The new proposed Article 20E of the Income Tax Law introduces a flat 8% tax rate on profits arising from the disposal of crypto assets. This applies to both individuals and legal entities.
Cyprus is taking an important step toward becoming a more attractive hub for crypto investors and Web3 entrepreneurs. A new tax proposal introduces a flat 8% tax on profits from crypto asset disposals, bringing clarity and structure to an area that has long lacked unified rules.
This guide is designed for crypto founders, investors and international entrepreneurs who want to understand how this new regime works, who it applies to, and why Cyprus may become a preferred jurisdiction for building and scaling a crypto focused business.
Below you will find everything you need to know about the new 8% tax, what counts as a disposal, how gains are calculated, and how our firm can help you position your activities in a compliant, tax efficient way.
Benefits of the New 8% Crypto Tax in Cyprus.
- Simple and predictable taxation
- Clear legal definition of crypto assets
- Fully aligned with EU legislation
- Competitive rate compared to many other EU jurisdictions
- Attractive for long term investors and active traders
- Supports growth of the Web3 sector in Cyprus
What Is Changing in Cyprus?
The new proposed Article 20E of the Income Tax Law introduces a flat 8% tax rate on profits arising from the disposal of crypto assets. This applies to both individuals and legal entities.
The definition of a crypto asset is aligned with EU Regulation 2023 slash 1114, which governs the market in crypto assets across the European Union. This ensures that Cyprus remains consistent with European regulatory standards and reduces confusion about what qualifies as a crypto asset.
The law also provides clear rules for calculating profits, setting out what is considered a disposal and how losses are treated.
What Counts as a Disposal of Crypto Assets?
Under the new framework, a disposal of crypto assets includes the following:
- Selling crypto assets for fiat currency
- Exchanging one crypto asset for another
- Using crypto to pay for goods or services
- Transferring crypto to another person without any payment in return
Any of these actions trigger a taxable event where the eight percent flat tax applies.
How the 8% Crypto Tax Is Calculated?
The tax is imposed on the net profit from disposal. In simple terms:
Profit equals selling price minus acquisition cost minus related expenses.
You only pay tax on the gain, not on the full value of the transaction.
Expenses directly related to acquiring or disposing of the asset may also be deductible, as long as they can be properly documented.
The new law specifies that losses from crypto disposals can only be offset against profits from crypto disposals within the same tax year. No carry forward of losses is allowed. This is important for entrepreneurs who engage in frequent trading or high volume activity.
Who Is Affected by the New Rule?
The 8% Crypto tax applies to:
- Individuals who hold or trade crypto assets
- Companies structured in Cyprus that invest, trade or build in crypto
- International entrepreneurs who choose to establish a Cyprus company for their crypto activities
Non residents may also be affected depending on how and where their crypto activities are structured. However, Cyprus companies owned by international entrepreneurs are fully covered by this regime.
This clarity allows you to plan more effectively and operate within a predictable tax environment.
Why This Matters for Crypto Entrepreneurs Outside Cyprus
For international founders, Cyprus already offers several advantages:
- Favourable corporate tax regime at twelve point five percent
- EU jurisdiction with a stable and transparent regulatory environment
- Access to European banking, professional services and compliance support
- English speaking legal and corporate ecosystem
- Growing tech and fintech community
The introduction of a clear tax rate for crypto profits adds another incentive for Web3 businesses, investors and token projects looking for a reliable European base.
International entrepreneurs can now structure a Cyprus entity knowing in advance how their crypto gains will be taxed, how their reporting obligations work and what level of documentation is expected.
This is especially appealing for:
- Traders and funds
- Web3 start ups
- Token projects
- Nodes, validators and infrastructure operators
- Digital asset consultants
- Global entrepreneurs who receive payments in crypto
The new regime reduces uncertainty and offers a simple model that supports long term planning.
Whether you are launching a new Web3 venture or restructuring an existing operation, we help you benefit from the new regime while staying compliant.
Our services include:
- Cyprus company formation
- Tax planning and optimisation under the new 8% regime
- Bookkeeping and transaction documentation for crypto activities
- Preparing and submitting required filings
- Advising on token projects, payments in crypto and asset transfers
- Ensuring proper operational maintenance to preserve tax advantages
We work closely with international founders and help them structure their operations in a way that is compliant, efficient and ready to scale.