Circular on VAT Treatment of Virtual Currencies

On June 11^th 2018, the director of the Luxembourg indirect tax authorities (Administration de l’enregistrement et des domaines, “AED”) issued a circular, which confirms that the position held by the ECJ, in its court ruling Hedqvist of October 22^nd 2015 (C-264/14), should apply in Luxembourg and that the VAT exemption for transactions involving foreign currencies (provided for in Article 44(1) (c), 7^th indent of the Luxembourg VAT law) should not only include traditional currencies but also virtual currencies (e.g. Bitcoins), provided that these virtual currencies have no other purpose than being a means of payment and that they are accepted for that purpose by certain operators.