Skip to main content

3.8 Luxembourg Double-Entry Requirements and Legal Obligations

Legal Requirement for Double-Entry Bookkeeping​

In Luxembourg, double-entry bookkeeping is a legal requirement for all businesses subject to the Commercial Code.

Legal Basis:

  • Commercial Code (Code de Commerce)
  • Applies to all commercial entities
  • Required regardless of business size (above certain thresholds)

What is Double-Entry Bookkeeping?​

Double-entry bookkeeping means:

  • Every transaction affects at least two accounts
  • Total debits equal total credits
  • The accounting equation always balances
  • Complete audit trail is maintained

1. Maintain Accounting Records​

Requirement:

  • All businesses must maintain accounting records
  • Must use double-entry system
  • Must follow PCN classifications
  • Must be in euros

Who Must Comply:

  • All commercial entities (SA, SARL, SNC, SCS, etc.)
  • Individual businesses with turnover > €100,000 (excluding VAT)
  • All businesses registered with RCS

2. Source Document Requirements​

Requirement:

  • All transactions must be supported by source documents
  • Invoices, receipts, bank statements, contracts
  • Must be retained for 10 years

Examples:

  • Sales invoices
  • Purchase invoices
  • Bank statements
  • Payroll records
  • Expense receipts

3. Journal and Ledger Requirements​

Requirement:

  • Must maintain General Journal (chronological record)
  • Must maintain General Ledger (all accounts)
  • Must maintain Subsidiary Ledgers (detailed accounts)
  • Must be available for inspection

Format:

  • Can be manual (books) or electronic
  • Must be organized and accessible
  • Must follow PCN structure

4. Periodic Reporting​

Requirement:

  • Must prepare trial balance regularly
  • Must prepare financial statements annually
  • Must file with RCS within 7 months of year end
  • Must file VAT returns (monthly/quarterly)

5. Retention Requirements​

Requirement:

  • All accounting records must be retained for 10 years
  • Source documents: 10 years
  • Financial statements: 10 years
  • Tax returns: 10 years

Storage:

  • Can be physical or electronic
  • Must be accessible
  • Must be secure

Consequences of Non-Compliance​

Penalties:

  • Fines: €250 to €25,000 (depending on violation)
  • Legal action: Criminal penalties for serious violations
  • Business closure: In extreme cases
  • Tax penalties: Additional tax assessments
  • Reputation damage: Loss of credibility

Examples of Violations:

  • Not maintaining proper records
  • Not using double-entry system
  • Not following PCN classifications
  • Not retaining documents
  • Not filing required reports

Best Practices for Compliance​

1. Use Proper Accounting Software​

Recommendations:

  • Use software with PCN compliance (Sage BOB, Odoo)
  • Ensures proper account classifications
  • Automates double-entry requirements
  • Maintains audit trail

2. Maintain Source Documents​

Practices:

  • Keep all invoices and receipts
  • Organize by date and type
  • Store securely (physical or electronic)
  • Retain for 10 years

3. Regular Reconciliation​

Practices:

  • Reconcile bank accounts monthly
  • Reconcile accounts receivable/payable
  • Verify trial balance monthly
  • Review for errors regularly

4. Professional Assistance​

When to Seek Help:

  • Complex transactions
  • Unfamiliar with PCN
  • Large volume of transactions
  • Compliance concerns

Options:

  • Fiduciaire (licensed accounting firm)
  • Expert-comptable (certified accountant)
  • In-house accountant

Luxembourg Compliance Checklist​

Daily/Weekly:

  • Record all transactions
  • Maintain source documents
  • Verify debits = credits

Monthly:

  • Prepare trial balance
  • Reconcile bank accounts
  • Review accounts receivable/payable
  • File VAT return (if monthly)

Annually:

  • Prepare annual accounts
  • File with RCS
  • File tax returns
  • Archive documents

Luxembourg Compliance Note​

Double-entry bookkeeping is not optional in Luxembourg—it's a legal requirement. All businesses must:

  • Use double-entry system
  • Follow PCN classifications
  • Maintain proper records
  • Retain documents for 10 years
  • File required reports

Non-compliance can result in significant penalties and legal consequences.

Think It Through​

Why do you think Luxembourg requires double-entry bookkeeping by law? What benefits does this requirement provide to businesses, government, and stakeholders?