Cyprus Tax Reform 2026: New Tax Measures on Digital Assets

The Cyprus 2026 tax reform introduces an 8% tax on cryptocurrencies - Learn what this means for investors and businesses

Cyprus is becoming one of Europe’s most crypto-friendly jurisdictions by taking a major step toward modernising its tax framework with the introduction of a dedicated tax regime for digital assets, specifically on cryptocurrencies. As part of the broader 2026 tax reform package, the government has proposed a clear and transparent system for taxing profits from crypto transactions and confirming that there will be no additional capital gains tax in Cyprus for crypto assets, aligning with European standards and becoming one of the EU member states protecting crypto rules in legislation.

Why the Cyprus Crypto Tax Reform Matters

This marks the first time that cryptocurrencies will have their own dedicated article in the Income Tax Law, providing clarity for individuals and businesses operating in the digital economy. This proactive approach not only provides certainty for investors and businesses, it signals that the country is ready to embrace the digital economy while maintaining compliance with international standards, making it an attractive destination for fintech and blockchain ventures.

What’s Changing Under the Cyprus Crypto Tax Regime?

As of 1 January 2026, Cyprus will implement a flat 8% tax on profits arising from the disposal of crypto assets, applicable to both individuals and companies.

What Counts As a Disposal?

• Selling crypto for fiat currency
• Exchanging one crypto asset for another
• Using crypto to pay for goods or services
• Donations or transfers without consideration

Key Definitions

• Crypto assets: Based on the EU’s Markets in Crypto-Assets Regulation (MiCA) covering digital representations of value or rights stored and transferred via distributed ledger technology.
  
  
• Losses: Can only offset gains from crypto disposals within the same tax year and there is no carrying forward of losses or offset against other income.
  
  
• Mining exception: Crypto obtained through mining is excluded from this regime and taxed under general income tax rules.

Impact on Individuals and Businesses

Individuals: Profits from trading crypto will now be taxed at a flat rate of 8%, simplifying compliance.

Businesses: Companies involved with digital assets gain clarity on tax treatment, enabling better planning and structuring.

Compliance: Accurate record-keeping of acquisition costs, disposal values, and related expenses will be essential.

Contact us to discover how we can help you establish your Cyprus-based business.