Virtual Currencies In Luxembourg

The Luxembourg tax authorities published on 26 July 2018, a circular in relation to the tax treatment of income realized by means of virtual currencies, notably in the framework of their alienation or creation.

The main takeaways are:

Virtual currencies are not fiat monies since they do not have legal tender. Accordingly, the tax payer is not allowed to either establish their annual accounts for tax purposes or declare their taxable income in virtual currencies;

Virtual currencies are intangible assets;

All income and proceeds, operating expenses, acquisition costs, special expenses and extraordinary expenses denominated in a virtual currency, are to be determined in euros or in another currency for which the European Central Bank establishes and publishes the exchange rate of the Euro against that foreign currency, notably on the basis of the daily rate published by an exchange platform approved by the Luxembourg Commission de Surveillance du Secteur