Fintech 2026

CYPRUS Trends and Developments Contributed by: Angelina Fitoz, Svetlana Remezova, Darya Averyanova and Sude Dogan, Lawitt Buro

Corporate tax modernisation: the 15% baseline Parallel to the specific crypto-tax reform, Cyprus implemented a broader corporate tax update as of 1 January 2026. The standard corporate tax rate has increased from 12.5% to 15%, a move that aligns Cyprus with international OECD Pillar Two standards for minimum global taxation. While this represents a higher baseline, the mainte - nance of the 8% special regime for crypto-disposals ensures that Cyprus remains a top-tier destination for specialised digital asset holding companies. This dual-layered approach allows the jurisdiction to meet international tax transparency obligations while pre - serving its competitive edge for the fintech sector. Cyprus has brought the corporate tax system into full compliance with international standards, but at the same time has retained its regional tax attractive - ness. In turn, the increase in corporate tax also allows Cyprus to keep tax revenues in its budget. The MiCA “hard deadline” and the flight to quality The regulatory focus of the Cyprus Securities and Exchange Commission (CySEC) in early 2026 is domi - nated by the final transition to the MiCA framework. Existing Crypto-Asset Service Providers (CASPs) authorised under the previous national AML regime were given a “hard deadline” of 27 February 2026 to seek full MiCA authorisation. This deadline serves as a critical filter for the market. Firms that successfully applied by this date are per - mitted to continue operations under a “grandfather - ing” clause until 1 July 2026. Conversely, those failing to apply by the February deadline were mandated to initiate an orderly wind-down plan. The shift of regula - tion towards MiCA indicates a completely new market system. The increased standard makes Cyprus more relevant for offshore neighbours. And it makes Cyprus an attractive offshore jurisdiction for clients, leaving a niche appeal for regulators due to the high degree of legislative growth.

At the date of publication of this guide (31 March 2026), tax legislation interprets the understanding of crypto-assets through “actions”, transactions that can be made with them. The law clearly states what influ - ences the formation of the tax base and the calculation of taxes. It is also important to delineate the bounda - ries, taking into account the presence of “levels” of the taxation system (accrual of tax with an increase in the value of assets and with subsequent sale), and how this system will work during the transition period (before the entry into force of the new article). However, the regime includes strict “ring-fencing” rules: losses from crypto-assets may only offset gains within the same tax year and cannot be car - ried forward to future periods. This necessitates more active tax planning and real-time accounting for firms managing digital asset treasuries, as crypto losses cannot be used to shelter other categories of income such as dividends or employment income. This important change highlights that crypto-assets are special objects that inherently have a “propulsion mechanism”. The parties to the transaction need to understand the tax consequences before making the transaction. The mining and staking carve-out Income derived from mining and validation (staking as a service) remains outside the scope of the disposal regime. Regulators have clarified that these activities constitute an active trade or service, taxed under gen - eral income tax rules, either at the standard corporate rate (which has increased to 15% in 2026) or progres - sive individual rates. This distinction reflects the principle that mining con - stitutes an active business activity rather than a sim - ple asset disposal. This paragraph is one of the most important actions completing the entire process of changes in the regulation of digital assets in Cyprus. Due to the inability to regulate all public relations that subjects may encounter within the framework of the law, special attention is drawn to the situation when a person is engaged in a business that combines both types of activities or is “at the junction”. It is hoped that these public relations issues will be clarified within the framework of the regulator’s resolutions.

192 CHAMBERS.COM