On Wednesday 9 December 2015, the Chamber of Deputies adopted the draft law 6718, amending the Accounting Act of 19 December 2002 and implementing the 2013/32/EU EU Directive into Luxembourg law.
The legislature provides for a more comprehensive overhaul of Luxembourg accounting law which will particularly take into account the options proposed by the accounting directive. The new provisions are expected to take effect from the financial year beginning the 1 January 2016.
Changes introduced include those in the structure of the balance sheet and profit and losses which will be detailed in a forthcoming Grand Ducal Regulation; an increase in thresholds for medium and large companies; the introduction and definition of materiality in accounting law; the introduction of a specific report on payments made for the benefit of governmnets for companies active in the estractive industry or in the logging of primar forests.
Changes to the balance sheet ad profit and losses are only subject to formal accordance with the European Directive, PwC Luxembourg reported. For each of them, the latter provides for the possibility to use a horizontal or vertical presentation. However, as part of the standardised information collection, and for the sake of administrative simplification, the Luxembourg legislator is expected to use a single model. While the balance is only slightly modified, the structure of profit and losses is itself completely new and present in list form.
PwC Luxembourg commented that more changes have been forseen regarding side notes to accounts which will - in addition to requiring placement in a specific order - will now contain gross amounts in compensation in the accounts, details of deferred taxes and descriptions of significant elements in the post balance sheet.
"If the majority of these modifications aims to comply with European legislation - and with the exception of companies engaged in mining or primary forest exploitation - there is ultimately little impact to the preparer of financial statements relative to additional disclosures," commented Anne-Sophie Preud'homme, partner in the accounting and tax expertise department of PwC Luxembourg. "The biggest change consists of the presentation of accounts, and in particular in the profit and loss account."
"The biggest challenge for the preparer will be to comply quickly to these changes since the new law will be implemented by 2016," added Alexandre Leleux, Director in the accounting and tax expertise department at PwC Luxembourg. He concluded: "We have much more to expect from the upcoming draft legislation that aims to be a complete overhaul of the form of the Account Act and the introduction of the options proposed by the European Directive in Luxembourg law."
Photos by PwC Luxembourg (L-R: Anne-Sophie Preud'homme; Alexandre Leleux)
