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Chapter Summary

Section 26.1: History and Evolution of PCN​

  • PCN 2011 established the modern framework for Luxembourg accounting
  • PCN 2020 represents the current standard with enhanced digital integration
  • The PCN ensures consistency, transparency, and compliance across all businesses
  • All businesses in Luxembourg must use PCN 2020 for accounting records

Section 26.2: PCN Structure - The Seven Account Classes​

  • Class 1: Capital, Provisions, Financial Debts (equity and long-term obligations)
  • Class 2: Fixed Assets and Establishment Costs (long-term assets)
  • Class 3: Inventory Accounts (current inventory)
  • Class 4: Third-Party Accounts (customers, suppliers, VAT, social charges)
  • Class 5: Financial Accounts (cash and bank accounts)
  • Class 6: Expense Accounts (all business expenses)
  • Class 7: Revenue Accounts (all business revenues)
  • All seven classes must be maintained in your chart of accounts

Section 26.3: Account Numbering System and Conventions​

  • PCN account numbers follow a logical, hierarchical structure
  • First digit(s) indicate the class (1-7)
  • Subsequent digits indicate sub-classifications and specific accounts
  • Sub-accounts can be used for detailed tracking (e.g., 411.001, 411.002)
  • Custom accounts must still follow PCN structure

Section 26.4: PCN Account Mapping for Common SME Transactions​

  • Every transaction must be mapped to PCN accounts using double-entry bookkeeping
  • Purchase transactions: Class 6 (expenses) and Class 4 (suppliers) or Class 5 (cash)
  • Sales transactions: Class 7 (revenues) and Class 4 (customers) or Class 5 (cash)
  • VAT transactions: Class 4, sub-accounts 44551 (input VAT) and 44581 (VAT on sales)
  • Payroll transactions: Class 6 (salaries) and Class 4 (social charges)

Section 26.5: Customizing Chart of Accounts for Your Business​

  • Businesses can customize their chart of accounts while maintaining PCN compliance
  • Use sub-accounts to add detail (customer segmentation, product categories, expense types)
  • Document all custom accounts and their purpose
  • Start simple and add detail as needed
  • Common customizations: customer segmentation, product/service categories, department tracking

Section 26.6: PCN Compliance Requirements​

  • PCN compliance is mandatory under Luxembourg Commercial Code
  • All businesses must use PCN account structure for financial statements
  • RCS filings must be PCN-compliant
  • Tax returns must reference PCN accounts
  • Accounting software must support PCN 2020 structure
  • Regular compliance reviews ensure ongoing adherence

Key Takeaways​

  1. PCN is Mandatory: All businesses in Luxembourg must use PCN 2020
  2. Seven Classes: All seven account classes must be maintained
  3. Standardization: PCN ensures consistency and comparability
  4. Flexibility: Sub-accounts allow customization while maintaining compliance
  5. Compliance: Regular reviews and proper documentation ensure adherence

End of Chapter 26 Summary