Cyprus Crypto Tax 2026 — Article 20E and the 8% Flat Rate

Before 1 January 2026, the tax treatment of crypto in Cyprus turned on whether your activity counted as trading. If the Tax Department applied the badges-of-trade analysis and concluded you were a trader, your gains were ordinary income at up to 35% for individuals or 15% corporate income tax. If you were an investor, some advisors argued the gains were analogous to securities and potentially outside the charge entirely. The result was divergent professional opinions, inconsistent filing positions, and uncertainty for every taxpayer holding crypto.

Article 20E replaced that with a single statutory rule: 8% flat on net profits from disposals of crypto-assets, effective from 1 January 2026. The old badges-of-trade analysis no longer decides the rate for disposal gains. Whether you bought one Bitcoin or trade daily, the rate on disposal profits is 8%.

There is no grandfathering. Disposals before 1 January 2026 remain under the prior regime — the old trading analysis still applies to those transactions. This means your records must segregate pre-2026 and post-2026 positions. A Bitcoin bought in 2021 and partially sold in November 2025 falls under the old regime for that sale. The remaining coins, if sold after 1 January 2026, fall under Article 20E at 8%.

The crypto-asset definition in Article 20E is aligned to MiCA — Regulation (EU) 2023/1114, Article 3(1)(5). This means the scope follows the EU regulatory definition, not a domestic invention, and it will track any future amendments to the MiCA framework automatically.

Notwithstanding the general loss rules in Article 13 of the Income Tax Law, losses on crypto-asset disposals can be set off only against profits from crypto-asset disposals, and only within the same tax year. They cannot be carried forward. They cannot be surrendered as group relief. They cannot offset against salary, dividend, rental, or any other income source.

This is the most expensive trap in the regime. Consider a taxpayer with €60,000 of crypto disposal gains in 2026 and €40,000 of crypto disposal losses in 2027. The 2026 gain produces €4,800 of tax at 8%. The 2027 loss cannot offset the 2026 gain — it belongs to a different tax year. The taxpayer pays the full €4,800 and gets nothing for the €40,000 loss, which vanishes at the year end.

The practical consequence is that the timing of when you crystallise a loss matters enormously. If you have gains in 2026, selling a losing position before 31 December 2026 lets you offset within the same year — reducing the taxable gain before the 8% applies. Waiting until January means the loss belongs to the next year, and if there are no gains that year, the loss is gone.

Year-end position planning is not optional under Article 20E. Every taxpayer with material crypto gains should review their portfolio before 31 December each year and assess whether crystallising losses within the same tax year produces a better outcome than carrying the position forward.

Mining rewards are explicitly excluded from Article 20E. When you mine crypto, the reward is ordinary income at the point of receipt — the euro value on the day the coin lands in your wallet. For individuals, this means progressive rates up to 35%. For companies, it is 15% corporate income tax. Hardware, electricity and hosting costs remain deductible against the mining revenue.

The second leg — the one most guides miss — is that when you later sell those mined coins, that sale is a disposal under Article 20E. The 8% applies to the difference between the market value on the day you mined the coin (already taxed as income) and the eventual sale price. Miners pay income tax on receipt and 8% on any appreciation after that.

Two taxable moments, two records. The mining reward is reported as income on your TD1 (individual) or TD4 (company) return. The disposal gain is reported separately under Article 20E. If you mine through a company, the income rate drops from 35% to 15% CIT, but the 8% disposal rate is identical either way.

Staking rewards, lending interest and DeFi yield are all taxed as ordinary income at the point of receipt — the euro value on the day the reward lands in your wallet. For individuals, this means up to 35%. For companies, 15% CIT. When those tokens are later disposed of, any gain above the receipt value is taxed separately at 8% under Article 20E.

This is a two-moment treatment requiring two cost-basis entries per reward event. The first entry records the income at the euro value on receipt. The second entry uses that same value as the cost basis when you eventually sell the token. Miss the first entry, and you have no defensible cost basis for the disposal — the Tax Department will treat the entire sale proceeds as gain.

A liquidity-pool position that rebases daily generates a new income event every single day. Over a year, that is 365 reward events, each needing a dated euro-value entry and a separate cost-basis record. Multiply by several positions and the record-keeping burden becomes the compliance problem, not the tax calculation itself.

The records that survive a Tax Department review are dated wallet screenshots or exchange export files showing the euro value at the moment of each credit. CSV exports from Binance, Kraken or Coinbase are acceptable if they include the transaction date, asset, quantity and euro equivalent. Portfolio tools like CoinTracker, Koinly or Accointing that flag each credit and produce a per-event cost-basis report are worth the subscription cost — manual tracking of daily rebasing positions is impractical.

SDC at 17% may also apply on interest income from crypto lending, since the Special Defence Contribution applies to interest earned by Cyprus tax residents. Staking rewards may or may not be classified as interest depending on the protocol structure — get a ruling if the amounts are material.

A fungible-series NFT — a 10,000-piece drop where pieces are interchangeable in practice — functions as a crypto-asset under MiCA, Regulation (EU) 2023/1114, Article 3(1)(5). It sits inside Article 20E at 8%. A unique, one-of-one artwork NFT falls outside MiCA's scope, so treatment reverts to general income tax principles.

