Are you interested in details of the draft bill that Luxembourg presented to the parliament and that implements the Anti Tax Avoidance Directive 1 (ATAD I) in national legislation? Would you like to find out more about the circular on the direct taxation regime of virtual currencies? Read the news from international taxation.
Luxembourg submits draft bill to implement ATAD I to parliament
The draft bill that would implement the EU Anti-Tax Avoidance Directive (ATAD I) into Luxembourg’s domestic law, as well as some unrelated measures, was published on 20 June 2018. The ATAD I, which is part of the anti-tax avoidance package presented by the European Commission in 2016, aims to provide a minimum level of protection for the internal market and ensures a harmonised and coordinated approach in the EU to the implementation of some of the recommendations under the OECD base erosion and profit sharing (BEPS) project. The draft law now must go through Luxembourg’s legislative process where parliament will debate, possibly amend and ultimately vote on the proposed measures. If enacted, the measures would apply as from fiscal years starting on or after 1 January 2019, except for the proposed exit taxation rules, which would apply as from fiscal years starting on or after 1 January 2020.
Luxembourg tax authorities clarify treatment of virtual currency
The Luxembourg tax authorities released a circular on 26 July 2018 that addresses the direct tax treatment of virtual currency, particularly income generated through the creation or disposal of cryptocurrency. Income derived from a cryptocurrency will be considered “commercial income” where it falls within the definition of such income under article 14 of the Income Tax Law. This typically would be the case for the mining of virtual currency, or the operation of an online stock exchange or vending machines with virtual currencies. Operating expenses, such as costs of electricity related to virtual currency mining or conversion fees of virtual currency exchange platforms, are deductible only if the expenses were incurred exclusively by the enterprise and they are not related to any tax-exempt income. The same applies to the depreciation of computer infrastructure. In the absence of a commercial enterprise, it must be determined whether income derived through virtual currency falls within the category of other income in article 99 of the Income Tax Law. This can be the case, for example, where a mining activity does not fulfil all the criteria to qualify as a commercial undertaking in Luxembourg.
Seminars, webcasts, business breakfasts and other events organized by Deloitte.
