Cyprus crypto tax in 2026: the 8% Article 20E regime

Cyprus changed its crypto-tax rules from 1 January 2026. Profit from disposing of a crypto-asset not acquired through mining is now subject to a special 8% income-tax regime under Article 20E. The official Tax Department FAQ confirms that the rule applies to individuals and companies, to private and business disposals, and uses FIFO where the same crypto-asset was acquired at different times and costs. Older claims that private crypto gains are simply outside Cyprus tax are therefore not a reliable guide for 2026.

What changed on 1 January 2026?

Before 2026, Cyprus had no crypto-specific disposal regime. Analysis often focused on whether a gain was trading income under the badges of trade or fell outside the narrow Capital Gains Tax rules for Cyprus immovable property and property-rich companies. Article 20E now supplies a specific rule for gains from the disposal of crypto-assets.

From 1 January 2026, gains on covered crypto-assets not acquired through mining are taxed at a flat 8%. The Cyprus Tax Department states that Article 20E applies whether the disposer is an individual or company and whether the disposal occurs inside or outside a business. The old private-investor-versus-trader distinction is therefore not a gateway to zero tax for a covered 2026 disposal.

A report spanning both years must split by disposal date. A 2025 acquisition can enter the cost of a 2026 disposal, but the new rate applies because the disposal occurs in 2026.

Which crypto-assets and disposals are covered?

The Tax Department links “crypto-asset” to the broad definition in the EU Markets in Crypto-Assets Regulation. Its FAQ lists cryptocurrencies such as Bitcoin, utility tokens, asset-referenced tokens and e-money tokens such as Tether. It says NFTs are generally not included. “Generally” matters: a fractional, interchangeable or economically fungible token needs its actual legal features reviewed.

A disposal includes:

• sale of crypto for euro or another fiat currency;
• exchange of one crypto-asset for another;
• use of crypto as payment for goods or services;
• gift, including the inheritance treatment described in the FAQ.

An unrealised market-value increase is not taxed merely because the year ends. Moving the same beneficially owned asset between personal wallets should preserve its acquisition history rather than create a sale. A bridge, wrapper, liquidity-pool token or protocol receipt may alter the legal asset and cannot be marked as an internal transfer from its label alone.

A crypto-to-crypto swap is expressly a disposal. Lack of a euro cash receipt does not defer the result. The euro market value of the asset surrendered at the swap time, less its acquisition cost and direct transaction costs, determines the gain.

FIFO, euro value and the 8% calculation

The official FAQ adopts FIFO where units of the same crypto-asset were acquired at different times and costs. The oldest available units are treated as disposed first. This is not an optional comparison between FIFO, LIFO and average cost.

1. Identify the crypto-asset disposed of.
2. Order available acquisition lots chronologically.
3. Match the oldest units under FIFO.
4. Determine euro proceeds or euro fair market value at disposal.
5. Subtract matched acquisition cost and direct transaction costs.
6. Net eligible same-year crypto gains and losses.
7. Apply 8% to the positive Article 20E result.

Example: a taxpayer buys 1 ETH for EUR 2,000 and later 1 ETH for EUR 2,800. They sell 1.5 ETH for EUR 4,800 and incur EUR 30 direct selling costs. FIFO cost is EUR 2,000 plus EUR 1,400 for half of the second lot. The profit is EUR 1,370: EUR 4,800 minus EUR 3,400 minus EUR 30. Before same-year eligible crypto losses, the special tax is EUR 109.60.

Worked annual example: a swap, a loss and an unsold balance

The following invented figures illustrate the calculation for a Cyprus-resident individual with covered purchased assets, no mining and no other Article 20E disposals. They are not market-price forecasts.

The illustrative Article 20E tax is EUR 1,740 × 8% = EUR 139.20. The BTC swap contributes EUR 880 even though no euro was withdrawn. The remaining 0.5 ETH retains EUR 1,400 acquisition cost; its year-end price increase is not another disposal in this example. Store the received token's acquisition record separately instead of losing it when the BTC sale is recorded.

For a gift, the FAQ uses market value at the gift time less acquisition cost and direct costs. For a related-party sale, the sale price must represent market value under Article 33. Preserve the exchange price, quote currency, euro conversion and timestamp. A fallback rate of 1 is correct only when the amount is already in euro.

Losses and deductions stay inside a narrow pool

A loss from disposing of covered crypto-assets can offset profit from other covered crypto-asset disposals of the same person in the same year. It cannot be carried forward. It cannot offset other income or a prior-year loss, and companies cannot use group relief to move the crypto loss to another company.

Article 20E permits acquisition cost and direct transaction costs in the disposal calculation. The Tax Department says no other expenditure can be deducted under the special regime, even if connected with the disposal. Company notional-interest deductions and general business deductions do not enter this special calculation.

This makes classification important. Mining assets, excluded NFTs, derivatives and service income must not be forced into the Article 20E pool merely to obtain the 8% rate. Likewise, a covered business disposal does not leave Article 20E just because the taxpayer is a company.

Missing basis must not be converted to zero. The report should reconstruct prior wallets and purchases where evidence exists, mark the unresolved quantity “not computable,” and continue calculating complete FIFO lots. A zero-cost placeholder would inflate both gain and tax.

