Update 2016 of the Luxembourgish Commercial and Accounting Law

Law of 9 December 2015 modifying Luxembourgish accounting standards

On 9 December 2015 the Luxembourgish Parliament adopted the draft bill 6718 which transposes the Directive 2013/34/EU of the European Parliament and the Council on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings into national law.

Amongst other things the new law introduces the materiality principle and modifies various provisions relating to the presentation of the annual accounts and the notes to the annual accounts.

Balance sheet and profit and loss account are harmonized to the EU Directive. The presentation of the profit and loss account has been changed from account form to staggered form (list).

The thresholds to determine large sized entities have been increased to EUR 20 million (currently EUR 17.5 million) for the total balance sheet and EUR 40 million for the turnover (currently EUR 35 million).

The main changes related to the notes to the annual accounts are the following:

  • Introduction and definition of the materiality concept;
  • Obligation to present the notes to the annual accounts in a specific order;
  • Obligation to describe the accounting policies in addition to the valuation rules;
  • Disclosure of gross amounts in case of compensation/netting;
  • Nature and financial impact on post balance sheet events for medium and large entities;
  • Disclosure requirement of exceptional items;
  • Additional disclosure requirement for small-sized entities related to the average number of staff by category;
  • New disclosures exemptions for small-sized entities relate to:
    • information regarding the investments in which they hold at least 20% of the share capital, except when this information is so important that it could alter the true and fair view of the annual accounts;
    • information on the fair value of financial fixed assets in case the latter is below the book value of the asset.

Furthermore Goodwill and developments costs which useful life are not reliably estimated cannot be depreciated over more than 10 years

The New Law shall apply for the first time to the annual accounts for financial years beginning 1 January 2016 or during the calendar year 2016.