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Following decisions of the Court of Justice of the European Union(1) and of the French Conseil d’Etat(2) dealing with virtual currencies (e.g., bitcoin, ethereum), the director of the Luxembourg direct tax administration clarified the tax treatment applicable to virtual currencies in a circular issued on 26 July 2018 (the Circular).
The main take-aways of the Circular are (i) that virtual currencies do not constitute real currencies, (ii) that they are to be considered as intangible goods for direct tax purposes and (iii) that taxable income generated in connection with virtual currencies qualifies either as income derived from a commercial activity (bénéfice commercial) or miscellaneous net income (revenus nets divers) depending on the nature of the activity pursued....
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