A GUIDE FOR BUSINESSES
In the complex landscape of business operations, the filing of annual financial statements stands as a pivotal requirement, not only ensuring regulatory compliance but also fostering transparency and accountability within the corporate sphere. In Luxembourg, this process details submitting accounts to the ECDF platform for accessibility by Luxembourg administrations. Moreover, certain entities are obliged to file their annual accounts with the Luxembourg Business Register to facilitate public access.
Entities Obligated to File with the Luxembourg Business Register (RCS)
Scope:
In accordance with Article 24 (amending the “Commercial Code”) and article 25, Title II of the Law 19 December 2002, the primary entities falling under this obligation include:
Commercial companies.
Affiliates of foreign companies.
Contents of the Financial Statements under LuxGaap
The content of the financial statements to be filed varies based on the size of the entrepreneurship:
Filing Requirement | Small Company | Medium Company | Large Company |
Balance Sheet | Abbreviated annual accounts | Abbreviated annual accounts | Yes |
Profit and Loss Account | Optional | Yes | Yes |
Notes to Accounts | Abbreviated annual accounts | Abbreviated annual accounts | Yes |
Management Report | Optional | Optional | Optional |
Audit Report | Optional | Abbreviated annual accounts | Abbreviated annual accounts |
Key Distinctions in Financial Reporting Requirements for Small and Medium Companies
Small and medium-sized companies (SMEs) face varying obligations regarding their balance sheet disclosures. Here’s a breakdown of the minimum requirements and the criteria for classification:
Distinguishing Criteria:
- Small company are those that do not exceed two of the following three limits for two consecutive fiscal years: (i) balance sheet total > 4.4 million euros (ii) turnover > 8.8 million euros (iii) workforce > 50 employees (Art.35 LRCS )
- Medium company are those that do not exceed 2 of the following three limits for 2 consecutive financial years: (i) total balance sheet > 20 million euros (ii) turnover > 40 million euros (iii) workforce > 250 employees (Art.47 LRCS )
- Large company are those that equal or exceed 2 of the following three limits for 2 consecutive financial years: (i) total balance sheet =/> 20 million euros (ii) turnover =/> 40 million euros (iii) workforce =/> 250 employees (Art.47 LRCS)
Filing Deadline:
- Financial statements must be filed within one month of their approval and no later than seven months after the end of the financial year.
Penalties for Non-Compliance:
- Directors or managers failing to submit financial accounts within the stipulated deadline and/or in the required format may face criminal fines ranging from €500 to €25,000.
Proposed adjustments
On 21 December 2023, the Delegated Directive amending the Accounting Directive was published, adjusting the monetary size criteria for micro, small, medium-sized, and large companies by 25%. Member States are required to update their local legislations by 24 December 2024 to align with the Directive. The new size criteria will apply to financial years starting from 1 January 2024, but Member States have the option to permit companies to apply the adjusted criteria from the financial year beginning on or after 1 January 2023.
Sources:
https://legilux.public.lu/eli/etat/leg/loi/1915/08/10/n1/jo
https://legilux.public.lu/eli/etat/leg/loi/2002/12/19/n1/jo
https://legilux.public.lu/eli/etat/leg/rgd/2015/12/18/n11/jo
https://www.cnc.lu/fileadmin/user_upload/publications/doctrine/Q_A_CNC_19-019_Art._36_LRCS_-_vf.pdf