With limited guidance from the Cypriot Tax Department, figuring out crypto tax in Cyprus can be challenging. That’s why we’ve partnered with crypto tax calculator Koinly to simplify the basics of crypto taxation in Cyprus, including how crypto is taxed and should be filed.

Important: Koinly and Nexo do not provide tax advice. This article is not intended as financial advice or a personalized recommendation. Always consult a tax professional for guidance specific to your situation.

How is crypto taxed, and what constitutes a taxable event?

The Cyprus Income Tax Office (ITO) has not yet released guidance on how crypto is taxed, though it is under review. As such, taxation on cryptocurrency follows general principles of asset taxation under existing guidance, and in Cyprus tax all depends on whether the activity is classified as trading or investment.

The ITO uses a “badges of trade” test to decide if cryptocurrency activity is considered trading (taxable) or investment (potentially not taxable). The key factors include:

Whether the goal is to make a profit
How often transactions are made
Type of assets involved
If the asset is modified (e.g., converting one token to another)
How and when the sale was made

If the activity is classed as trading, any profits will be taxed under Personal Income Tax (PAYE) and taxed at up to 35% depending on your annual income.

If the activity is treated as an investment rather than trading, any profit may be tax-free. For example, if you buy crypto as a long-term investment and sell it later without regular trading, the gain might not be taxed.

How much tax will you pay?

If you pay tax on your crypto as it’s classified as trading, then you’ll pay up to 35%.

How to calculate your crypto taxes

To calculate your capital gain or loss from a transaction, use this formula:

Capital Gain/Loss = Selling Price – Purchase Price

If you don’t have a clear sale price, generally using the fair market value of the crypto at the point you disposed of it is an acceptable alternative.

Accounting method for crypto

The ITO has no specific guidance on crypto accounting methods where investors are dealing with multiple assets of the same kind. However, FIFO is an accepted accounting method for corporate accounting.

Are different digital assets taxed differently?

The ITO has no guidance on crypto or the tax implications of different kinds of crypto assets, for example, stablecoins and NFTs. You should speak to an accountant for advice on your situation.

How are airdrops and forks taxed?

The ITO has no guidance on the tax implications of airdrops, including from forks. These may be considered tax free or taxable upon receipt. You should speak to an accountant for advice on your circumstances.

When to report your crypto taxes

In Cyprus, the financial year runs parallel to the calendar year, and taxpayers must report income in their annual tax returns by July 31 of the following year, although self-employed persons with annual income over €70,000 have until March 1 of the year after this.

Final tips

Keep records of all transactions, including timestamps, values, and fees.
Consult a tax professional if you engage in complex trading or DeFi activities.
Use Koinly to automate calculations and ensure compliance.

📌 Start calculating your crypto taxes with Koinly today!

The information in this article is for general information only. It should not be taken as consulting professional advice from either Nexo or Koinly. Neither Nexo nor Koinly is a financial adviser. You should consider seeking independent legal, financial, taxation, or other advice to check how the website information relates to your unique circumstances.