The distinction is substance, not the label "NFT". A 10,000-piece PFP collection where each token carries different traits but the pieces trade as a fungible asset class is inside the 8% regime. A single digital painting by a named artist, minted as one token with no series counterpart, is outside.

For high-volume flipping of fungible-series NFTs — buying and selling dozens of pieces per month — obtain a tax ruling from the Tax Department before filing. The Commissioner may treat systematic flipping as a trading activity under general income tax principles rather than Article 20E, which would push the rate from 8% to up to 35% for individuals. A ruling settles the question before the return is filed, not after.

The most common misconception we see is that non-dom status exempts crypto gains. It does not. Article 20E is income tax, and it applies regardless of domicile. Non-dom status exempts SDC — the Special Defence Contribution — on dividends and passive income only. The 8% charge on crypto disposal profits is not SDC; it is income tax under Article 20E.

What non-dom status does still give a crypto holder is 0% SDC on dividends extracted from a crypto-holding company. If you hold your crypto portfolio through a Cyprus company, the company pays 8% on disposal gains under Article 20E. When the company distributes the after-tax profit as a dividend to a non-dom shareholder, the SDC rate is 0%. A domiciled shareholder pays 5% SDC on the same dividend.

This is the structuring point that actually matters: the 8% disposal rate is the same whether you hold personally or through a company. The difference is in extraction — 0% SDC for non-doms versus 5% for domiciled shareholders — and in the rate on mining and staking income: 15% CIT in a company versus up to 35% personally.

Both individuals and companies are inside the 8% on crypto disposals under Article 20E, so the disposal rate is not the deciding factor when choosing a structure. What differs is everything around it.

Mining and staking income is taxed at 15% CIT inside a company versus up to 35% at the top marginal rate for an individual. On €100,000 of staking rewards, that is €15,000 in a company versus €35,000 personally — a €20,000 difference before extraction. Hardware, electricity and hosting are deductible in both structures, but a company can depreciate mining rigs over their useful life and carry losses forward against future mining revenue.

Deductibility of costs is broader in a company. A corporate structure can deduct software subscriptions, portfolio management tools, office costs and staff salaries against trading or mining income. An individual can deduct expenses exclusively and necessarily incurred in connection with the disposal, but the threshold for personal deductions is narrower and the Tax Department scrutinises them more closely.

The compliance burden is heavier in a company: audited financial statements, TD4 corporate tax returns, VAT registration if services are provided, and substance requirements if the company holds a CASP licence from CySEC. A personal holder files on the TD1 return and has no audit obligation.

Extraction is the final variable. After the 8% disposal tax, the company distributes the after-tax profit as a dividend. Non-dom shareholders pay 0% SDC on that dividend; domiciled shareholders pay 5%. An individual who holds crypto personally pays the 8% and keeps the rest — no extraction layer, no SDC. The decision framework: for disposal-only activity with modest gains, personal holding is simpler. For active mining, staking or DeFi yield at meaningful scale, the 15% vs 35% income rate differential and broader deductibility usually justify the corporate structure.

Pre-2026 positions

There is no grandfathering under Article 20E. Disposals before 1 January 2026 remain under the prior regime, which turned on whether the activity constituted trading under the badges-of-trade analysis. If the Tax Department concluded you were an investor rather than a trader, some advisors took the position that gains were outside the charge. That analysis is no longer relevant for post-2026 disposals — but it still governs any pre-2026 sale.

This means your records must segregate pre-2026 and post-2026 positions. A Bitcoin bought in 2021 and sold in November 2025 is taxed under the old regime. The same Bitcoin, if held until February 2026 and then sold, falls under Article 20E at 8%. Your acquisition cost, allowable expenses and the disposal date determine which regime applies — and you need contemporaneous records for both periods if the Tax Department asks.

Segregated record-keeping means separate spreadsheets or portfolio tool tags for pre-2026 and post-2026 disposals, with acquisition dates, cost basis in euros at the time of acquisition, and disposal dates clearly identified. If you used a cost-averaging method for pre-2026 positions, maintain that method for those disposals only — Article 20E disposals are calculated on a per-transaction basis.

CASP licensing after 1 July 2026

The MiCA transitional period closed on 1 July 2026. CySEC's deadline for existing Cyprus CASPs (Crypto-Asset Service Providers) to file their MiCA authorisation application was 27 February 2026. Firms that did not apply by that date were required to submit wind-down plans to CySEC. A pending application does not extend the right to operate — only firms holding a CySEC MiCA authorisation may provide crypto-asset services from Cyprus after the transitional period ends.

If you operate a crypto business from Cyprus, your licensing status and your tax status are separate issues. Article 20E applies to disposal gains regardless of whether you hold a CASP licence. But if your business involves providing crypto-asset services to others — custody, exchange, advisory, portfolio management — you need the CySEC authorisation to operate lawfully, and the absence of one does not exempt you from the 8% tax on your own disposal gains.

See our CASP licensing guide → for the full application process, timeline and costs.