Financial reporting in Luxembourg

What is financial reporting and why is it important?

Financial reporting refers to the process by which a company prepares and presents detailed financial information about its financial condition, performance and changes in its financial position. These reports are intended for various stakeholders, such as shareholders, investors, regulators, employees and other interested parties.

Financial reports have multiple purposes such as providing transparency or facilitating decision-making, here are some of their main purposes:

• Transparency and trust. Financial reporting allows companies to provide transparency about their economic and financial situation. This is essential to build trust with shareholders, investors, banks, employees, customers and suppliers among others. In addition, this transparency helps stakeholders understand how financial resources are being used and the soundness of the company.
• Legal compliance. In Luxembourg, companies must legally file annual financial reports with the Trade and Companies Register RCS. Proper financial reporting not only ensures compliance but also supports efficient business management. Our Accounting Services can help you manage your reporting processes seamlessly, ensuring accuracy and timeliness. 
• Tax obligations. These reports are the basis for complying with tax obligations as they are the basis for the taxes that the company must pay to the State. Without a clear and accurate presentation of the financial statements, the company could face problems with the tax authorities. If you need assistance with tax compliance, explore our Tax Compliance Services to ensure your business meets all regulatory requirements in Luxembourg.
• Access to financing and investment. These reports enable companies to access financing from banks, investors or capital markets. Banks require these reports to assess the company's ability to repay loans, while investors analyze them to make decisions about their possible participation in the company.
• Fraud and mismanagement prevention. Financial reports help prevent fraud and detect irregularities within the company. By having to provide your financial statements to the RCS, they are then accessible to the public and can be viewed by anyone. This transparency deters managers or employees from engaging in inappropriate behavior.

Which companies must file financial reports in Luxembourg?

Under Luxembourg law, most companies in the Grand Duchy are required to file annual financial statements, specifically the following types of companies are required to do so:

• Capital companies: Public Limited Companies (SA) Private Limited Liability Companies (SARL) Partnership Limited by Shares (SECA) Cooperative companies European Companies (SE) 
• Partnerships and traders: General Partnership (SENC) Limited partnership (SCS) Traders who are natural persons with an annual turnover over 100,000 euros 
• Groups: Economic Interest Grouping (EIG) European Economic Interest Grouping (EEIG) Branch offices of groups. 
• Luxembourg branch offices from foreign companies (except credit institutions and insurance and reinsurance companies).

What documents must be submitted?

The documents that companies must declare depend on their size. A company can be classified as small, medium or large according to several criteria and depending on its classification, it must submit more or less documentation. 

The following table shows the classification criteria, it is important to note that the company must meet the thresholds for two of the three criteria to fall into a category and that the thresholds must be exceeded or not exceeded for two consecutive fiscal years.

Depending on the size of the company, the content of the accounts to be presented will be different: 

The document must be submitted using the Luxembourg accounting standards or the IFRS if the company is required to do so. 

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What are the deadlines and costs?

In Luxembourg, the annual accounts and the appropriation of profits must be approved within 6 months after the end of the calendar year for individuals or of the financial year for legal entities by the following entities depending on the type of company:

• By the partner's general meeting in the case of a limited liability company (SARL) or a simplified limited liability company (SARL-S)
• By the shareholders' general meeting in the case of a public limited company (SA)
• By the shareholders' general meeting with the approval of the business managers in the case of a partnership limited by shares (SECA or SCA)
• By the business managers in the case of a partnership (SENC)
• By the trader himself in the case of sole proprietorship.

Once approved, the annual financial statements must be submitted during the month following their approval, that is, at the latest 7 months after the end of the calendar year for natural persons established as traders, or 7 months after the end of the financial year for legal entities.

Those who submit their application within the established deadlines must pay a fee of 19 euros, while companies submitting the documents after the deadline must pay a higher fee depending on the delay:

• Delay of more than 1 month: deposit fee of 50 euros.
• Delay of more than 2 months: deposit fee of 100 euros.
• Delay of more than 4 months: deposit fee of 500 euros.

What is the procedure to follow?

For financial reporting, filers must file their accounting package electronically with the Registre de Commerce et des sociétés (RCS) using a LuxTrust certificate. It is important to note that unless companies are authorized to use IFRS they must file their balance sheet following the Luxembourg standard chart of accounts (PCN).

The procedure to follow is as follows:

• 1. Create an eCDF account

  The eCDF is an electronic platform for the collection of financial data that allows the preparation, electronic validation and transmission via the Internet of the financial data to be provided to the State. Before being able to use it, it is necessary to create an account. Detailed information on how to create an account can be found on the eCDF website or the dedicated page of guichet.lu.

• 2. Performing electronic validation of accounting documents in eCDF

  The next step is to perform the electronic validation of the accounting documents in eCDF, this involves sending the accounting package with all the documents relating to the company's annual accounts for a given fiscal year.The eCDF system allows you to enter the financial data using the standard PDF forms available on the eCDF platform or to perform a data transfer via an XML file generated from the company's accounting system.

• 3. Performing the electronic registration of the accounting package in the RCS

  Once the accounting documents have been validated on the eCDF platform, the company must send the accounting package electronically to the RCS. During the procedure, it is necessary to indicate that the annual accounts have been validated on the eCDF platform by ticking the corresponding box so that the Luxembourg Business Registers (LBR) can automatically retrieve the accounting data from the eCDF platform.During the registration, it is necessary to define the day on which the notice of the filing of the accounts in the Recueil Électronique des Sociétés et Associations (RESA) will be made public, you can choose the same day or a fixed date at the latest 15 days after the filing.