Home listings are one of the most noticeable ways that cryptocurrency is being used in real estate and it is a strategy that is being used more and more to generate greater interest in the real estate market.
Given the growing popularity of cryptocurrency in Cyprus, purchasing real estate using cryptocurrency is a viable option in the current atmosphere. Developers are already offering properties for sale in Bitcoin, which is becoming more common. It is now a reality that the global trend for cryptocurrency is growing, and the number of people willing to conduct transactions in Crypto, or digital money, is growing. There is also the option to convert cryptocurrency into Fiat money for individuals who prefer to accept payment in the traditional manner using Euro or other currencies.
The purchase and sale of real estate is carried out as a standard transaction which appears as indicated below:
An immediate question that arises, is to how to convert the cryptocurrency into cash or the local currency if the seller does not wish to keep cryptocurrency. This can be achieved in different ways, even if you hold on to your Bitcoins or other cryptocurrencies and sell them after several years.
Alternatively, if you do not wish to do this you can convert them into cash as below:
When it comes to the question of whether or not cryptocurrency is taxable in Cyprus and whether you have to pay taxes on converting cryptocurrency, it seems that Cyprus is in a more privileged position than other European countries. The reason is that funds that derive from Initial Coin Offerings (I.C.O.) are subject to taxes in Cyprus since they are deemed to be a taxable income. However, Cyprus has one of the lowest and most attractive corporate tax rates at 12.5% and this is reason for its greatest advantage in comparison with any another European country. The transferring of Crypto between wallets or accounts that you own is not taxable. You can transfer your own original cost base and dates by accruing and tracking your potential tax impact when you eventually sell.
On comparing Cyprus with Malta, Malta is more popularly known as a blockchain island, since Malta does not impose Capital Gains on Cryptocurrencies that have been held for a long time. There are of course many other Crypto-friendly countries in the world such as Portugal, Switzerland (which is a country known for its incredible banking standards) and Germany.
In Cyprus, the Prevention and Suppression of Money Laundering and Terrorist Financing Law L188 (I)/2007, (the AML Law) was amended through the L13 (I)/2021 (the Amending Law) to harmonize domestic legislation with the provisions of the 4th and the 5th AML Directives (Directives (EU) 2015/849 and 2018/843). The 5th AML Directive made several amendments to the 4th AML Directive (together the AML Directives) effectively extending AML/CTF controls to the below:
As a result of the amendments introduced by the 5th AML Directive, EU Member States are required to ensure that exchange providers and Custody Providers are registered, and the persons holding management functions or who are the beneficiary owners of providers are fit and proper. In Cyprus, the Cyprus Security and Exchange Commission (CySec) has been designated as the competent supervisory authority for matters relating to crypto asset regulations and has been provided with powers to regulate through directives. By implementing the EU Directives, trading with cryptocurrencies in Cyprus is legally permitted. It is therefore safe to say that trading with Cryptocurrencies in Cyprus is conducted according to the rules of general Civil Law.
Cryptocurrencies are a new trend that can easily be implemented into property transactions as it is becoming even more popular around the world. The property market has had to adapt so that sales are also made through cryptocurrency. One of the most important pillars of the country's economy, which will also continue to be considered as one of the most important pillars, is the purchase and sale of properties. Consequently, adaptation was required and necessary. The most important point to remember when investing in Cryptocurrencies is to consider your risk. You should not forget to calculate the taxes and fees that you will need to pay in order to make a wise financial decision.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Mr Savvas Savvides, Partner and Director of the Paphos Office at Michael Kyprianou & Co LLC, at Tel: +357 26 930 800 or via email at Savvas.Savvides@kyprianou.com