Nicosia, Cyprus. Cyprus will introduce a dedicated tax regime for crypto assets from January 1, 2026, applying a flat 8 per cent rate on realised profits. The move positions the country among Europe’s more competitive jurisdictions for cryptocurrency investors.
EU regulatory backdrop
The change comes as the European Union has brought much of the crypto market under a common regulatory framework through the Markets in Crypto-Assets Regulation, known as MiCA, while leaving taxation largely to individual member states.
MiCA sets uniform EU rules for crypto assets not already covered by existing financial services legislation, including provisions on transparency, disclosure, authorisation and supervision. The framework became applicable to issuers of asset-referenced tokens and e-money tokens in June 2024, while rules for crypto-asset service providers applied from December 2024.
Tax treatment across Europe
Tax treatment remains fragmented across Europe, leaving investors subject to different outcomes depending on the country. Some jurisdictions offer exemptions for long-term holders, while others tax gains at rates of 30 per cent or more.
Scope of Cyprus regime
For Cyprus, the new framework marks the first time crypto assets such as Bitcoin and Ethereum have been brought under a specific tax regime.
According to PwC Cyprus’ tax reform overview, the 8 per cent tax applies to gains from the sale of crypto assets, donations of crypto assets, exchanges of one crypto asset for another, and the use of crypto assets as a means of payment.
The special 8 per cent treatment does not apply to gains from crypto assets acquired through mining.
Loss rules and timing
The rules limit the treatment of losses. Losses from crypto assets may only be offset against gains from other crypto assets of the same person in the same year. They cannot be carried forward, nor can they be offset through group relief.
The framework is marked by a low flat rate, no tax on unrealised gains, and greater clarity in an area that has often been treated unevenly across Europe.
From January 1, 2026, the EU’s DAC8 rules will also enter into force, expanding tax transparency to crypto-asset transactions.
