Accounting standards for non-profit associations and foundations in Luxembourg: The new law and key impacts 2024

The recently published new Luxembourg law on non-profit associations (NPA) and foundations introduces stringent accounting standards for these entities. It introduces three categories of NPA – small, medium and large – with specific reporting obligations based on assets, income, and number of staff. The law came into effect on 23 September 2023. The Ecovis experts explain the details.

The importance of the law for NPAs

These rules apply to the different sizes of NPA:

• Small NPAs may maintain a system of simplified, cash-based accounting
• Medium NPAs must maintain double-entry bookkeeping and produce a balance sheet, profit/loss account, and limited disclosures
• Large NPAs must adhere to the same accounting standards as medium-sized commercial entities and prepare full financial statements. The annual accounts are subject to mandatory audits by a certified company auditor (Réviseur d’Entreprises Agréé, or REA).

What foundations need to consider

Foundations are subject to stringent accounting obligations similar to large NPAs, including balance sheets, profit/loss accounts, and specific disclosures. They must also undergo mandatory audits by REAs.

We have extensive experience and expertise in auditing organisations and institutions in Luxembourg.

Arnaud Yamalian, Réviseur d’entreprises agréé, Managing partner, ECOVIS IFG Audit S.A., Luxembourg, Luxembourg

When the new rules apply and transition periods

The law applies immediately to newly created NPAs and foundations. Existing entities have a 24-month transition period to align with these new standards.

The Ecovis experts recommend that affected companies seek external support from experienced auditors as the implementation of the new legal regulations is a complex issue.

For further information please contact:

Arnaud Yamalian, Réviseur d’entreprises agréé, Managing partner, ECOVIS IFG Audit S.A., Luxembourg, Luxembourg
Email: arnaud.yamalian@ecovis-audit.lu