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crypto assets taxation

Taxation of profits from crypto asset transactions

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Article 20E of The Income Tax Law of 2002 (118(I)/2002) – Taxation of profits from crypto asset transactions

The recent Cyprus tax reform effective since the 1st of January 2026 has introduced a special mode of taxation for crypto assets. Profits of any person (physical or legal) arising from the disposal of crypto currencies are subject to taxation at a rate of 8%.

Crypto Asset

The term “crypto asset” is defined according to the Regulation (EU) 2023/1114 (“MiCAR”) as a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology.

The three main categories of crypto assets that fall within MiCAR’s scope based on their characteristics are:

  1. E-Money Tokens (“EMT”) which are regulated under Title IV of MICAR and demonstrate similarities in terms of economic function and regulation, with electronic money. An EMT is a crypto asset that purports to maintain a stable value by referencing the value of one official currency such as the USD and the Euro. Examples of these are USDC (Circle) and USDT (Tether).
  2. Asset Referenced Tokens (“ART”), which is a regulatory category corresponding to the so-called ‘stablecoins’ and that are regulated under Title III of MiCAR. An ART is a crypto asset that purports to maintain a stable value by referencing another value or right or a combination thereof, including one or more official currencies such as currencies and commodities or another crypto currency. Examples of these are Pax Gold (PAXG) and Tether Gold (XAUT).
  3. Crypto assets other than ARTs and EMTs which are regulated under Title II of MiCAR, hence forming a residual category i.e. a “catch-all” category. Examples of these are Bitcoin and Ethereum.

Disposal

The term “disposal of crypto currencies” means:

  1. The sale of crypto currencies
  2. The donation of crypto currencies
  3. The exchange of one crypto currency for another crypto currency; and
  4. The use of crypto currency as a means of payment.

The term “disposal” does not apply in the case of disposal of crypto currencies, which were acquired through the conduct of mining activity and any profits that do not fall within Article 20E are taxed under the general provisions of the Income Tax Law.

Losses

Losses arising from the disposal of crypto currencies may be offset against profits from crypto currencies disposals within the same tax year. Such losses cannot be carried forward to future years, nor can they be surrendered to other group companies for group relief.

New Tax Landscape for Non-UK Domiciled Individuals

New Tax Landscape for Non-UK Domiciled Individuals

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New Tax Landscape for Non-UK Domiciled Individuals

On October 30, 2024, the UK government officially confirmed that its non-domicile (“non-dom”) regime will be abolished effective April 6, 2025. This regime has long been a preferred option, particularly for high-net-worth individuals (“HNWIs”), who are likely to face significant changes to their tax obligations, prompting many to consider relocating to more tax-friendly jurisdictions.

Cyprus: A Compelling Alternative for HNWIs

Cyprus, with its favorable non-dom tax scheme, is an attractive option for individuals seeking a tax-efficient jurisdiction.

To establish tax residency in Cyprus, individuals can either reside in Cyprus for 183 days in a tax year or meet the “60-day rule”.

Under the “60-day rule”, one must spend a minimum of 60 days in Cyprus, maintain a residence, and have professional or business ties within Cyprus, amongst others. This scheme is designed to provide immediate tax relief for individuals who make Cyprus their primary residence without requiring long-term commitments.

Foreigners who become Cyprus tax resident and non-dom (subject to VISA requirements for non-EU citizens) benefit from a well-rounded combination of tax and non-tax benefits both at the personal and corporate level, as outlined below:

(a) Tax Benefits

  • Exemption from tax on dividend income and interest income
  • Exemption from tax on gains from selling securities/titles
  • No inheritance, gift, estate, or capital gains tax (except on Cyprus immovable property)
  • The first Euro 19,500 of emoluments is tax-free for all employees
  • 50% tax exemption for employees whose remuneration exceeds Euro 55,000 per annum for a period of 17 years
  • 20% tax exemption for employees whose remuneration is below Euro 55,000 (or up to Euro 8,550) for a period of 7 years, subject to conditions
  • Special tax rate of 8% on income generated by asset managers
  • Favorable IP regime, allowing Cyprus IP companies to achieve an effective tax rate of up to 2.5% on qualifying profits from IP exploitation

(b) Non-Tax Benefits

  • High quality of life in a low-crime society with a welcoming culture
  • Prime geographical location with a pleasant Mediterranean climate
  • Advanced healthcare and educational facilities
  • Cost-effective and straightforward establishment and maintenance of legal entities

Cyprus stands out as an ideal destination for individuals looking to safeguard their wealth and optimize their tax planning. At Nobel, we are committed to working closely with our clients to guide them through new regulations and provide personalized solutions tailored to their unique needs. Our dedicated team of professionals is ready to assist you in examining the implications of these upcoming changes, as well as to recommend potential relocation and investment options. Contact us here for more information.