Agefi Luxembourg - novembre 2025

Novembre 2025 47 AGEFI Luxembourg Informatique financière C rypto currencies and other crypto assets are increasin- gly being adopted by in- vestors. Over time, the legal framework applicable to this asset class has become more defi- ned. Although Luxembourg does not yet have specific tax legisla- tion dedicated to crypto assets, the Luxembourg direct tax autho- rities issued Circular L.I.R. n°14/5 – 99/3 – 99bis/3 on 26 July 2018, providing guidance on their tax treatment for Luxembourg tax re- sidents (the “Circular”). Types of investors and investment profiles Under Luxembourg tax law, investors in crypto assets may be classified as in- dividuals or corporations. Anadditional distinction ismadewithin the category of individual investors, based on their investment strategy – namely between traders (regarded as carrying out a business activity) and or- dinary investors (considered as merely managing their private wealth). Investing and trading represent two distinct approaches of participating in the financialmarkets, each carrying spe- cific tax implications under Luxem- bourg law. Broadly speaking, ordinary investors typically follow a passive strategy, aiming for long-term returns through a buy-and-hold approach. In contrast, traders actively seek to capi- talise on both bull and bear markets by entering and exiting positions over shorter timeframes, targeting frequent returns. The aim of this article is to provide an overview of the Luxembourg tax regime applicable to each category of investor and investment profile, while acknowledging that this distinction is necessarily simplified and the qualifica- tion of each investor will depend on the specific facts and circumstances. Luxembourg tax framework applicable to individual investors Asmentioned, the taxationof individual investors primarily depends on their in- vestment strategy, particularly on whether the income generated qualifies as business income or as income result- ing from ordinary private wealth man- agement (i.e., miscellaneous income). Taxation of a trader An individual using a trading strategy will, in principle, be considered to carry out a business activity and thus fall within the scope of the business income tax regime.According to the guidance of the Luxembourg tax authorities, such activity is considered a business activity if it is carried out as an independent ac- tivity, of permanent nature, pursued with the intention of generating profits, and represents participation in general economic life. For example, an individualwho actively trades stocks on a daily basis on behalf of thirdpartieswith systematicmonitor- ing and the intent to generate short term profits shouldbe consideredas conduct- ing a business activity. In such cases, profits generated from their crypto ac- tivity, irrespective of their nature, are taxed as business income at the trader’s progressive income tax rates. In addi- tion, traderswill be subject tomunicipal business tax (“ MBT ”). For further de- tails, please refer to Section III. The Circular set outs the following indi- cators for determiningwhether an activ- ity in the crypto sector qualifies as a business activity: - Premises or organization dedicated to virtual currency operations; - Use of borrowed capital; - Frequent turnover of the inventory of virtual currencies; and - Trading on behalf of third parties. Hence, a fact specific analysis will be re- quired in each case to assesswhether the activity of an individual qualifies as a business activity. Taxationof ordinary investors If the conditions for the business activity arenotmet, the individualwill be consid- ered as an ordinary investor and thus fall outside the business income tax regime outlined above. Profits generated by these investors from buying and selling cryptocurrencies over short time frames, i.e. gains arising from the sale/exchangeof cryptoassetsheld for less than six months would qualify as a speculative gain. In such cases, the gain is subject to the individual’s progressive in- cometaxrate,unlessthetotalannualspec- ulativegainremainsbelow€500,inwhich case it is exempt fromtaxation inLuxem- bourg. Ordinary investors holding their crypto assets over a longer time horizon fallunderthecapitalgainstaxregime,pro- vided the holding period exceeds six months. In such cases, capital gains re- alised upon the sale/exchange of the crypto assets are exempt from taxation in Luxembourg. Crypto-related taxation is not limited to the buying and selling/exchange of cryp- tocurrencies. Various activities involving crypto assets can also generate taxable in- come, including the following: - Mining: The process of validating and addingtransactionstoablockchainonnet- works using a proof-of-work consensus mechanism. Miners are rewarded with newlyissuedcoins(blockrewards)and/or transactionfeesinexchangeforcontribut- ing