Cyprus Crypto Tax (8%) from 2026: A Global Perspective

Crypto taxation has moved decisively from regulatory grey area to mainstream tax policy. Across Europe, the UK, the United States, and the Middle East, governments have now adopted increasingly formal positions on how crypto gains are taxed, when taxation is triggered, and how activity is classified.

Against this global backdrop, Cyprus has introduced a flat 8% Cyprus crypto tax on gains from the disposal of crypto-assets, effective 1 January 2026. Before assessing what this reform means in practice, it is important to understand how crypto is currently taxed in other major jurisdictions.

Crypto Taxation in Major Jurisdictions

Germany

Germany treats crypto-assets held by private individuals as private assets. Capital gains are fully exempt from taxation where the crypto is held for more than one year. Where disposal occurs within one year, gains are taxable as other income, subject to an annual €1,000 exemption threshold (Freigrenze). This threshold operates as a cliff edge: once exceeded, the entire gain becomes taxable.

This regime can be particularly attractive for long-term holders. However, it is highly fact-dependent. Where trading activity becomes frequent, organised, or professional in nature, there is a risk of reclassification as commercial activity, potentially subjecting gains to full income taxation.

France

France generally taxes individual crypto gains under the flat tax regime (PFU) at 30%, comprising 12.8% income tax and 17.2% social contributions.

For private individuals managing their own assets, crypto-to-crypto exchanges are not taxable events. Taxation is triggered when crypto is disposed of for fiat currency or used to acquire goods or services. Where activity is considered professional rather than occasional, alternative tax rules may apply.

While administratively straightforward, the French system results in a relatively high effective tax burden, particularly for active investors.

Ireland

Ireland treats crypto-asset disposals as subject to Capital Gains Tax at 33%, one of the highest CGT rates in Europe. There is no dedicated crypto relief regime, and standard CGT principles apply.

Compliance expectations are strict, record-keeping requirements are significant, and enforcement has increased. For individuals and founders with meaningful crypto exposure, Ireland is widely regarded as a high-tax jurisdiction in this area.

Spain

Spain taxes crypto gains under the savings income regime, with progressive rates up to 28%. Taxable events include disposals for fiat and crypto-to-crypto exchanges.

The Spanish framework is comprehensive and clearly defined, but relatively inflexible, offering limited planning opportunities for individuals with large or actively managed crypto portfolios.

Italy

Italy taxes crypto capital gains at 26%, subject to a €2,000 annual exemption. Recent changes in the legislation have removed the €2.000 threshold and increased the capital gains tax to 33%. Extensive reporting obligations apply, including mandatory disclosure of foreign-held crypto assets, even where no tax is ultimately payable.

The Italian regime has evolved rapidly in recent years, reflecting a clear trend toward greater formalisation and regulatory scrutiny rather than preferential treatment.

Netherlands

The Netherlands does not tax crypto based on realised gains. Instead, crypto holdings are included in Box 3, under which individuals are taxed on a deemed return, irrespective of actual performance.

Box 3 income is taxed at 36%, but the taxable base is a presumed yield rather than actual gains. This approach has been widely criticised, particularly in volatile markets, for taxing unrealised or even non-existent returns.

United Kingdom

The UK treats crypto-assets as property for tax purposes. Capital gains are taxed at 10% or 20% (18% or 24% for disposals after 30 October 2024), depending on the individual’s income level. Crypto-to-crypto exchanges are taxable events, and detailed transaction records must be maintained.

The Annual Exempt Amount is £3,000 for the 2024/25 and 2025/26 tax years. Losses can generally be carried forward, but compliance is complex, and HMRC enforcement and data-matching activity in relation to crypto holdings has increased materially in recent years.

United States

In the United States, crypto-assets are treated as property for federal tax purposes.

Short-term gains, where assets are held for twelve months or less, are taxed as ordinary income at rates of up to 37% federally. Long-term gains are taxed at preferential rates of 0%, 15%, or 20%, depending on income levels, with possible state taxes in addition.

The US regime is among the most complex globally, with extensive reporting obligations and increasingly aggressive enforcement.

United Arab Emirates

The UAE does not currently tax crypto trading carried out by individuals in their personal capacity. There is no personal income tax or capital gains tax, which has made the UAE highly attractive to crypto investors.

However, since June 2023, a 9% federal corporate tax applies to companies with taxable profits exceeding AED 375,000. While this does not affect private individuals, it is directly relevant for corporate crypto activity, structured operations, and investment vehicles. The UAE regime therefore draws a clear distinction between personal and corporate activity, with substance and classification playing an increasingly important role.

The Cyprus Crypto Tax Reform from 2026

Against this international landscape, Cyprus has introduced a new Article 20E into its Income Tax Law.

From 1 January 2026, the Cyprus crypto tax framework provides that gains from the disposal of crypto-assets will be taxed at a flat rate of 8%, applying to both individuals and companies, with no grandfathering and no transitional relief.

Crypto-assets are defined by direct reference to EU Regulation 2023/1114 (MiCA), aligning the Cyprus tax framework with EU regulatory definitions and avoiding jurisdiction-specific interpretation.

A taxable disposal includes the sale of crypto for fiat, the exchange of one crypto-asset for another, the use of crypto as a means of payment, and the donation of crypto-assets.

Losses arising from crypto disposals may only be offset against crypto gains in the same tax year and cannot be carried forward. General loss relief provisions do not apply, creating a ring-fenced and self-contained regime.

Crypto acquired through mining is excluded from Article 20E and taxed under ordinary income or trading provisions. Any crypto gains falling outside Article 20E are taxed under the general rules of the Income Tax Law.

Administrative Application and Expected Guidance

While the primary legislation establishes a clear statutory framework, the practical application of the Cyprus crypto tax regime will depend on administrative guidance issued by the Cyprus Tax Department.

As is customary with new tax provisions, circulars or interpretative guidance are expected to clarify matters such as valuation methodology at the time of disposal, documentation and record-keeping standards, reporting and compliance procedures, audit approach, and interaction with existing tax filings.

Until such guidance is issued, certain elements of the regime will require careful interpretation based on general tax principles and established administrative practice. This approach is consistent with Cyprus’ historical method of implementing new tax regimes, where clarity is progressively enhanced through secondary guidance rather than frequent legislative amendment.

Where Cyprus Ultimately Sits

Viewed against the global crypto tax landscape, Cyprus is not positioning itself as a zero-tax or opportunistic jurisdiction. Instead, the proposed Cyprus crypto tax framework reflects a deliberate policy choice focused on balance, stability, and simplicity.

The introduction of a flat 8% tax rate, embedded directly in primary legislation and aligned with EU regulatory definitions under MiCA, provides legal certainty that is increasingly valued by founders and high-net-worth individuals. At the same time, the use of a standalone and ring-fenced regime indicates a clear intention to simplify compliance, limit interpretational ambiguity, and promote consistency in application over time.

Cyprus may not deliver the lowest possible tax outcome in every scenario. However, when assessed on a risk-adjusted basis, it offers a framework that combines a competitive tax rate by international standards with structural stability, administrative simplicity, and full EU credibility. When coupled with Cyprus tax residency and the Non-Dom regime, this approach positions Cyprus as a sustainable and stable jurisdiction for managing crypto gains alongside broader investment and business activity.

How Nikita & Partners Can Assist

Nikita & Partners advises companies, investors, and groups on Cyprus crypto tax planning, relocation and tax residency structuring, and the integration of crypto activity within Cyprus corporate and investment frameworks, with a focus on preparing proactively for the 2026 regime as guidance develops.

This article is general in nature and does not constitute tax advice. Specific advice should be obtained based on individual circumstances.