Luxembourg

Financial Reporting Framework in Luxembourg

Adoption of IFRSs in Europe Effective in 2005

In June 2002, the European Union adopted an IAS Regulation requiring European companies listed in an EU securities market, including banks and insurance companies, to prepare their consolidated financial statements in accordance with IFRSs starting with financial statements for financial year 2005 onwards. EU countries have the option to:

  • Require or permit IFRSs for unlisted companies.
  • Require or permit IFRSs in parent company (unconsolidated) financial statements.
  • Permit companies whose only listed securities are debt securities to delay IFRS adoption until 2007.
  • Permit companies that are listed on exchanges outside of the EU and that currently prepare their primary financial statements using a non-EU GAAP (in most cases this would be US GAAP) to delay IFRS adoption until 2007.

The European IAS regulation applies not only to the 27 EU Member States but also to the three members of the European Economic Area (EEA) – Iceland, Liechtenstein, and Norway.

Luxembourg is an EU Member State. Consequently, Luxembourg companies listed in an EU/EEA securities market follow IFRSs since 2005. In July 2010, the European Commission published the results of a survey of the 27 EU member states and the 3 EEA member states regarding the four options above. For information on each country's plans, click to download:

The European Commission has adopted the following wording for use in the notes to the accounts and in the audit reports of companies subject to EU Regulation 1606/2002/EC (the 'IAS regulation'):

  • "in accordance with International Financial Reporting Standards as adopted by the EU" or
  • "in accordance with IFRSs as adopted by the EU".

Companies may also state, in a footnote, compliance with IFRSs as adopted by the IASB, if that is the case.

In September 2011, the European Commission services published a report an update on the extent to which certain options included within the Accounting Directives have been incorporated into the law of the Member States and EEA countries. Please click for access to the report (PDF 816k, link to EC website).

Summary of Financial Reporting Requirements in Luxembourg

Consistent with the IAS regulation noted above, Luxembourg has adopted the following requirements in respect of each class of entity:


Class of entityReporting requirements
Listed companies
  • IFRSs as adopted by the EU is required for consolidated financial statements
  • IFRSs as adopted by the EU is permitted for separate financial statements, subject to approval by competent authorities
  • Requirements are similar for subsidiaries of foreign companies and foreign companies listed on the Luxembourg Stock Exchange
Unlisted companies
  • Luxembourg accounting principles are required for separate and consolidated financial statements
  • Credit institutions, insurance and re-insurance companies can choose between IFRSs as adopted by the EU and Luxembourg accounting principles, both in separate and consolidated financial statements
  • All other entities need to obtain the approval of the Luxembourg Ministry of Justice to prepare separate or consolidated financial statements in accordance with IFRSs as adopted by the EU. The Ministry of Justice grants the derogation on the reasoned opinion of the Commission des Normes Comptables ('CNC', the Luxembourg Accounting Standards Board).

Plans for convergence

It is anticipated that IFRSs will be introduced into the local Luxembourg commercial law as an alternative to the current Luxembourg accounting principles. The Luxembourg authorities issued a draft law early in 2009, which proposed introducing IFRS for commercial companies. This draft law, if ultimately enacted as law, would provide an option to any limited liability company registered in Luxembourg to prepare its statutory financial statements in accordance with IFRSs as adopted by the EU. As Luxembourg's tax regime is dependent upon accounting requirements, the adoption of IFRSs by an entity could significantly impact the tax position of the entity.

 

Updates
Please remember that publications to which this page has links may be out of date because of new or changed IFRSs or other reasons.
 
July 2010: Comparison between IFRS for SMEs and Luxembourg GAAP

Deloitte Luxembourg has published a comparison between the requirements of the IFRS for Small and Medium-sized Entities (IFRS for SMEs) and Luxembourg Generally Accepted Accounting Principles (LUX GAAP). The publication compares the two accounting frameworks, highlighting the variations commonly possible, with the aim of providing a clear and practical overview of the differences that exist.
As at July 2010, IFRS for SMEs are neither part of the European Accounting Regulation, nor of the current Luxembourg commercial law. Accordingly it cannot be used for statutory purposes. Nevertheless there could be entities in Luxembourg applying it for group reporting purposes, because IFRS for SMEs has already been adopted in several jurisdictions.
Click for:
February 2010: Comparison between IFRS and Luxembourg GAAP

Deloitte Luxembourg has published IFRS versus LUX GAAP – A comprehensive comparison (PDF 1,085k). The publication provides a summary and a clear and practical oversight of the key differences between the requirements of IFRS and Luxembourg Generally Accepted Accounting Principles (LUX GAAP), with a focus on differences that are commonly found in practice.
May 2007: Comparison of Luxembourg GAAP, IFRSs, and US GAAP

Deloitte & Touche (Luxembourg) has published Lux GAAP–IFRS–US GAAP: A Comprehensive Comparison (PDF 332k). This publication sets out the key differences between Luxembourg GAAP, IFRSs, and US GAAP as of 28 February 2007. Regarding Luxembourg GAAP, the report states:

IFRS will be introduced into the local Luxembourg commercial law as an alternative to the current Luxembourg accounting principles. The international standards have already been included as an accounting option for credit institutions. The Luxembourg authorities are working on a draft commercial law, this will give the option to use IFRS for statutory accounts, to any limited companies registered in Luxembourg.


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