Mining, staking, DeFi and derivatives

The special 8% regime does not apply to disposals of crypto acquired through mining. The Tax Department treats mining as a business activity and taxes the gains under the general Income Tax Law at normal rates. Its current FAQ places taxation at disposal of the mined assets; generating or acquiring the coins does not itself determine that tax point.

Keep a separate mining schedule recording quantities, disposal proceeds or market value, and the mining costs attributable to the coins disposed of. The FAQ allows qualifying direct transaction costs and other expenses incurred wholly and exclusively to earn that gain, including the applicable share of equipment capital allowances. Do not automatically substitute the coins' market value on receipt for these documented mining costs.

The official FAQ says staking profit is taxed on an accrual basis during the staking period. It is measured at the earlier of the end of the staking arrangement, when the holder exits and receives the reward, or the end of each tax year, using the crypto/euro rate at that date. A later disposal needs an acquisition value connected to the amount already recognised.

The reward itself is not taxed at the special 8% disposal rate. The FAQ treats staking income under the general income-tax rules. Its later covered disposal falls under Article 20E, with the value already recognised as staking income carried into the disposal calculation. Amounts previously recognised during a continuing arrangement must also be reconciled at the next valuation.

For example, assume a completed arrangement produces a reward valued at EUR 300 when recognised. It is subsequently sold for EUR 360, with EUR 4 direct selling costs. The later disposal profit is EUR 360 − EUR 300 − EUR 4 = EUR 56, giving EUR 4.48 under Article 20E before other eligible losses. The EUR 300 receipt belongs in the separate general-income calculation; this example does not assume an individual's general tax rate.

DeFi is not one legal transaction type. Lending interest, liquidity fees, governance rewards, wrapping and token exchanges must be separated. The existence of a token does not prove Article 20E treatment for the receipt itself.

Futures and perpetual contracts require their actual rights and settlement terms. Keep contract settlements, position closures, liquidations, funding and fees separate from purchases and sales of coins. A position-opening confirmation and a balance snapshot do not, by themselves, show an additional realised profit. Check the broker's settlement ledger before using a reconstructed result.

Residence, migration and foreign exit tax

Selecting Cyprus in software does not establish tax residence. Residence under the 183-day or qualified 60-day rule requires the full statutory facts. Treaty residence and the end of residence in another country must also be checked.

The official FAQ also includes non-resident individuals who dispose while physically present in Cyprus, and non-resident companies disposing through a Cyprus permanent establishment. A short visit therefore deserves a specific residence, source and treaty review; neither an overseas exchange account nor non-dom status alone establishes exemption.

The Tax Department FAQ contains special rules for crypto held when a person or company moves to Cyprus after foreign exit taxation. For an individual, foreign exit tax may be creditable under Articles 35 or 36, subject to treaty status and limits. Company transfers from another EU Member State and from a third country follow different basis and credit mechanics. Do not apply a universal market-value step-up.

For companies, Cyprus exit-tax rules can apply on specified transfers of assets, business, permanent establishment or residence. The FAQ says the individual case does not have the same Cyprus exit charge. Migration positions should remain a separate reconciliation with foreign returns.

Return, provisional tax and record workflow

Article 20E gains will be declared separately in a dedicated part of the income-tax return for tax year 2026 and later. The Tax Department says income tax on crypto profit is paid through provisional tax in two instalments, due 31 July and 31 December of the relevant year. The taxpayer must estimate taxable income for those payments.

From tax year 2026, individual returns use the Tax For All system. Filing obligations and the final deadline depend on the taxpayer and current instructions; do not reuse the 31 October 2026 deadline for the 2025 return as a permanent 2026 rule.

1. Confirm residence and taxpayer type.
2. Split pre-2026 and post-2025 disposals.
3. Identify covered crypto-assets and excluded instruments.
4. Separate mining, staking, services and derivatives.
5. Reconcile all exchanges, wallets and opening balances.
6. Apply FIFO per crypto-asset.
7. Value every disposal in euro.
8. Deduct only acquisition cost and direct transaction costs.
9. Offset losses only within the same person's 2026 crypto pool.
10. Calculate provisional tax and prepare the dedicated return section.

What to give your accountant

Deliver a disposal schedule, the original exchange files, the opening acquisition lots and a list of wallets you own. Attach separate mining and staking schedules, euro valuation evidence, direct-cost receipts and any foreign exit-tax documents. Add a short reconciliation showing how the year-end quantities follow from opening balance, acquisitions, rewards, disposals and transfers. This lets the reviewer test the figures instead of relying on a final tax total alone.

If the provisional estimate changes during 2026, the FAQ allows a revised calculation up to 31 December. Distinguish this payment process from the deadline for filing the final return. A trading loss booked in a later year does not reopen the earlier year's same-year crypto loss pool.

The DAC8 guide explains why exchange information does not equal the Article 20E calculation. Compare neighbouring systems only through their own rules: see the Greece guide, Malta guide and global reporting guide.

Frequently asked questions

Official Cyprus sources

• Cyprus Tax Department: crypto taxation FAQ from 1 January 2026
• Cyprus Ministry of Finance: 8% crypto regime and losses
• Cyprus Tax Department: Tax Reform 2026
• Cyprus Tax Department: individual income-tax return

Content reviewed on 9 October 2026 using the Tax Department's indexed official FAQ and reform material. The Department offers a formal tax-ruling process for unresolved Article 20E cases.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.