Accounting · Audit · Tax · Digital Assets
Accounting, statutory audit, and tax advisory for Cyprus crypto companies and digital asset businesses. Services cover IFRS classification, wallet reconciliation, Article 20E compliance, MiCA/CASP readiness, and Non-Dom structuring for founders.
Cyprus now has a dedicated crypto tax framework, a MiCA-aligned CASP licensing regime, and one of the most competitive digital asset environments in Europe. Getting the accounting right, the audit defensible, and the structure optimised requires advisors who understand all three. We do.
IFRS classification of digital asset holdings under IAS 38, IAS 2, or IFRS 9. Wallet-level reconciliation against exchange records and on-chain data. Fair value measurement, impairment testing, and year-end preparation for statutory accounts.
On-chain balance verification, wallet ownership confirmation, exchange account reconciliation, and custody arrangement evaluation. ISA-compliant audit procedures designed for entities with material digital asset holdings, including CASPs and digital asset investment vehicles.
Calculation and filing of the 8% flat tax on crypto-asset disposal gains under Article 20E. Transaction classification (disposal vs. investment), cost basis determination, intra-year loss offset analysis, and treatment of crypto-to-crypto swaps and payment transactions.
Audit readiness and financial statement preparation for CySEC CASP authorisation applications and ongoing MiCA compliance. Support for entities in the transitional period ahead of the 1 July 2026 deadline, including preparation of the audited accounts required by CySEC.
Cyprus holding and operating structures for crypto businesses: use of the participation exemption, Non-Dom structuring for founding shareholders, interaction of the 8% crypto tax with the IP Box and NID regimes, and substance requirements for MiCA-licensed entities.
Income recognition and tax treatment for mining operations (taxed under general CIT rules, not the 8% regime), staking rewards, DeFi yield, and NFT transactions. VAT analysis for exchange services and assessment of novel digital asset income streams under existing IFRS frameworks.
| Activity | Tax treatment | Rate | Notes |
|---|---|---|---|
| Crypto disposal gains | Article 20E flat tax | 8% | Applies to both individuals and companies. Ring-fenced from other income. |
| Crypto-to-crypto swaps | Article 20E: treated as disposal | 8% | Each swap is a taxable event at fair value. |
| Using crypto as payment | Article 20E: treated as disposal | 8% | Gain is the difference between acquisition cost and fair value at payment date. |
| Mining income | General income tax | 15% CIT | Not within Article 20E scope. Taxed as trading income under standard CIT rules. |
| Staking & yield rewards | General income tax | 15% CIT | Fair market value in EUR at receipt. Subsequent disposal taxed at 8% under Art. 20E. |
| Investment gains (occasional) | Capital in nature | 0% | Where activity is occasional and investment-driven, gain may be capital: not taxable. Fact-specific assessment required. |
| Crypto losses | Restricted offset | — | Can only offset crypto disposal gains in same tax year. No carry-forward. Cannot offset other income. |
| Dividends from Cyprus crypto company | SDC on Non-Dom: exempt | 0% (Non-Dom) | Non-Dom shareholders pay 0% SDC. GeSY levy of 2.65% applies (capped). |
| Crypto exchange services (VAT) | VAT-exempt financial service | Exempt | Consistent with EU Court of Justice ruling C-264/14. Service fees may attract VAT. |
Effective date: Article 20E applies to all crypto-asset disposal transactions executed on or after 1 January 2026. Whether a transaction qualifies as a disposal or as an investment gain depends on the nature and regularity of the activity. Businesses should establish their tax position and record-keeping framework before the year-end.
Understand your assets, structure, and regulatory position
We start by mapping your digital asset holdings: asset types (utility tokens, security tokens, stablecoins, NFTs), how they are held (self-custody, exchange, third-party custodian), transaction volumes, and your current or planned regulatory status under MiCA. We confirm whether your activity constitutes trading, investment, or a CASP operation. That determination drives both the accounting treatment and the applicable tax framework.
IFRS standard selection and accounting policy
We determine the appropriate IFRS classification for each asset category: IAS 38 (intangible assets, cost or revaluation model) for most cryptocurrency holdings, IAS 2 (inventories) where assets are held for sale in the ordinary course of business, or IFRS 9 (financial instruments) for security tokens. We document the accounting policy, confirm it is consistently applied, and verify that it is adequately disclosed in the notes to the financial statements.
Where holdings are material, we advise on the practical implications of the revaluation model under IAS 38, including the availability of an active market to support fair value measurement and the treatment of revaluation surpluses in equity.
