As of now the legislative framework of cryptocurrencies regarding the applicable tax regime in Cyprus is not completely finished yet. There is ample room for interpretation and discussion when it comes to crypto profits - and losses.

For one, holding cryptocurrencies as an individual in a long-term investment portfolio seems to be a clear issue, profits are handled as capital gains (as explained in the blog article mentioned at the bottom of this page) and are hence not taxable.

The topic currently gets complicated when it comes to short-term activities (i.e. frequent purchase and sale transactions), which can be interpreted as being executed in the capacity of a professional trader. The Cyprus Income Tax Authorities might want to levy taxes on the earnings, the same way residents are taxed on their worldwide personal income.

In this case, trading digital currencies under a Cyprus legal entity within the Non-Dom scheme seems to be the better approach to optimize the tax structure.

Needless to say, obtaining legal and financial advice is of vital importance in this case.

Disclaimer: This article is published for educational and informational purposes only and does not represent legal, financial or investment advice. The reader is responsible for seeking professional counsel.

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• With the Non-Dom scheme in Cyprus you pay 0% taxes on dividends, interest and investments income!

  How to pay 0% taxes on capital gains in Cyprus

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