Crypto Tax Legislation & Law in Luxembourg

There is no specific Luxembourg legislation for the taxation of crypto-assets. Therefore the general tax rules and principles should apply. Accordingly, a specific circular dated 26 July 2018 was issued by the Luxembourg direct tax authorities (the “Circular”) aiming to clarify the qualification of virtual currencies (monnaie virtuelle) as well as its tax treatment. Based on our experience, this Circular is expected to apply also to other crypto-assets, although this should be confirmed on a case-by-case basis.

The exchange of a crypto-asset for FIAT should entail the realisation at fair market value of the assets being transferred followed by the acquisition of the asset received in exchange. The tax treatment applicable to this transaction will depend on whether the income derived from such transaction falls within the category of business profits (i.e., income derived from a commercial activity) or miscellaneous income (i.e. income derived from the management of the individual’s private wealth). Business profits should be taxed on a net basis and at progressive personal income tax rates in the hands of the individuals. Miscellaneous income-related gains realised within less than 6 months after the acquisition of the crypto-assets should be considered as speculative gains and taxed on a net basis at progressive personal income tax rates in the hands of the individuals. Speculative gains amounting to less than EUR 500 during a specific tax year are exempt for personal income tax purposes.

Yes, generally a similar treatment should apply.

Such transactions should, provided all the conditions are met, fall into the tax category of commercial activity. Therefore, income derived from such activity should be taxed as business profits. An activity is deemed to be a commercial if it is:

• independent
• permanent
• carried out with the intent to realise profits
• involving participation in the general economic life.

According to the Circular, the following criteria can be used to identify a professional activity related to virtual currencies:

• premises or organisation dedicated to the relevant transactions
• use of borrowed funds
• frequent movements in virtual currencies inventory
• trading on behalf of third parties.

Related income qualifies as business profits and should be taxed on a net basis and at progressive personal income tax rates in the hands of the individuals.

Losses can be offset against other categories of income during the taxable year; and if not possible, can be carried forward for 17 years (subject to conditions) to offset any net income of subsequent years. However, speculative losses may in principle only be offset on other speculative gains of the same year; or if not possible, with other miscellaneous income.

See answer to Q5 above.

In principle yes, although there is no specific guidance and a case-by-case analysis on the specific NFT features is recommended.

According to the Circular, mining activity should constitute a taxable event for income tax purposes.

Cryptocurrency mining activity should, provided that all the conditions are met, fall into the category of commercial activity, which is generally the case. Therefore, income derived from such activity should be taxed as business profits. Otherwise, income derived from cryptocurrency mining activity would be subject to income tax as miscellaneous income.

In principle, taxation is like that for mining.

Yes, these may constitute taxable events for income tax purposes.

For instance, airdrops and mining should in principle not constitute a taxable event for income tax purposes. On the other hand, hard forks should constitute a taxable event, being assimilated to an exchange.

Self-employment income and employment income in the form of crypto-assets should be subject to personal income tax at the standard applicable rate for such categories of income.

In any event, the guidelines provided by the tax authorities are limited and most events/models should be checked on a case-by-case basis depending on the particular circumstances and in which category of income these fall.

The ‘DAC-8’ directive (EU 2023/2226), adopted by the Council on 17 October 2023 and amending Directive 2011/16/EU on administrative cooperation in the field of taxation, was transposed into Luxembourg law by the law of 27 March 2026, with retroactive application from 1 January 2026.

It extends the scope of automatic exchange of information to cover crypto-assets and strengthens fiscal transparency. Reporting crypto-asset service providers (RCASPs)—including entities authorised under MiCA (Regulation (EU) 2023/1114) as well as crypto-asset operators not covered by MiCA but having a sufficient nexus with Luxembourg—must comply with registration, due diligence and reporting obligations. Information on crypto-asset users’ resident in reportable jurisdictions will be transmitted annually to the Administration des contributions directes by 30 June, with the first reporting deadline being 30 June 2027 (for the 2026 calendar year).

The definition of ‘crypto-asset’ under DAC 8 is broader than that of MiCA and covers all types of crypto-assets that can be used for payment or investment purposes, including stablecoins, e-money tokens and certain non-fungible tokens (NFTs). However, Central Bank Digital Currencies (CBDCs) and electronic money meeting specific regulatory requirements are excluded from the scope of reportable crypto-assets.

No, not at the moment.