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26.6 PCN Compliance Requirements

PCN compliance is not optional—it's a legal requirement under Luxembourg's Commercial Code (Code de Commerce). All businesses operating in Luxembourg must maintain their accounting records according to PCN standards.

Mandatory Requirements​

1. Use of PCN Account Structure​

Requirement: All businesses must organize their accounts according to the seven PCN classes (1-7).

Compliance:

  • Use standard PCN account numbers for main accounts
  • Maintain all seven classes in your chart of accounts
  • Ensure account classifications match PCN definitions

Non-Compliance Consequences:

  • RCS filing rejection
  • Tax authority penalties
  • Audit complications
  • Difficulty obtaining financing

2. Financial Statement Preparation​

Requirement: Financial statements must be prepared using PCN account classifications.

Compliance:

  • Balance sheet accounts from Classes 1-5
  • Income statement accounts from Classes 6-7
  • Proper classification of all accounts
  • Consistent application across reporting periods

3. RCS Filing Compliance​

Requirement: Annual accounts filed with RCS must use PCN structure.

Compliance:

  • Balance sheet formatted according to PCN
  • Income statement using PCN account classifications
  • Notes to financial statements explaining account usage
  • Electronic filing through eCDF platform

Deadline: 7 months after fiscal year end

4. Tax Authority Compliance​

Requirement: Tax returns and supporting documentation must reference PCN accounts.

Compliance:

  • Corporate tax returns reference PCN accounts
  • VAT returns integrate with PCN structure
  • Supporting schedules use PCN account numbers
  • Documentation available for tax audits

5. Audit Readiness​

Requirement: Accounting records must be audit-ready and PCN-compliant.

Compliance:

  • Complete chart of accounts documentation
  • All transactions properly classified
  • Supporting documentation available
  • Account reconciliations performed regularly

Compliance Checklist​

Use this checklist to ensure PCN compliance:

  • Chart of accounts uses PCN 2020 structure
  • All seven classes (1-7) are included
  • Main account numbers follow PCN standards
  • Sub-accounts are properly documented
  • Financial statements use PCN classifications
  • RCS filing is PCN-compliant
  • Tax returns reference PCN accounts
  • Accounting software is PCN-configured
  • Staff are trained on PCN usage
  • Documentation is maintained and updated

Software Compliance​

Accounting Software Requirements​

PCN-Compliant Software:

  • Must support PCN 2020 account structure
  • Should include pre-configured PCN chart of accounts
  • Must generate PCN-compliant financial statements
  • Should support eCDF and FAIA integration

Popular PCN-Compliant Software:

  • Sage BOB (Luxembourg-specific)
  • Odoo (with Luxembourg localization)
  • Other software with PCN modules

Software Configuration​

Required Settings:

  • PCN 2020 chart of accounts installed
  • Account numbering follows PCN structure
  • Financial statement templates use PCN format
  • VAT accounts properly configured (Class 4)
  • Integration with eCDF platform

Documentation Requirements​

Chart of Accounts Document​

Required Content:

  • Complete list of accounts used
  • Account descriptions and purposes
  • Custom account explanations
  • Sub-account structure
  • Account mapping for common transactions

Accounting Manual​

Required Content:

  • PCN compliance procedures
  • Transaction classification guidelines
  • Account usage instructions
  • Reporting procedures
  • Software configuration details

Regular Compliance Reviews​

Monthly Reviews​

  • Verify all transactions use PCN accounts
  • Check account classifications are correct
  • Review sub-account usage
  • Ensure VAT accounts are properly used

Quarterly Reviews​

  • Review financial statement preparation
  • Verify account reconciliations
  • Check compliance with reporting requirements
  • Update documentation as needed

Annual Reviews​

  • Comprehensive chart of accounts review
  • Verify RCS filing compliance
  • Review tax return preparation
  • Update accounting manual
  • Train staff on any changes

Common Compliance Issues​

Issue 1: Missing Account Classes​

Problem: Not using all seven PCN classes

Solution: Ensure all classes are in your chart of accounts, even if some accounts remain at zero

Issue 2: Incorrect Account Classifications​

Problem: Using wrong PCN accounts for transactions

Solution: Review transaction mapping, train staff, update procedures

Issue 3: Non-PCN Account Numbers​

Problem: Creating accounts outside PCN structure

Solution: Remove non-PCN accounts, reclassify transactions to PCN accounts

Issue 4: Inconsistent Application​

Problem: Using different account structures across periods

Solution: Standardize account usage, document procedures, train staff

Luxembourg Compliance Note​

PCN compliance is monitored by:

  • RCS: Reviews annual account filings
  • Tax Authorities (ACD): Reviews tax returns and supporting documentation
  • Auditors: Verifies compliance during statutory audits
  • Banks: May require PCN-compliant financial statements for financing

Non-compliance can result in:

  • Fines and penalties
  • Filing rejections
  • Audit complications
  • Difficulty obtaining financing
  • Legal consequences

Think It Through​

Sophie's bakery has been operating for two years. During an audit, the auditor discovers that some transactions were recorded using non-PCN account numbers. What steps should Sophie take to correct this issue and ensure future compliance?

Concepts in Practice​

Compliance Audit Example

During an annual audit, Le Petit Bistro was found to have:

  1. Issue: Some expense accounts didn't follow PCN structure

  2. Impact: Financial statements couldn't be properly reconciled

  3. Solution:

    • Reclassified all transactions to PCN accounts
    • Updated chart of accounts
    • Trained staff on proper account usage
    • Implemented monthly compliance reviews

  4. Result: Full compliance achieved, audit completed successfully

Regular compliance reviews prevent such issues and ensure smooth operations.