Wallet reconciliation and year-end preparation
We reconcile wallet balances to exchange records and on-chain data, calculate fair values at the year-end measurement date, and prepare the ledger entries required for the statutory accounts. For high-volume trading operations, we establish transaction-level tracking to support cost basis determination and gain/loss calculation under Article 20E.
Article 20E filing and structuring review
We prepare the Article 20E tax computation, classify each transaction as a taxable disposal or excluded activity, apply the intra-year loss offset rules, and file the return. Where the structure has not yet been optimised (for example, where a founder is personally holding assets that would be more efficiently held through a Cyprus entity with Non-Dom distribution planning), we advise on restructuring options before the tax year closes.
Statutory audit and CASP regulatory reporting
We conduct the statutory audit using procedures adapted for digital asset businesses: on-chain balance confirmation at the balance sheet date, wallet access and ownership testing, exchange account reconciliation, and custody arrangement evaluation. For CASPs, we produce the audited financial statements required by CySEC as part of the authorisation and ongoing supervision process. Key Audit Matters relating to digital asset valuation, existence, and custody are reported in the auditor's report where material.
Cyprus introduced an 8% flat tax on profits from crypto-asset disposals under Article 20E, effective 1 January 2026. Both individuals and companies are subject to this rate. A disposal includes converting crypto to fiat, swapping digital assets, using crypto as payment, and gifts or transfers without consideration. Crypto losses can only offset crypto disposal gains in the same tax year: no carry-forward, no offset against other income. Mining is excluded from Article 20E and taxed under general income tax rules at the standard CIT rate.
There is no dedicated IFRS standard for crypto-assets. Most cryptocurrency holdings fall under IAS 38 (Intangible Assets): they have indefinite useful lives, are not amortised, and must be tested annually for impairment. Where crypto is held for sale in the ordinary course of business, IAS 2 (Inventories) applies. Security tokens with contractual cash flow rights may qualify as financial instruments under IFRS 9. The accounting policy choice between cost and revaluation models under IAS 38 has material implications for how gains and losses flow through the financial statements. The IASB has crypto measurement on its active work plan as of 2025.
Under MiCA, which came into full effect on 30 December 2024, any entity providing crypto-asset services in Cyprus or to EU clients requires CASP authorisation from CySEC. Covered services include operating a trading platform, exchanging crypto-assets, custody and administration on behalf of clients, portfolio management, and reception and execution of orders. Entities registered with CySEC under the pre-MiCA national regime benefit from a transitional period until 1 July 2026 to align with full MiCA requirements. Authorisation requires audited financial statements.
Yes. When crypto trading is conducted through a Cyprus company, the company pays 8% on disposal gains under Article 20E. A Non-Dom shareholder receiving dividends from that company pays 0% Special Defence Contribution, with only the GeSY healthcare levy (2.65%, capped annually) applying to distributions. This produces a materially low combined tax cost compared with most jurisdictions. The Non-Dom exemption is available to individuals who acquire Cyprus tax residency and are not domiciled in Cyprus, and applies for up to 17 years.
Auditing a crypto company requires additional procedures beyond a standard statutory audit. These include on-chain balance verification at the balance sheet date, wallet ownership and access confirmation, reconciliation of exchange account balances, fair value determination for each asset class, assessment of custody arrangements and counterparty risk, and evaluation of the IFRS classification adopted. For illiquid or thinly traded tokens, valuation methodology and market evidence require specific attention. CASPs authorised under MiCA must produce audited financial statements as a condition of authorisation.
The exchange of cryptocurrency for fiat currency is treated as a VAT-exempt financial service in Cyprus, consistent with the EU Court of Justice ruling in case C-264/14. Crypto-to-fiat exchange transactions do not attract VAT. Service fees charged by CASPs for custody, portfolio management, and other non-exchange services may attract VAT depending on their nature. Mining, DeFi yield, and NFT royalties each require individual analysis: the VAT treatment of novel digital asset activities has not been uniformly settled across EU member states.
The 8% flat tax under Article 20E is ring-fenced: crypto disposal profits are taxed separately at 8% and are not aggregated with other corporate income. The standard CIT rate of 15% (from 2025 under the Cyprus tax reform) applies to other income streams: trading income, interest, royalties, and management fees. For a company earning both crypto disposal gains and other taxable income, the two streams are assessed and taxed independently. Mining income is taxed at 15% CIT, not 8%. The NID (Notional Interest Deduction) may be available against qualifying taxable income, including potentially crypto-related income where the company is funded by new equity.
Digital Assets & Crypto
From IFRS classification to Article 20E filing and CASP audit readiness. Regulated advisory from Limassol since 1990.
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