Cyprus Crypto Tax Guide: Everything Investors Need to Know

Cryptocurrency continues to boom in Cyprus, attracting traders, investors, startups, and global digital nomads. 

But with rapid growth comes an essential question:

How does Cyprus tax crypto?

The answer is surprisingly simple — and incredibly attractive.

Cyprus remains one of Europe’s most crypto-friendly jurisdictions, offering 0% tax on most crypto gains, clear treatment for income-generating activities, and favourable corporate structures for international investors. This beautifully refined guide explains everything you need to know this day and age.

🌟 1. Is Crypto Taxed in Cyprus? — The Quick Overview

Cyprus does not classify cryptocurrency as real estate or traditional share capital, meaning most crypto transactions do not fall under capital gains tax.

✔ Crypto is NOT taxed when:

• You buy and hold long term

• You casually trade without business-level frequency

• You swap between tokens (BTC → ETH → SOL)

• You sell after months or years as a passive investor

This makes Cyprus one of the most favourable crypto environments in the EU.

✘ Crypto IS taxed when:

• You trade as a business or full-time activity

• You receive crypto as income (staking, mining, airdrops)

• You operate a crypto-related company

Understanding the difference between investment and income is the heart of Cyprus crypto taxation.

💼 2. Long-Term Crypto Investors: 0% Tax Explained

If you purchase cryptocurrency with the intention to hold, Cyprus treats it as movable property. Because Cyprus only taxes capital gains on immovable property (real estate), long-term crypto investments fall under:

⭐ 0% Capital Gains Tax

• Buy Bitcoin → Hold → Sell later → No tax

• Buy Ethereum → Move to a cold wallet → Sell years later → No tax

This rule applies to:

• Bitcoin

• Ethereum

• Altcoins

• NFTs (collected, not traded frequently)

For most residents, this is the single biggest tax advantage Cyprus offers.

📊 3. When Crypto Becomes Taxable in Cyprus

A) Crypto Trading as Business Activity

If your crypto activity resembles a professional operation, it is taxed as income.

Indicators include:

• Daily or highly frequent trades

• Crypto as your main income source

• Use of high leverage

• Running algorithmic or systematic strategies

In such cases, profits are taxed under Cyprus income tax brackets:

Business-related expenses (software, equipment, electricity, subscriptions) can be deducted.

B) Staking, Mining, Airdrops & Yield Rewards

These fall under taxable income because they are earned, not invested.

If you later sell the rewarded tokens, that sale is generally tax-free, but the initial value when received is considered income.

🏢 4. Corporate Crypto Taxation in Cyprus

Cyprus is a popular incorporation hub for crypto startups, exchanges, Web3 companies, and fintech firms thanks to its highly competitive tax framework.

Corporate Tax Rate: 12.5%

One of the lowest in the EU.

Companies must pay corporate tax on:

• Exchange fees

• Trading profits (as business activity)

• Mining or staking operations

• NFT marketplace revenue

• Consultancy or development services paid in crypto

Corporate entities may also issue dividends, which offer major advantages under the Non-Dom regime.

🖼️ 5. How NFTs Are Taxed in Cyprus

NFT taxation follows activity type:

• Collecting NFTs (long-term) → 0% tax

• Trading NFTs frequently → income tax or corporate tax

• Creating and selling NFTs → treated as business income

Artists, developers, and NFT project owners must consider this carefully.

🌍 6. The Non-Dom Regime: A Huge Advantage for Crypto Investors

Cyprus offers one of Europe’s best tax residency setups: the Non-Domicile regime.

If you are a foreigner living in Cyprus and qualify as a tax resident, you benefit from:

• 0% tax on dividends

• 0% tax on interest income

• 0% Special Defence Contribution (SDC)

This is extremely valuable if you structure your crypto activities through a Cyprus company and receive profits as dividends instead of salary.

🧾 7. Record Keeping Requirements

Even though long-term crypto gains are tax-free, proper records should always be maintained:

• Transaction history

• Exchange statements

• Wallet addresses

• Dates and times

• EUR value at transaction time

Popular tools include Koinly, CoinTracking, and Accointing.

📝 8. Filing Crypto Taxes in Cyprus: How It Works

Most long-term investors do not need to file anything specifically for crypto.
However, if your crypto is categorized as income, you must:

1. Register with the Tax Department

2. Keep accurate records

3. Declare income under the appropriate tax form (TD1 for individuals, TD4 for companies)

4. Submit documents if requested

5. Pay the relevant tax rate

Tax advisors familiar with blockchain are highly recommended for businesses and high-volume traders.

⚠️ 9. Common Mistakes to Avoid

❌ Assuming ALL crypto is tax-free

❌ Trading daily while thinking you’re a “long-term investor”

❌ Not declaring staking or mining income

❌ Poor record keeping

❌ Ignoring the Non-Dom benefits

❌ Using anonymous wallets to hide activity (EU AML rules prevent this)

✅ Conclusion: Cyprus Remains One of Europe’s Best Crypto Tax Jurisdictions

For most individuals, Cyprus provides a clear, simple, and extremely advantageous tax framework:

• 0% tax on long-term crypto gains

• Fair rules for income-based activities

• Attractive corporate structures

• Massive benefits for Non-Dom residents

Whether you're a passive investor, a Web3 entrepreneur, or a global trader relocating to the island, Cyprus offers clarity, stability, and one of the most crypto-friendly environments in Europe.