computational power. - Staking: The act of locking or delegating crypto-assetstosupporttheoperationand securityofablockchainnetworkthatuses a proof-of-stake (or similar) consensus mechanism.Inreturn,participantsearnre- wards, typically in the formof additional tokens of the same cryptocurrency. -Othercryptoassetsincome:Thisincludes income arising from blockchain events such as airdrops (free distribution of to- kens,oftenforpromotionalorrewardpur- poses) and hard forks (chain splits that mayresultinholdersreceivingadditional tokens on the newchain). Mining gains From a Luxembourg tax perspective, cryptocurrencyminingisgenerallytreated as a business activity, notably due to the infrastructureneededtocarryoutsuchan activity (e.g., mining farm), thus the rele- vant investor being treated as a trader. However, the tax treatment depends on several key indicators outlined in the Cir- cular, as previously discussed in the sec- tion II.A. titled “Taxation of a trader” . In the hypothetical case where the min- ing activitydoes notmeet the aforemen- tioned indicators to be classified as a business activity, the income from such activity should be classified as miscella- neous income andbe subject toprogres- sive taxation. Staking gains Stakinggainsarenotexplicitlycoveredby a specific legal framework in Luxem- bourg. staking income shouldbe taxed as miscellaneous income and be subject to progressive taxation. Other crypto assets income Severalothertypesofincomescanbegen- erated from crypto assets. Amongst the mostcommonareairdropsandhardforks. Thereisnoclearlegalortaxframeworkin Luxembourg for income from the above- mentioned crypto assets. As a result, the general provisions of Luxembourg in- come tax law should apply. Therefore, should the Circular’s criteria not be met, such remunerationwould likely be taxed asmiscellaneous income and taxed at the individual’sprogressiveincometaxratein Luxembourg. Taxable event and tax filing Income generated from crypto assets shouldgenerallybereportedinthetaxre- turn of the taxpayer corresponding to the yearinwhichtheincomeisearned.Hence, it iskey todeterminewhensaid income is considered to be earned for Luxembourg tax purposes, i.e. the taxable event needs be identified. Inthecontextofthecryptoassets,ataxable event typically arises in the following sit- uations: -Conversionofcryptocurrencies:Thecon- version/sale/exchangeofacryptocurrency toafiatcurrency(e.g.EUR,USD…)orinto another cryptocurrencywill trigger a tax- able event. Thus, the taxable gain (if tax- able)wouldneed to be assessed; - Other crypto asset income: Income gen- eratedfromcryptoincludes,butisnotlim- ited to, additional crypto assets received (e.g., through mining, staking, airdrops, hardforks or other rewards) and any transaction fees earned. Said income should, in principle, be taxable upon re- ceipt basedon theirmarket value. In order to ensure appropriate tax treat- ment, investors should retain and be able to provide sufficient documenta- tion to the Luxembourg tax authorities in respect of the income generated, in- cluding proof of acquisition date (e.g., for the 6-months period for individuals), fair market value at the time of receipt, and the nature of the transaction. Trad- ing platforms generally provide this documentation automatically on an an- nual basis, however, should such infor- mation not be provided by trading platforms, a self-track record of the trades performed should be observed. On the other hand, while traders should nonetheless maintain sufficient docu- mentation to comply with their tax re- porting obligations, the nature of the transactions should have no incidence on the applicable tax treatment. Luxembourg tax framework applicable to corporate investors Taxationof corporate investors Corporate investors resident in Luxem- bourg carrying out an activity generating financial income based on crypto assets should,inprinciple,besubjecttocorporate income tax (“ CIT ”) andMBT. For fiscal year 2025, any profits gener- ated from crypto assets, irrespective of their nature, by a tax-resident and fully taxable corporate investor should be subject toCIT andMBT at the aggregate rate of 23.87% in Luxembourg city. In addition, the fair market value of the assets held in the context of such activity should be assessed to determine a com- pany’s taxable basis for net wealth tax (“ NWT ”) purposes. Specifically, the fair market value of crypto assets held at the end of the fiscal year is relevant for cal- culating the unitary value determina- tion and the corresponding NWT charge as of 1 January of the following year. The unitary value will be subject to NWT at a rate of 0.5% for a net asset value of less than € 500 million and 0.05% for any net asset value in excess of € 500 million. Additionally, for fiscal year 2025, a mini- mumNWTwillapplyasfollows:€535for a balance