax rate on qualifying crypto gains.

This rate applies regardless of whether the gain would otherwise be considered capital in nature or trading in nature.

This is particularly important because:

• Trading income could otherwise be taxed at 15% (corporate tax), or
• Individuals could otherwise be taxed at progressive rates up to 35%.

The 8% crypto tax therefore represents a simplified and favourable regime.

4. What Constitutes a Taxable Crypto Event in Cyprus?

The following transactions constitute taxable realisation events:

4.1 Sale of Crypto

Selling Bitcoin, Ethereum or other crypto for fiat currency triggers tax.

4.2 Exchange of Crypto

Swapping one crypto for another (e.g., ETH for BTC) is a taxable event, even if no fiat is received.

4.3 Use of Crypto as Payment

Using crypto to pay a supplier or purchase goods/services is treated as a disposal and is taxable.

4.4 Gifting Crypto

Transferring crypto as a gift is considered a taxable disposal.

This is a broad disposal definition under Cyprus crypto taxation rules.

5. How Are Crypto Losses Treated in Cyprus?

The Cyprus crypto tax regime is ring-fenced.

Losses:

• Can only be offset against other crypto gains
• Must be offset within the same tax year
• Cannot be carried forward
• Cannot be group relieved
• Cannot offset other sources of income

This means that crypto losses cannot reduce:

• Salary income
• Business profits
• Rental income
• Interest income
• Capital gains

Crypto gains and losses operate in a separate compartment.

6. Can Crypto Losses Offset Other Income in Cyprus?

No.

Even though Cyprus tax law generally allows offset of trading losses in certain cases, the crypto regime expressly restricts offsetting.

Because crypto income is taxed under a special flat-rate regime, losses are confined to crypto gains of the same year only.

There is:

• No carry-forward
• No group relief
• No cross-offset against other income streams

This is an important planning consideration for crypto investors in Cyprus.

7. Is Crypto Mining Taxed in Cyprus?

Crypto mining does NOT fall under the 8% crypto tax regime.

The law explicitly states that crypto assets acquired through mining do not benefit from the special 8% taxation. This exclusion applies irrespective of whether mining is carried out by an individual or a legal entity.

This does NOT mean mining is tax-free.

Mining is taxed under the normal income tax framework applicable to the taxpayer performing the activity.

Tax Treatment of Mining – Companies vs Individuals

Mining does not fall within the 8% crypto tax regime. It is taxed under the normal income tax framework.

Companies (Legal Entities)

Where mining is carried out by a Cyprus tax resident company:

• Treated as a business activity.
• Taxable profit = market value of crypto generated less allowable deductible expenses.
• Subject to corporate tax at 15%.
• Losses follow normal corporate loss carry-forward rules.

Individuals

Where a Cyprus tax resident individual carries out mining in a systematic and profit-oriented manner:

• Treated as business income.
• Taxable profit = market value of crypto generated less allowable deductible expenses.
• Subject to progressive personal income tax rates.

If mining is minor or occasional, classification depends on facts and circumstances.

In all cases, mining income is considered production/business income and does not benefit from the 8% crypto regime.

8. Practical Examples – Cyprus Crypto Taxation Practical Examples – Cyprus Crypto Taxation

Example 1 – Realised Gain (Sale)

Buy BTC at €10,000
Sell BTC at €18,000

Gain = €8,000
Tax = 8% = €640

Example 2 – Unrealised Increase

Buy BTC at €10,000
Market value rises to €18,000
Still holding

Tax = €0

Example 3 – Crypto-to-Crypto Exchange

Buy ETH at €5,000
Exchange ETH for BTC when ETH value is €9,000

Gain = €4,000
Tax = 8%

Even though no fiat is received, the exchange is taxable.

Example 4 – Crypto Mining by Company

Company mines crypto
Market value at receipt = €50,000
Mining costs = €20,000

Profit = €30,000
Corporate tax (15%) applies

Illustrative Examples – How the 8% Crypto Tax Works in Practice

The following example illustrates how the Cyprus crypto tax regime operates in a typical annual scenario:

Example – Annual Crypto Activity

An individual Cyprus tax resident undertakes the following during 2026:

• Purchases BTC for €20,000
• Exchanges BTC for ETH when BTC value is €32,000
• Later sells ETH for €35,000
• Also incurs a crypto loss of €5,000 on another token in the same year

Step 1 – First Disposal (Exchange BTC → ETH)

Gain = €32,000 – €20,000 = €12,000
Tax at 8% = €960

Step 2 – Second Disposal (Sale of ETH)

If ETH value at acquisition is deemed €32,000 and sold for €35,000:

Gain = €3,000
Tax at 8% = €240

Step 3 – Loss Offset Within Same Year

Crypto loss of €5,000 may be offset against crypto gains of the same year only.

Total gains before loss = €15,000
Less allowable crypto loss = €5,000
Net taxable gain = €10,000
Tax at 8% = €800

If the €5,000 loss exceeds the year’s crypto gains, the excess is not carried forward.

9. Key Technical Observations

• Taxation is based on realisation events.
• No taxation of unrealised gains.
• Mining excluded from 8% regime.
• Losses ring-fenced to crypto only.
• Gifts and payments with crypto are taxable disposals.

10. Is Cyprus Crypto Tax Friendly?

Compared to many jurisdictions, Cyprus offers:

• A low 8% flat tax on realised crypto gains
• No taxation of unrealised gains
• A clear legislative framework

However, the inability to carry forward crypto losses may impact tax planning.

Conclusion

The taxation of cryptocurrencies in Cyprus from 2026 introduces clarity and structure through an 8% flat tax regime on realised crypto gains.

Investors and companies operating in Cyprus should:

• Track all disposal events carefully
• Monitor annual gain/loss positions
• Distinguish mining from investment activities
• Consider structuring implications

Need Advice on Cyprus Crypto Taxation?

If you are investing, trading or mining cryptocurrencies in Cyprus, it is important to assess your tax position before the end of each tax year.

Whether you are:

• A Cyprus tax resident individual
• A crypto trader operating through a Cyprus company
• A mining operator
• A digital asset investor relocating to Cyprus

Proper structuring and annual tax planning can significantly impact your effective tax burden.

📩 Contact Rightax Ltd for a tailored review of your crypto activities and a structured analysis under the Cyprus crypto tax framework.

Rightax Ltd is a Cyprus-based tax advisory firm specialising in corporate taxation, international structuring and international tax advisory services with a focus on Cyprus.

Early planning ensures compliance while optimising your Cyprus crypto tax position.

Reach out for expert help with tax, accounting, audit, or company setup in Cyprus.

+357 99 108 510

[email protected]