Cyprus Introduces Dedicated 8% Crypto Tax Regime
As part of the 2026 tax reform, Cyprus introduced a dedicated tax regime for cryptocurrency gains with an 8% flat rate. Here is how it works and who qualifies.
Cyprus has introduced a dedicated tax framework for cryptocurrency and digital asset gains as part of its 2026 tax reform package. The new Article 20E of the Income Tax Law sets a flat 8% tax rate on profits from the disposal of crypto assets, effective 1 January 2026, making Cyprus one of the most competitive EU jurisdictions for crypto investors. Parliament approved the measure on 22 December 2025 and it was published in the Official Gazette on 31 December 2025.
Key details
Rate: 8% flat rate on profits from the disposal of crypto assets.
Who pays: Article 20E applies to "any person", meaning both individuals and companies. It covers all Cyprus tax residents, including non-doms. Non-dom status exempts the Special Defence Contribution, not this income tax, so non-doms are subject to the 8%. Non-residents are taxed on Cyprus-source crypto profits only.
What is a disposal: Sale for fiat, crypto-to-crypto exchange, using crypto to pay for goods or services, and gifting. Each disposal is a separate taxable event.
Losses: Crypto losses offset only crypto gains in the same tax year. There is no carry-forward, no carry-back, and no offset against other income.
Mining: Excluded from Article 20E and taxed under the ordinary Income Tax Law as business activity.
Definition: Crypto assets are defined by direct reference to the EU Markets in Crypto-Assets Regulation (MiCA, Regulation 2023/1114).
Why this matters
Portugal, which was the go-to EU destination for crypto-friendly taxation, eliminated its crypto tax exemption in 2023. Since then, crypto traders and investors have been looking for alternatives within the EU. Cyprus at 8% is now arguably the most attractive option in the EU, especially when combined with the non-dom regime (which can exempt certain investment income from SDC).
For comparison:
- Portugal: standard capital gains rate (28%) now applies to crypto
- Malta: technically 0% on long-held crypto for individuals, but practical compliance is complex
- Germany: 0% after 1-year holding period, but short-term gains taxed at up to 45%
- Cyprus: 8% flat rate regardless of holding period
What to watch
The headline rate and core rules are settled, but the Cyprus Tax Department has not yet issued detailed guidance on every edge case. Open questions include:
- How DeFi yields, staking rewards, and airdrops will be classified (likely income on receipt, then an 8% disposal event on later sale)
- The interaction with the existing securities exemption for tokens that may qualify as financial instruments under MiFID II (these fall outside the MiCA definition)
- Valuation and record-keeping standards for high-frequency traders
For a full breakdown of who pays, how non-doms are affected, and the loss and mining rules, see our guide: Cyprus Crypto Tax 2026: The 8% Flat Rate Explained.