Cyprus - taking crypto profits into USDC

[heliotrope]

Has it been established whether taking crypto profits into USDC is exempt from tax in Cyprus? Seems like crypto to fiat is taxable, but crypto to crypto is not. Just wondering whether the proposed legislation distinguishes stablecoins.

Otherwise, taking profits into USDC and getting interest here and there until one is able to cash out to fiat in a more crypto-friendly place could be a good strategy?

 

[squirellcr]

Cyprus is crypto friendly, just theur bank accounts are not

 

[JimBeam]

Not sure what do you mean...

1. Lets presume you have money in your bank account of your Cypriot company and you buy USDT and transfer that to whoever. What will you tell the accountant what did you do with the money? If you just bought Crypto it will still be your company's asset...
2. Let's presume someone pays your company in USDT. If you haven't invoiced that - you might transfer that to your personal account and will most probably be okay, but if you have issued invoice that you're back to the first point.

 

[sylwiasj]

Not sure what do you mean...

1. Lets presume you have money in your bank account of your Cypriot company and you buy USDT and transfer that to whoever. What will you tell the accountant what did you do with the money? If you just bought Crypto it will still be your company's asset...
2. Let's presume someone pays your company in USDT. If you haven't invoiced that - you might transfer that to your personal account and will most probably be okay, but if you have issued invoice that you're back to the first point.

What about sending money to crypto exchange from your private account? (maybe online bank, not even in Cyprus).

 

[KTcyause]

The guidance in relation to the VAT treatment of cryptocurrencies is currently very limited. Cryptocurrencies profits are exempt from VAT, Bitcoin shall be treated as a currency because its main purpose is to be used as a direct means of payment. However, if you regularly make a profit from crypto-transactions, it is safer to do this as a private person with Non-Dom status in Cyprus or by using a “Dividend-Company”, in order to not subject these profits to tax in case the Cyprus Income Tax Office decides to treat it as passive gains.

Activities related to DLT (distributed ledger tecnhology) and Virtual Currencies create a series of questions, regarding the imposition of taxation. As a general rule, tokens shall be treated as intangible assets due to their non-physical presence, therefore amortization over maximum 20 years will be allowable. Depending on the intentions of each buyer contributor and their classification, tokens could be treated as pre-payments, investments, intangible assets or stock.

Cyprus is friendly to crypto investors but not really friendly in Crypto payments, only one university in Cyprus accepts crypto.

 

[CyprusLaw]

The guidance in relation to the VAT treatment of cryptocurrencies is currently very limited. Cryptocurrencies profits are exempt from VAT, Bitcoin shall be treated as a currency because its main purpose is to be used as a direct means of payment. However, if you regularly make a profit from crypto-transactions, it is safer to do this as a private person with Non-Dom status in Cyprus or by using a “Dividend-Company”, in order to not subject these profits to tax in case the Cyprus Income Tax Office decides to treat it as passive gains.

Activities related to DLT (distributed ledger tecnhology) and Virtual Currencies create a series of questions, regarding the imposition of taxation. As a general rule, tokens shall be treated as intangible assets due to their non-physical presence, therefore amortization over maximum 20 years will be allowable. Depending on the intentions of each buyer contributor and their classification, tokens could be treated as pre-payments, investments, intangible assets or stock.

Cyprus is friendly to crypto investors but not really friendly in Crypto payments, only one university in Cyprus accepts crypto.

With respect to VAT (even though this was not raised by the OP - the main guidance derives from the Hedqvist case and the Working Papers issued by the European Commission).

I would disagree with the suggestion of trading as an individual, as non-dom status does not exempt you from taxation as an individual - they are exempt from SDC so they would benefit from dividend payments form a company.

With respect to crypto-payments, this is not exactly the case, despite the fact that banks are not accepting cryptocurrency transactions per se, a lot of firms, organisations etc have started accepting cryptocurrency payments.

 

[uplana]

I would disagree with the suggestion of trading as an individual, as non-dom status does not exempt you from taxation as an individual - they are exempt from SDC so they would benefit from dividend payments form a company.

I can only agree with this advise. Don't be foolish and do business without to have a LTD.

 

[bountymounty]

With respect to VAT (even though this was not raised by the OP - the main guidance derives from the Hedqvist case and the Working Papers issued by the European Commission).

You must be VAT registered if you do business in Europe.