Cyprus non-dom tax resident tax for long term crypto holding sales?

[Researcher]

What are long term hold (1+ years) crypto sales tax% in Cyprus for individual non-dom tax resident?

Can Cyprus non-dom tax residency be used to effectively sell long term crypto holdings for minium to no tax?

 

[GrumpyMess]

Researcher said:
What are long term hold (1+ years) crypto sales tax% in Cyprus for individual non-dom tax resident?
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The term doesn't matter. Crypto to fiat is taxed at general tax rates up to 35%.

 

[Researcher]

GrumpyMess said:
The term doesn't matter. Crypto to fiat is taxed at general tax rates up to 35%.
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Well, that is totally horrible and completely unacceptable.
What ways to cash out crypto in Cyprus with low tax?
Can physical person lend crypto to Cyprus company and then company sells this Crypto for low tax?

 

[GrumpyMess]

Researcher said:
Well, that is totally horrible and completely unacceptable.
What ways to cash out crypto in Cyprus with low tax?
Can physical person lend crypto to Cyprus company and then company sells this Crypto for low tax?
Click to expand...

There is no easy way to do this, but tax advisors suggest doing this through a company. In some ways this is even better, because sof will be dividends and not crypto, but 15% tax may be isn't what are you looking for. May be it will be possible with an offshore company and 2.65% tax. Anyway I'm interested in the same route. But the more I learn about Cyprus, the less I want to live there, so make sure you definitely want to spend 60+ days there.

 

[Researcher]

GrumpyMess said:
There is no easy way to do this, but tax advisors suggest doing this through a company. In some ways this is even better, because sof will be dividends and not crypto, but 15% tax may be isn't what are you looking for. May be it will be possible with an offshore company and 2.65% tax. Anyway I'm interested in the same route. But the more I learn about Cyprus, the less I want to live there, so make sure you definitely want to spend 60+ days there.
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But how do you transfer crypto from physical person to a Cyprus company?
What mechanism can be used for this? Lending?
Also important - which banks will be OK with a company dealing with crypto and accept money from crypto exchanges?

 

[zaybxc]

I've been looking into Cyprus and the big advantage is that crypto-to-crypto swaps are not taxed, but only crypto-to-fiat; so, on a personal level, one might trade and (if lucky!) increase his crypto capital.
It seems to me that it's quite expensive to maintain a company that trades crypto in Cyprus; beside accountants, auditor, provisional tax etc. a bank account in a crypto specialized Swiss bank like Sygnum or Seba costs around 1000 euro per month.
I did some quick calculation and to trade one's own crypto through a company in Cyprus is convenient only if one can cash out at very least 300k euro a year on average. Otherwise it's better to do it on a personal level and save the headaches that all the company overhead brings.

 

[CyprusLaw]

Researcher said:
But how do you transfer crypto from physical person to a Cyprus company?
What mechanism can be used for this? Lending?
Also important - which banks will be OK with a company dealing with crypto and accept money from crypto exchanges?
Click to expand...

This can be through a loan or a capital contribution.

zaybxc said:
I've been looking into Cyprus and the big advantage is that crypto-to-crypto swaps are not taxed, but only crypto-to-fiat; so, on a personal level, one might trade and (if lucky!) increase his crypto capital.
It seems to me that it's quite expensive to maintain a company that trades crypto in Cyprus; beside accountants, auditor, provisional tax etc. a bank account in a crypto specialized Swiss bank like Sygnum or Seba costs around 1000 euro per month.
I did some quick calculation and to trade one's own crypto through a company in Cyprus is convenient only if one can cash out at very least 300k euro a year on average. Otherwise it's better to do it on a personal level and save the headaches that all the company overhead brings.
Click to expand...

You could go for an EMI instead, like ZEN for example. Cost will be significantly lower.

