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Crypto (DeFi) taxes - better as private person or Cyprus Ltd

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Z

z00m

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Jan 12, 2022
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Hi there.

My wife and I are thinking about moving from Germany to Cyprus. Our main source of income will be from Crypto DeFi, especially Liquidity Mining. I haven't seen many threads or articles about DeFi and Cyprus anywhere so I hope someone has practical insights on this topic.

Is it better to hold the crypto privately or put it in a Cyprus Ltd? I could imagine that in the near future profits from Liquidity Mining will be considered as income which would make it really unfavorably for a private person.

Then again I'm still not sure how crypto is taxed in general in Cyprus. So I "earn" rewards in Crypto from Liquidity Mining. Those coins have a EUR value when I receive them, but they are not EUR, they are a coin. So do I pay taxes when I receive them or when I trade them to different crypto coin or when I exchange them to EUR? Or all of them?
 
As things stand it would be deemed as personal income and therefore a︄ Cyprus company would be a better option. Would be happy to discuss via PM
 
Hey there,
I am actually in a very similar position - already checked out all‌ the options in Cyprus and leaning towards a Ltd.
Already talked to a few 'agents'‍ and one of them sort of warned me that Cyprus might clarify or change the⁠ taxation on crypo in the next months. If they will treat it like stocks/options -⁤ then ok, but if they apply different non-investor friendly rules - that would be a⁣ pain.
Anyone heard this as well?
Would be also interested in a pm for other⁢ details🙂
 
Hi, I will PM you. There is indeed a︀ tax circulat being drafted, the regulation will be friendly, clarifying and confirming that some categories︁ are to be treated as income, while confirming that some categories will fall under securities︂ hence tax exempt
 
Hi, I'm interested in all crypto taxation topics too; feel free to reach out in‌ pm.
 
@CyprusLaw thank you! I have a few follow up questions 🙂
  • may I ask, how you‌ know it will be friendly?
  • do you have an idea, when this will be applied?‍ all trades after a due date are treated according to the new rules? hindsight for⁠ the whole tax year 2022?
  • if you trade or stake within an Ltd profits would⁤ still be just taxed with 12,5%?
Have a nice evening!
 
We have information for the content of the draft. No timeframe yet should be soon.⁢
About the ltd question - yes 12.5% as things stand at the moment
Happy to︀ discuss by pm
 
If other people have a view feel free to comment. In my view every long‌ term operation is likely to be tax exempted, as opposed to active/professional trading for example.‍ So far lawyers had different opinions regarding the taxation of crypto to crypto transactions (in⁠ my view they were exempted). The new circular will I guess address the point explicitly⁤ for the future and will be made public soon on the web - hopefully will⁣ it be also in English.
 
Whats the point in discussing details in⁠ private, if they concern a majority who are inetersted?
Are we still in a forum⁤ Or a provate advertisement/ affiliation group?
 
What are the costs of going the Cyprus Ltd way and how much should the‌ crypto worth be at a minimum to make it worth while in your estimate?
 
im moving to cyprus next montj also do a lot of mining.
im 99% sure that only if you cash out to fiat is a taxable event.
keep you updatet . i will do a limited

ultra low risk would be staking UST︌ ( stable coin on terra blockchain) with 19.45% apy

i dont think they will be taxexempted. active trading is a⁤ different game. could you explain your opinions
dont think crypto to⁢ crypto txs is a taxable event in my country they just changed that because they︀ simply do not have the manpower to check that
 
Dude ...⁠ love your name 😀
And yes, for now it seems that in Cyprus, only cash out⁤ to fiat is taxed. Let me know how it works out for you.

Like you already do and @wife changing︂ money said, stablecoins are low risk. If you want to stake (yield farm/liquidity mine) in︃ medium to high risk DeFi projects, the rewards are motsly in a native coin that︄ might be useless / shitcoin. So I stake some on the Crypto.com plattform but mostly︅ do Liquidity Mining in the DeFiChain universe. Recently they introduced the decentralized stocks, which give︆ you the APY of a young blockchain (40% - 150% APR) in Liquidity Mining but︇ let you invest in "some kind of stocks".
 
Not really a crypto forum but this‍ is far from the truth. UST is risky. DYOR.

This thread is interesting as I⁠ am also looking for cyprus LTD as a vehicle for ETH staking company. Not sure⁤ if the rewards will be considered as dividend or interest.
 
UST Stablecoin is in my opinion the „safest“⁤ Stablecoin out there. Its also the only stablecoin which is fully decentrialized.
maybe you mistook⁣ it with USDT(Tether).

back to topic
searching for a tax consultant which is specialized in⁢ the crypto wild wild west.
 
For sure he did not mistook it with usdt 😉 ust is as risky as all the other stablecoins.
Tether fud is going on for years,⁤ but as of today, nothing at all happened and tethers from years ago still 1$.⁣
 
Hello wifey

Your question is‍ to me not accurate enough; I expect profits from active trading to remain taxable. Many⁠ criteria could apply to differentiate profits of trading (professional) or of capital (investments, not professional)⁤ nature. So far crypto-to-crypto profits exempted.

Here is the website where the new circular should⁣ be published; it is also possible to send an email to the tax department/ministry of⁢ finance for the release date of course: https://www.mof.gov.cy/mof/tax/taxdep.nsf/circulars_gr/circulars_gr?openform

Interested to have more qualitative info as︀ well.
 
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