The Law of 7 August 2023: new accounting requirements for non-profitable associations and foundations

This New Law specifically foresees 3 different categories of non-profit associations and the foundation. Each category has its own accounting requirements and its level of accounting information that should be produced.

The thresholds to determine the categorisation of an NPA are based on the total assets, the total income and the average number of full-time equivalent employees. 

To change from one category to another, a NPA has to reach at least 2 of the 3 following criteria for 2 consecutive years. The effect of the change will have its impact on the third year.

The documents or information referred to below and the underlying supporting documents, irrespective of the form in which they are kept, must be kept by the associations/foundations in an orderly manner for ten years from the end of the financial year to which they relate.

The accounting documents should be produced by the board and approved by the general meeting within the 6-month period following the closing of the financial year and should be filed together with (if applicable) the audit report the Luxembourg Trade Register within the month of their approval. 

Accounting requirements for small NPAs

Small NPAs shall keep at minima a simplified bookkeeping showing all income and expenses (cash accounting). At the end of the financial year, they will have to prepare a statement of income and expenditures, with an appendix listing:

• the available pity cash,
• the cash at bank, 
• the number of members by categories of members;
• the percentage of funds transferred to other European Union ("EU")/ European Economic Area ("EEA") and to non-EU/EEA countries.

No specific layout for the statement of income and expenditures is foreseen by the Law but a reference is made to a Grand-ducal Regulation which can be further issued.

Accounting requirements for medium NPAs

Medium NPAs shall keep books and records according to the double entry bookkeeping system. At the end of the financial year, they will have to prepare accounting documents, including at minima a profit and loss account, a balance sheet and notes to the accounts which should include at least the following information:

• the number of members by categories of members;
• the volume of financing;
• the estimated percentage of activities performed in the Grand-Duchy of Luxembourg, in other EU/EEA countries or outside EU/EEA countries;
• the percentage of funds transferred to other EU/EEA countries and to non-EU/EEA countries.

No specific layout for the profit and loss account and the balance sheet is foreseen by the Law but a reference is made to a Grand-ducal Regulation which can be further issued.

Accounting requirements for large NPAs

For Large NPAs, in addition to the obligation to keep double-entry accounts, a reference is made to the companies falling under the scope of article 47 of the Accounting Law. Large NPAs are therefore subject to the same accounting requirements as medium-sized undertakings, with the obligation to prepare a balance sheet, a profit and loss account (abridged form being allowed) and notes to the accounts in accordance with the Accounting Law. Their notes to the accounts should also include the following additional information:

• the number of members by categories of members;
• the volume of financing;
• the estimated percentage of activities performed in the Grand-Duchy of Luxembourg, in other EU/EEA countries or outside EU/EEA countries;
• the percentage of funds transferred to other EU/EEA countries and to non-EU/EEA countries.

A grand ducal regulation may be issued regarding the layout of the annual accounts and the filing requirements.

The annual accounts of large NPAs are subject to audit by a “Réviseur d’Entreprises Agréé”. 

Specific accounting requirements of NPAs recognised as of public interest

NPAs recognised as of public interest are subject to the accounting requirements of Large NPAs, whatever their size is.

Additionally, NPAs of public interest must deliver a detailed report of activity to the Ministry of Justice in the month following the filing of their annual accounts.

Accounting requirements for foundations

Foundations shall keep books and records according to the double entry bookkeeping system.

Each year, the annual accounts must be approved within the 6-month period following the closing of the financial year and should be filed to the Luxembourg Trade register within the month of their approval.

In addition to annual accounts, foundations shall prepare a budget which is approved by the board at the same time as the annual accounts.

In term of accounting requirements, similarly to Large NPAs, foundations are falling under the scope of article 47 of the Accounting Law and are therefore subject to the same accounting requirements than medium-sized undertakings, with the obligation to prepare a balance sheet, a profit and loss account (abridged form being allowed) and notes to the accounts in accordance with the Accounting Law. Their notes to the accounts should also include the following additional information:

• the volume of financing;
• the estimated percentage of activities performed in the Grand-Duchy of Luxembourg, in other EU/EEA countries or outside EU/EEA countries;
• the percentage of funds transferred to other EU/EEA countries and to non-EU/EEA countries.

Similarly to NPAs, the documents or information referred to above and the underlying supporting documents, irrespective of the form in which they are kept, must be kept for a period of 10 years, as from the closing of the financial year to which they relate to. 

The Board is required to communicate to the Minister of Justice a detailed activity report for the past financial year within the month of submission of the accounting documents.

The annual accounts of foundations are subject to audit by a "Réviseur d'Entreprises Agréé".