sheet total of up to € 350,000, € 1,605 for a balance sheet total exceeding € 350,000but not exceeding€ 2million, and € 4,815 for a balance sheet total exceeding € 2million. Taxable event and tax filing Our commentspreviouslyoutlined in the sectionII.C.titled “Taxableeventandtaxfil- ing ” apply mutatis mutandis to corporate taxpayers. In this regard, and along the linesofourcommentsinrespectoftraders, while corporate taxpayers should main- tain sufficient documentation to comply withtheirtaxreportingobligations,thena- tureofthetransactionsshouldhavenoin- cidence on the applicable tax treatment. LuxembourgVAT treatment Cryptocurrencies In line with CJEU case law, the Luxem- bourg VAT Authority confirmed that cryptocurrencies are to be subject to the same VAT treatment as any other cur- rency.Assuch,theuseofcryptocurrencies as ameans of payment for goods or serv- ices falls outside the scope of VAT. How- ever, the supply of goods or services paid for in cryptocurrencies remains subject to VATon thevalueof theunderlying trans- action,i.e.,thevalueofthecryptocurrency used as consideration for the supply. The VAT Committee highlighted that mining activities warrant a distinct VAT treatment. Where miners receive remu- neration randomly (e.g., via airdrops), such mining services do not constitute a taxablesupplyandshouldfalloutsidethe scope of VAT. This is based on general VATprinciplespursuanttowhichatrans- actionmustbecarriedoutinexchangefor a consideration that it is ascertainable for it to fall within the scope of VAT.Accord- ingly, mining services that guarantee re- muneration in cryptocurrency should be subject toVAT. Ancillary services provided bywallet op- erators, suchas the storageand transfer of cryptocurrencies are taxable supplies but maygenerallyqualifyfortheVATexemp- tionapplicabletofinancialservices.Incon- trast, intermediation services offered by exchange platforms should be character- ized as an electronically supplied service and shouldbe fully subject toVAT. DAC8 To enhance tax transparency and tackle aggressive tax planning, the European CommissionproposedarevisiontoDirec- tive2011/16/EUonadministrativecooper- ation in tax matters, leading to the introduction of the eighth amendment, namelyDAC8. Thisdirective extends the scope of automatic information exchange to include data reported by crypto-asset service providers regarding transactions involving the transfer or exchange of crypto-assets (including stablecoins) and e-money tokens. The proposal was pre- sented on 8 December 2022 and adopted by the European Parliament on 13 Sep- tember 2023. DAC 8 is expected to enter intoforceon1January2026,withMember States required to transpose the directive intonational lawby 31December 2025. It is expected that DAC 8 will increase transparency in the field of crypto-assets, aswell as improving the amount of infor- mation available to local tax authorities. Conclusion DespiteLuxembourg’sproactivestepsto- ward integrating crypto assets into its fi- nancial and regulatory landscape - the taxation of crypto assets remains a com- plex and evolving area. While certain favourable tax treatments may apply underspecificconditions,thelegalframe- workdoesnotyetprovidecomprehensive or definitive guidance on all aspects of crypto taxation inLuxembourg. Given this uncertainty, it is essential that each situation involving crypto assets be analysed individually to determine the appropriate tax treatment. Factors such as the nature of the transaction, the hold- ingperiod,thetypeofasset,thevaluation mechanic, and the taxpayer’s profile can significantly influence the tax outcome. In this regard, and considering the in- creasing amount of information being sharedwithandamongst taxauthorities, it is of the essence that investors, and in particular, investors gather sufficient in- formation to support the nature of the transactions undertaken. To foster legal certainty and support the growthof thedigital asset ecosystem, fur- ther clarifications and detailed guidance wouldbehighlybeneficial.Amoreprecise and transparent legal framework would not only enhance compliance but also re- inforce Luxembourg’s position as a lead- inghub for digital finance inEurope. Luis MUNOZ, Partner Emre AKAN, Counsel Adrien LE LÉONNEC - SERRA, Associate Florian REINA, Associate DLA Piper Luxembourg Are your crypto assets taxable in Luxembourg? Abonnement aumensuel (journal + éditiondigitale) 1an(11numéros)=55€abonnementpourLuxembourgetBelgique-65€pourautrespays L’édition digitale du mensuel en ligne sur notre site Internet www.agefi.lu est accessible automatiquement aux souscripteurs de l’éditionpapier. NOM:....................................................................................................................................................................... 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