 

[Siggi]

zaybxc said:
I've been looking into Cyprus and the big advantage is that crypto-to-crypto swaps are not taxed, but only crypto-to-fiat; so, on a personal level, one might trade and (if lucky!) increase his crypto capital.
It seems to me that it's quite expensive to maintain a company that trades crypto in Cyprus; beside accountants, auditor, provisional tax etc. a bank account in a crypto specialized Swiss bank like Sygnum or Seba costs around 1000 euro per month.
I did some quick calculation and to trade one's own crypto through a company in Cyprus is convenient only if one can cash out at very least 300k euro a year on average. Otherwise it's better to do it on a personal level and save the headaches that all the company overhead brings.
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Hi, are you sure that swapping crypto profits to stablecoins is not a taxable event in Cyprus?
Do you have any source for this information?

@CyprusLaw can you also confirm?

 

[CyprusLaw]

Siggi said:
Hi, are you sure that swapping crypto profits to stablecoins is not a taxable event in Cyprus?
Do you have any source for this information?

@CyprusLaw can you also confirm?
Click to expand...

At the moment there is no guidance, therefore the realisation of the gain (i.e. conversion to fiat) is treated as a taxable event. However, I would disagree on the assessment that you need to make over 300,000 per year to benefit from making a company taking into account the following: (a) trading of crypto at a personal level would bear personal taxation on the basis of the relevant bands which start from 20% over 19,500, an (b) depending on your trading activity you could also be liable to social insurance contributions and GHS, which would mean over 40% cut-off from your profits.

While having your trading portfolio under a company in Cyprus would mean 12.5% corporate tax, and then no SDC on dividends as a non-dom and potentially just 2.65% on GHS, so the effective tax rate under a company is much lower, compared to trading at a personal level.

Feel free to pm me to discuss.

 

[Siggi]

CyprusLaw said:
At the moment there is no guidance, therefore the realisation of the gain (i.e. conversion to fiat) is treated as a taxable event. However, I would disagree on the assessment that you need to make over 300,000 per year to benefit from making a company taking into account the following: (a) trading of crypto at a personal level would bear personal taxation on the basis of the relevant bands which start from 20% over 19,500, an (b) depending on your trading activity you could also be liable to social insurance contributions and GHS, which would mean over 40% cut-off from your profits.

While having your trading portfolio under a company in Cyprus would mean 12.5% corporate tax, and then no SDC on dividends as a non-dom and potentially just 2.65% on GHS, so the effective tax rate under a company is much lower, compared to trading at a personal level.

Feel free to pm me to discuss.
Click to expand...

Would the following work?
Grow the cryptoportfolio to 7-8 figures by trading crypto on private level. Then establish a Cyprus Ltd and transfer all crypto to the company by capital contribution and then cash out to fiat?
Thats not gonna work right?

 

[Rotor]

"If a Physical or Legal Person who is tax resident in Cyprus trades Cryptocurrencies on a regular basis then profits will be taxed as any other trading activity for Companies (12.5% Corporation Tax and Dividend or Deemed Dividends will apply accordingly) and for Physical Persons at the income tax rate (progressive rates from 20% to 35% for profits exceeding Euro 60,000 per annum).


On the other hand, if the Legal or Physical Person made a profit on a one-off transaction then this transaction is considered a capital gain and as the underlying asset is not a property (which would have been taxed at 20% Capital Gains Tax) but a digital currency for which no tax rate exists, will be tax free."

https://www.cyprusaccountants.com.c...prus-Crypto-Tax-for-Companies-and-Individuals

 

[CyprusLaw]

Rotor said:
"If a Physical or Legal Person who is tax resident in Cyprus trades Cryptocurrencies on a regular basis then profits will be taxed as any other trading activity for Companies (12.5% Corporation Tax and Dividend or Deemed Dividends will apply accordingly) and for Physical Persons at the income tax rate (progressive rates from 20% to 35% for profits exceeding Euro 60,000 per annum).


On the other hand, if the Legal or Physical Person made a profit on a one-off transaction then this transaction is considered a capital gain and as the underlying asset is not a property (which would have been taxed at 20% Capital Gains Tax) but a digital currency for which no tax rate exists, will be tax free."

https://www.cyprusaccountants.com.c...prus-Crypto-Tax-for-Companies-and-Individuals
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Please note that there is no legal basis on this matter. There has been no tax guidance on profit from cryptocurrency, therefore any allegations that profits (when converted to fiat) are tax free are unsubstantiated and potentially bear a high risk.