Cyprus is moving ahead with a major tax reform package that, among other changes, would introduce a flat 8% tax on profits from the disposal of crypto-assets. For the first time, crypto would have its own dedicated article in the Cyprus Income Tax Law, rather than being dealt with case by case. The measures have been approved by the Council of Ministers and submitted to Parliament, with the intended start date of 1 January 2026, subject to final approval and publication.
The crypto provisions sit alongside broader reforms that would raise corporate income tax from 12.5% to 15%, adjust dividend taxation and special defense contributions, and update several other parts of the tax code.
Key points of the proposed 8% crypto tax (Article 20E)
According to the draft law and summaries published by tax and legal firms, the crypto-specific rules would work broadly as follows:
Scope of taxpayers
- Applies to both individuals and companies that are subject to Cyprus income tax.
What is taxed
- An 8% flat rate would apply to profits from the disposal of crypto-assets.
What counts as a “disposal”
- Sale of crypto for fiat currency
- Exchange of one crypto-asset for another
- Using crypto to pay for goods or services
- Donation or gift of crypto-assets (in specified cases)
How gains are measured
- Taxable profit is essentially disposal value (or fair market value) minus acquisition cost and directly related expenses.
Losses
- Losses from crypto disposals can only be offset against crypto gains in the same tax year.
- Losses cannot be carried forward to later years.
- Losses cannot be set off against other income (such as salary, business profits, or interest).
Mining exception
- Crypto-assets acquired through mining are excluded from the 8% regime.
- Professional summaries indicate such profits are treated separately and are not taxed under Article 20E itself.
Legal definition of “crypto-asset”
- The draft refers to the EU’s MiCA Regulation (EU) 2023/1114 for the definition, covering digital representations of value or rights that can be transferred and stored using distributed-ledger technology.
All of these points are taken from the text of proposed Article 20E and consistent commentary by KPMG, STEP, and Cyprus-based tax and law firms.
What this means in practice
In simple terms, Cyprus is saying:
- If you’re tax-resident in Cyprus and you sell or spend crypto (or swap it for other tokens), your profit on that transaction would normally be taxed at 8%, instead of being pushed into general income or capital gains rules.
- You get one simple rate, but the trade-off is that you can’t use crypto losses to reduce other types of income, and you can’t carry those losses forward to future years.
- If your activity looks more like a business (for example, a trading desk or market-maker), or if the crypto was acquired through mining, commentary indicates that other parts of the tax law may still apply, and the 8% rule will not automatically cover everything.
From a policy perspective, this is less about creating a “crypto loophole” and more about putting crypto on a clear, written footing within the income tax law, with a dedicated article and a defined rate.
Part of a broader tax reset in Cyprus
The crypto-asset rules are only one piece of a larger tax reform that Cyprus plans to roll out around 2025–2026. Other headline measures in the same package include:
- Corporate income tax rising from 12.5% to 15%
- Special defense contribution on actual dividend distributions reduced from 17% to 5%
- Abolition of deemed dividend distribution for post-2026 profits
- Changes to capital gains rules and certain real-estate-related provisions
- Extension of the loss carry-forward period for general tax losses from five to seven years (note: this does not apply to crypto losses under Article 20E)
Professional commentary generally describes this package as an effort to modernize and simplify the tax framework, while aligning with broader international trends, including minimum corporate tax discussions at OECD / EU level.
How does Cyprus compare with other EU crypto tax approaches?
Across the EU, crypto is already taxed, but the approaches differ a lot:
Portugal
- Since 2023, Portugal taxes short-term crypto gains (held <365 days) at 28%, while long-term gains (held >365 days) are generally tax-free for individuals, subject to conditions.
Germany
- Crypto is treated as a “private sale” asset. If you hold for more than one year, gains can be completely tax-free; if you sell sooner, gains are taxed at your personal income tax rate.
France
- Occasional investors face a 30% flat tax on crypto capital gains (income tax plus social charges).
- On top of that, France has just approved a new 1% annual tax on “unproductive wealth” above €2 million, which explicitly includes digital assets such as cryptocurrencies.
Malta
- Guidance indicates that long-term, investment-style crypto holdings can be exempt from capital gains tax, while frequent trading is treated as income and taxed at the usual progressive rates; corporate activity is taxed under standard company tax rules (often mitigated by Malta’s refund system).
Against that backdrop, Cyprus’s single 8% rate on disposals sits at the lower end of headline tax rates for realized crypto gains in the EU, especially compared with flat rates around 26–30% in Italy, France, and others.
At the same time, the strict loss rules and the exclusion of mining/staking income show that Cyprus is not creating a blanket “crypto-tax haven” but is instead carving out one specific, predictable rule for disposal gains, while leaving more complex or business-type activities to the general tax system.
Legislative status: where things stand now
As of late November 2025:
- The tax reform package, including the 8% crypto rule, has been drafted, approved by the Council of Ministers, and submitted to the House of Representatives (Parliament).
- Professional summaries consistently state 1 January 2026 as the intended start date.
- The measures remain subject to parliamentary approval and formal publication before they become law.
This remains a proposed 8% crypto tax under draft Article 20E, so all details reflect the current draft text rather than a final, enacted law.
