Under the Luxembourg Law of 19 December 2002 (as amended, transposing the EU Accounting Directive 2013/34/EU), every company falls into one of three size categories — small, medium-sized, or large. Which one determines how abridged your balance sheet and profit-and-loss account can be, what notes disclosure is required, and — critically — whether you need a statutory auditor at all.
The three criteria
Size is assessed on three measures, taken from the balance sheet date:
- Balance sheet total
- Net turnover
- Average number of full-time-equivalent employees during the financial year
A company is classified by whichever category it fits based on two of the three criteria — it doesn't need to exceed all three thresholds to move up a category, and it doesn't need to fall under all three to move down.
Why we're not quoting exact euro figures here
The EU raised these thresholds by roughly 25% via a 2023 delegated directive to account for inflation since the Accounting Directive was first set, with member states transposing the change into national law on their own timeline. Luxembourg's exact current figures for balance sheet total and net turnover therefore depend on which financial year you're assessing and exactly when the updated thresholds took effect locally — a number that was correct a year ago may already be superseded. The employee headcount threshold (50 for small, 250 for medium) has stayed stable through this revision and is the one figure worth remembering without checking.
For the current balance sheet and turnover figures applicable to your financial year, check the consolidated text on Legilux rather than relying on a number quoted in an article — including this one.
Why the category matters
- Small companies can file an abridged balance sheet and, in most cases, an abridged profit-and-loss account, with reduced notes disclosure. Small companies are generally exempt from the statutory audit requirement (a commissaire may still apply depending on the legal form, but a réviseur d'entreprises agréé is not required).
- Medium-sized companies get a less abridged presentation than small companies but still some relief compared to large companies, and must appoint a réviseur d'entreprises agréé for a statutory audit.
- Large companies file full-form accounts with complete notes disclosure and require a full statutory audit.
The two-consecutive-years rule
A company doesn't change category the moment it crosses a threshold in a single year. The change only takes effect once the company has exceeded (or fallen below) the relevant thresholds for two consecutive financial years. This is a deliberate stabiliser — it prevents a company hovering near a threshold from flipping categories, and the associated audit and disclosure obligations, every other year based on normal business fluctuation.
Where this typically goes wrong
- Applying last year's threshold figures without checking whether they've been revised for the current financial year
- Reclassifying immediately on crossing a threshold once, instead of applying the two-consecutive-year rule
- Assuming small-company status automatically means no audit is required, without checking whether the specific legal form or a regulatory status (e.g. a regulated fund vehicle) imposes its own audit requirement regardless of size
- Missing that group membership can affect the assessment — thresholds may need to be considered on a consolidated basis in some circumstances