In brief
The Grand-Ducal Regulation of 25 October 2024 (GDR) introduced new accounting thresholds in Luxembourg, aligning with Delegated Directive (EU) 2023/2775, which was adopted on 17 October 2023.
This measure aims to increase the accounting thresholds applicable to companies and groups in response to the inflation observed between 2013 (adoption of the 2013 EU Accounting Directive) and 2023, and to reduce administrative burdens for businesses.
For that purpose, the GDR amends the provisions of the Luxembourg law on commercial companies dated 10 August 1915 as amended ("Company Law") and the Luxembourg law on the register of commerce and companies and accounting dated 19 December 2002 as amended ("Accounting Law").
These changes affect the criteria used to classify companies for accounting and reporting purposes and provide exemptions to certain groups.
The amendments apply retroactively to financial years beginning on or after 1 January 2023, with practical effects starting from 2025.
Key takeaways
Company categorization
The financial thresholds defining the categories of companies in the Accounting Law have been raised as follows:
| Category |
Total assets |
Net turnover |
Average number of employees |
| Small company |
≤ EUR 7.5 million
(previously ≤ EUR 4.4 million) |
≤ EUR 15 million
(previously ≤ EUR 8.8 million) |
≤ 50
(unchanged) |
| Medium-sized company |
≤ EUR 25 million
(previously ≤ EUR 20 million) |
≤ EUR 50 million
(previously ≤ EUR 40 million) |
≤ 250
(unchanged) |
| Large company |
> EUR 25 million (previously > EUR 20 million)
|
> EUR 50 million (previously > EUR 40 million)
|
> 250 (unchanged)
|
Group categorization
For groups, thresholds in the Company Law have been aligned similarly:
| Category |
Total assets |
Net turnover |
Average number of employees |
| Small group |
≤ EUR 25 million
(previously ≤ EUR 20 million) |
≤ EUR 50 million
(previously ≤ EUR 40 million) |
≤ 250
(unchanged) |
| Large group |
> EUR 25 million
(previously > EUR 20 million) |
> EUR 50 million
(previously > EUR 40 million) |
> 250
(unchanged) |
Impacts on businesses
Reduced regulatory/reporting obligations
Because of the increased thresholds, a certain number of existing medium-sized companies will be recategorized as small companies after two consecutive financial years in which the new thresholds have been met for small companies and have not been met for medium-sized companies.
As a reminder, small companies may, in principle, draw up abridged balance sheets, and medium-sized companies may, in principle, prepare abridged profit and loss accounts.
Medium-sized companies that become small may be exempted from statutory audit requirements and the obligation to prepare a management report.
Similarly, certain existing large groups will be recategorized as small groups. Therefore, their parent companies may be exempted from drawing up consolidated accounts and a consolidated management report.
Large companies that become medium-sized may be exempted from publishing sustainability information under the Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464).
Gradual effect of recategorization
Given that the new categories only take effect after two consecutive financial years in which the thresholds have been met or have not been met, the following applies:
- For preexisting companies/groups, the recategorization will become effective from 2025, following the assessment of the 2023 and 2024 thresholds.
- For newly established companies, the classification is determined in their first financial year based on a good faith estimate.
Practical examples
Preexisting company
- In 2022: The company was categorized as a medium-sized company (total assets of EUR 10 million, net turnover of EUR 13 million, 25 employees). It exceeded the previous thresholds.
- In 2023 and 2024: The company does not exceed the new thresholds (net turnover of less than or equal to EUR 15 million, less than or equal to 50 employees).
- Effect: The company will be recategorized as a small company in 2025.
New company established in 2024
- Initial projections: The company has total assets of EUR 6 million, a net turnover of EUR 10 million and 30 employees.
- Effect: The company is immediately classified as a small company from 2024.
Short or long financial year
A company with a 15-month financial year in 2024 must annualize its net turnover for proper classification.
Next steps
- Impact assessment: Businesses should analyze their financial data to identify their new classification and anticipate associated obligations or exemptions.
- Proactive communication: Management teams should inform internal and external stakeholders of the impacts of these changes.
- Legal compliance: Businesses should ensure that financial and nonfinancial reporting align with the new criteria for the relevant financial years (from 2023 onward).
