Cyprus Introduces a Special Tax Regime for Profits from Crypto-Asset Transactions

On 31 December 2025, Cyprus published Law Ν. 244(Ι)/2025 — the Income Tax (Amending) (No. 4) Law of 2025, amending the Income Tax Law, 2002. The law was published in the Official Gazette of the Republic of Cyprus on 31.12.2025.
One of the key amendments is the introduction of a special tax regime for profits from crypto-asset transactions. For this purpose, a new Article 20E — “Profits from transactions in crypto-assets” was inserted into the Income Tax Law, 2002.
1. Profits from the disposal of crypto-assets are taxed at 8%
Under the new Article 20E(1), profits of any person arising from the disposal of crypto-assets are subject to tax at the rate of 8%.
Reference formula:
Article 20E(1) of the Income Tax Law, 2002, as inserted by section 13 of Law Ν. 244(Ι)/2025 — the Income Tax (Amending) (No. 4) Law of 2025.
2. What qualifies as a “disposal” of crypto-assets
Under Article 20E(3)(b), “disposal of crypto-assets” means:

• sale of crypto-assets;
• donation of crypto-assets;
• exchange of one crypto-asset for another crypto-asset;
• use of a crypto-asset as a means of payment.

Therefore, a taxable event may arise not only when a crypto-asset is sold for euro, but also in the case of a crypto-to-crypto exchange, a donation, or payment for goods or services using crypto-assets.
3. Meaning of “crypto-assets”
Under Article 20E(3)(a), the term “crypto-assets” has the meaning given in Article 3(1)(5) of Regulation (EU) 2023/1114, namely the EU Markets in Crypto-Assets Regulation — MiCA.
4. Crypto losses may be offset only on a limited basis
The new Article 20E(2) introduces a specific rule for losses. Losses arising from the disposal of crypto-assets may be offset only against profits from the disposal of crypto-assets arising in the same tax year.
Such losses:

• may not be carried forward to future tax years;
• may not be offset against the same person’s profits in subsequent years;
• may not be surrendered to another company under the group relief rules of Article 13 of the Income Tax Law, 2002.

5. Mining is excluded from the 8% special regime
Under Article 20E(4), the provisions of Article 20E do not apply to the disposal of crypto-assets that were acquired through mining activity.
Accordingly, crypto-assets obtained through mining do not fall within the special 8% tax regime under Article 20E.
6. Where a transaction does not fall within Article 20E
Under Article 20E(5), any profit arising from crypto-asset transactions which does not fall within Article 20E is taxed in accordance with the general provisions of Part III and Part V of the Income Tax Law, 2002.
7. Crypto profits are expressly included in taxable income
Law Ν. 244(Ι)/2025 — the Income Tax (Amending) (No. 4) Law of 2025 also amended Article 5 of the Income Tax Law, 2002. Profits from transactions in crypto-assets falling within Article 20E were added as a taxable category of income.
In other words, crypto profits are now expressly recognised in the Income Tax Law as taxable income.
Practical conclusion
Cyprus has introduced a special tax regime for profits from crypto-asset transactions:

• profits from the disposal of crypto-assets are taxed at 8%;
• taxable events include sale, donation, crypto-to-crypto exchange and use of crypto-assets as a means of payment;
• crypto losses may be offset only against crypto profits of the same tax year;
• such losses cannot be carried forward or surrendered under group relief;
• mining is excluded from the special regime under Article 20E;
• where a transaction does not fall within Article 20E, the general Income Tax Law rules apply.

For investors, companies and individuals using crypto-assets, the practical implication is clear: accurate records must be kept for each transaction, including acquisition value, disposal value, transaction date and the nature of the crypto transaction.