Financial consolidation in Luxembourg: Obligations and thresholds

Consolidation obligation thresholds

A Luxembourg parent company must prepare consolidated accounts if the group exceeds, at the closing date, two of the following three thresholds on a consolidated basis: balance sheet total €20M, net turnover €40M, average headcount 250 employees. These thresholds are calculated on an aggregated basis (before eliminations). Public interest entities (listed companies, credit institutions, insurance undertakings) are always required to consolidate, regardless of their size.

Consolidation methods

• Full consolidation: for exclusively controlled subsidiaries (more than 50% of voting rights)
• Proportional consolidation: for jointly controlled entities (joint ventures)
• Equity method: for investments with significant influence (20% to 50% of voting rights)
• Elimination of intra-group transactions: sales, loans, dividends between group companies

Exemptions and special cases

A Luxembourg parent company may be exempt from the consolidation obligation if it is itself a subsidiary of a group whose ultimate parent company prepares consolidated accounts in accordance with European directives or IFRS. This sub-group exemption is subject to strict conditions: publication of the ultimate parent's consolidated accounts in Luxembourg, no objection from minority shareholders holding at least 10% of capital. Small groups below the thresholds are also exempt unless they include a public interest entity.