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

z00m

z00m

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Jan 12, 2022
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#1
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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?
 
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#2
z00m said:
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?
Click to expand...
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
 
#4
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:-)
 
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#5
lsc5 said:
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:)
Click to expand...
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
 
#7
@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!
 
#8
lsc5 said:
@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!
Click to expand...
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
 
#9
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.
 
#10
CyprusLaw said:
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
Click to expand...
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?
 
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#13
z00m said:
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?
Click to expand...
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

detailoriented said:
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
Moulaga said:
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
Click to expand...
Click to expand...

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

Thomas67 said:
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.
Click to expand...
i dont think they will be taxexempted. active trading is a different game. could you explain your opinions
z00m said:
@CyprusLaw Interesting. I'm wondering about Crypto-to-crypto transactions. So yes please. Send me a PM.
Click to expand...
dont think crypto to crypto txs is a taxable event in my country they just changed that because they simply do not have the manpower to check that
 
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#14
wife changing money said:
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
Click to expand...
Dude ... love your name :D
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.

Moulaga said:
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
Click to expand...
Like you already do and @wife changing money said, stablecoins are low risk. If you want to stake (yield farm/liquidity mine) in medium to high risk DeFi projects, the rewards are motsly in a native coin that might be useless / shitcoin. So I stake some on the Crypto.com plattform but mostly do Liquidity Mining in the DeFiChain universe. Recently they introduced the decentralized stocks, which give you the APY of a young blockchain (40% - 150% APR) in Liquidity Mining but let you invest in "some kind of stocks".
 
#15
z00m said:
Dude ... love your name :D
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 changing money said, stablecoins are low risk. If you want to stake (yield farm/liquidity mine) in medium to high risk DeFi projects, the rewards are motsly in a native coin that might be useless / shitcoin. So I stake some on the Crypto.com plattform but mostly do Liquidity Mining in the DeFiChain universe. Recently they introduced the decentralized stocks, which give you the APY of a young blockchain (40% - 150% APR) in Liquidity Mining but let you invest in "some kind of stocks".
Click to expand...
„Dude ... love your name :D“

danke, but dont tell your wife!
 
#16
CyprusLaw said:
Happy to Pm you about this
Click to expand...
New here, where do we pm?
wife changing money said:
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 UST ( 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 they simply do not have the manpower to check that
Click to expand...
Are you only mining / staking / trading or do you also earn a salary in crypto?
 
#18
gwenvador said:
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.
Click to expand...

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.
 
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#19
wife changing money said:
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.
Click to expand...
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$.
 
#20
wife changing money said:
i dont think they will be taxexempted. active trading is a different game. could you explain your opinions
Click to expand...

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 as well.
 
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