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

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z00m

New member
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?
 

CyprusLaw

Mentor Group Gold
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 a Cyprus company would be a better option. Would be happy to discuss via PM
 

lsc5

New member
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:)
 

CyprusLaw

Mentor Group Gold
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 a tax circulat being drafted, the regulation will be friendly, clarifying and confirming that some categories are to be treated as income, while confirming that some categories will fall under securities hence tax exempt
 

lsc5

New member
@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!
 

CyprusLaw

Mentor Group Gold
@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 to discuss by pm
 

Thomas67

New member
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.
 

Moulaga

New member
Whatever decision Cyprus will make I believe a Cyprus Ltd would be a better option as there are many legit ways to increase expenses to make the taxes and benefits look lower.

May I ask what DeFi protocole you use ? My wife and I are interested too. We have 6 fig USDT and are planning to stalk it into a DeFI to get a monthly returns. (Some in low risk and some in medium risk). Thanks in advance for your help
 

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