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Taxes

Taxation of Cryptocurrency in Luxembourg in 2025

The topic of cryptocurrencies is increasingly on the rise and one of the points that arouses more interest, especially when prices go into rocket mode, is taxation. Through this guide we will then review what is the current state of taxation of cryptocurrencies in Luxembourg.

Last time updated
11.12.24

The taxation of cryptocurrencies in Europe varies greatly with rates ranging from zero to 52%, Luxembourg for its part is one of the most favorable countries in this regard, as if certain conditions are met taxation can be 0%.

General cryptocurrency laws in Luxembourg in 2025

We will start our review by examining the laws and entities involved in crypto tax in Luxembourg, however, before we get into the subject, we will briefly review what cryptocurrencies and NFTs are.

Cryptocurrencies are decentralized digital assets that use cryptography to ensure the security of transactions and control the creation of new units. One of the most important characteristics of cryptocurrencies is their decentralization. This refers to the fact that cryptocurrencies are not controlled or backed by an independent entity, they do not depend on a Central Bank or any government entity. Cryptocurrencies are characterized by their:

Security
cryptocurrencies use cryptography to protect transactions so it is very difficult to alter a transaction.
Decentralization
they work through a distributed network known as blockchain which eliminates the need for intermediaries such as banks and allows autonomous control of transactions.
Speed
They allow for fast and cheaper transfers globally.
Volatility
cryptocurrency prices are highly volatile.

In addition to cryptocurrencies, in the crypto world, there are also NFTs and as the acronym of their name indicates, these are non-fungible tokens, that is, unique digital assets. These digital assets usually represent ownership of a digital or physical object. Here are their main characteristics:

Unique and indivisible
each NFT has unique attributes that distinguish it from other tokens and cannot be divided into smaller units like cryptocurrencies.
Verifiable ownership
ownership of an NFT is recorded on the blockchain which provides proof of authenticity and facilitates the transfer of rights.
Interoperability
NFTs can be used in different applications and platforms and are accessible through marketplaces specialized in transactions of these assets.
Investment potential
they have gained popularity as investments due to the value that some of these assets have achieved in the market.

Tax authority and laws

The entity responsible for the taxation of cryptocurrencies in Luxembourg Inland Revenue. This entity is in charge of applying and managing the tax laws in the country, its main role is to supervise and ensure compliance with the tax obligations of individuals and companies, including those related to crypto assets.

(+352) 24 75 24 75
33 Rue de Gasperich, Howald Hesperange
n/a

And what about crypto tax laws? The Luxembourg tax regime for crypto assets is generally governed by the country's standard tax laws and principles, as there is no separate legislation for the taxation of crypto assets. This means that both individual investors and companies must manage the existing tax framework to understand their obligations with respect to crypto assets, including cryptocurrencies and non-fungible tokens (NFTs). However, some recent laws do mention crypto assets directly and circulars have emerged in order to clarify the application of current regulations with respect to cryptocurrencies.

Income Tax Law (LIR)
this law establishes the general framework for the taxation of income, including that derived from activities with cryptocurrencies. As cryptocurrencies are relatively recent, there was initially no clarity on how the income tax law should be applied in this area, however, the circular of July 26, 2018 solved this problem by providing interpretations and guidelines on how the current law should be applied to cryptocurrencies.
Law of April 5, 1993 on the Financial Sector
this legislation regulates financial activities in Luxembourg and is relevant for companies operating with cryptocurrencies, especially with regard to the prevention of money laundering and terrorist financing.
Markets in Crypto-Assets Regulation (MiCA)
although this is a European Union regulation MiCA has direct implications in Luxembourg. This regulation establishes a regulatory framework for crypto assets and their service providers.
The law of March 25, 2020
this law transposes the EU's Fifth Anti-Money Laundering Directive (5AMLD) into national law by extending measures to prevent money laundering and terrorist financing to activities related to crypto assets.

Among the laws and regulations that address in one way or another the issue of cryptocurrencies in Luxembourg we can find the following:

Tax treatment of cryptocurrencies in Luxembourg

Let's now examine the taxation of crypto assets in Luxembourg, to do so we will examine 3 key points: the taxation of capital gains from the disposal of cryptocurrencies, the taxation of gains from the disposal of NFTs and the considerations with respect to VAT.

Capital gains
Taxation of NFTs
TVA

Reporting and compliance with cryptocurrency taxes

Income from crypto assets must be declared to the Luxembourg tax authorities in the annual tax return. Although it is not necessary to submit detailed transaction records with the tax return, it is important to have these records readily available so that they can be provided to the tax authorities if required. These documents will allow you to justify the income declared and the tax calculations made.

It is therefore recommended to keep a detailed record of transactions that includes the following elements:

Something's missing
Make sure you have all the documents
*The mandatory items are marked with red asterisks.
Dates of purchase and sale Amounts invested and sale prices Commissions associated with the transactions
Amounts invested and sale prices
Commissions associated with the transactions
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Make sure you have all the documents
*The mandatory items are marked with red asterisks.

Penalties for non-compliance for cryptocurrency in Luxembourg

Individuals who fail to declare gains obtained from cryptocurrency transactions may face various tax penalties. These penalties are basically the same as those that a filer would face when omitting any other type of benefit.

  • Late or incorrect filing penalties: if a taxpayer files their return late or with inaccurate information, the ACD may impose penalties that vary depending on the severity and duration of non-compliance.
  • Late payment interest: the late payment interest rate is 0.6% per month on the outstanding tax amount, which accrues until full payment is made.
faq

Frequently Asked Questions (FAQ)

Are there specific guidelines for taxing NFTs in Luxembourg?

Are cryptocurrency transactions subject to VAT in Luxembourg?

Do I need to declare cryptocurrency holdings even if I haven't sold them?

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