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30.2 Annual Accounts: Balance Sheet, Income Statement, Notes

Overview​

Annual accounts (comptes annuels) in Luxembourg consist of three mandatory components that form an integrated whole. These components must be prepared according to LUX GAAP principles and presented in a standardized format.

Components of Annual Accounts​

According to Article 26(1) of the Accounting Law, annual accounts comprise:

  1. Balance Sheet (Bilan)
  2. Income Statement (Compte de profits et pertes)
  3. Notes (Annexe)

These three documents form an integrated whole and must be consistent with each other.

Optional Additional Statements​

Companies may also include:

  • Statement of Cash Flows (Tableau des flux de trĂ©sorerie)
  • Statement of Changes in Equity (État de variation des capitaux propres)

General Presentation Principles​

Clarity and Compliance​

Article 26(2): Annual accounts must be prepared with clarity and in conformity with the provisions of Chapter II of the Accounting Law.

True and Fair View (Image Fidèle)​

Article 26(3): Annual accounts must give a true and fair view (image fidèle) of:

  • The company's assets (patrimoine)
  • Financial position (situation financière)
  • Results (rĂ©sultats)

Article 26(4): If application of the Law's provisions is insufficient to give a true and fair view, additional information must be provided.

Article 26(5): In exceptional cases, if applying a provision would be contrary to the true and fair view, the company may derogate from that provision, provided it:

  • Motivates the derogation in the notes
  • Indicates the impact on assets, financial position, and results

Substance Over Form​

Article 29(3): The presentation of amounts in the balance sheet and income statement may refer to the substance of the transaction or contract recorded, rather than its legal form.

Note

Since the Law of 30 July 2013, the principle of substance over form has become optional rather than mandatory, while still requiring a true and fair view.

Non-Compensation​

Article 33: Compensation between asset and liability items, or between expense and revenue items, is prohibited, except where a right to compensate exists under the Law.

Comparative Figures​

Article 29(2): Each item in the balance sheet and income statement must show the corresponding figure from the previous year (N-1).

If comparability is affected, this must be:

  • Signaled in the notes
  • Duly commented upon
  • Adapted if necessary to ensure comparability

Article 28: To ensure comparability over time, the structure of the balance sheet and income statement cannot be modified from one year to another, particularly regarding the form of presentation.

Balance Sheet (Bilan)​

Structure​

The balance sheet follows a standardized format as defined in Article 34 of the Accounting Law.

Asset Side (Actif)​

A. Capital Subscribed but Not Paid

  • I. Capital subscribed but not called
  • II. Capital subscribed, called but not paid

B. Establishment Costs (Frais d'Ă©tablissement)

C. Fixed Assets (Actif immobilisé)

  • I. Intangible fixed assets (Immobilisations incorporelles)
    • Research and development costs
    • Concessions, patents, licenses, trademarks
    • Goodwill (Fonds de commerce)
    • Advances paid and intangible assets in progress
  • II. Tangible fixed assets (Immobilisations corporelles)
    • Land and buildings
    • Technical installations and machinery
    • Other installations, equipment, and furniture
    • Advances paid and tangible assets in progress
  • III. Financial fixed assets (Immobilisations financières)
    • Shares in related companies
    • Receivables from related companies
    • Shares in associated companies
    • Receivables from associated companies
    • Securities and other financial instruments
    • Long-term loans and receivables
    • Own shares

D. Current Assets (Actif circulant)

  • I. Inventory (Stocks)
    • Raw materials and consumables
    • Work in progress
    • Finished goods and merchandise
    • Advances paid
  • II. Receivables (CrĂ©ances)
    • Trade receivables
    • Other receivables
    • Prepaid expenses and accrued income
  • III. Securities (Valeurs mobilières de placement)
  • IV. Cash and bank accounts (Avoirs en banques, comptes de chèques postaux, chèques et encaisse)

E. Accruals and Deferred Income (Comptes de régularisation)

Liability and Equity Side (Passif)​

A. Capital and Reserves

  • I. Subscribed capital or endowment
  • II. Share premium
  • III. Reserves
  • IV. Revaluation reserves
  • V. Profit or loss for the year
  • VI. Profit or loss brought forward
  • VII. Advances on dividends

B. Provisions (Provisions)

  • I. Provisions for risks and charges
  • II. Provisions for taxes
  • III. Other provisions

C. Financial Debts (Dettes financières)

  • I. Long-term financial debts
  • II. Current portion of long-term debt
  • III. Short-term financial debts

D. Trade Payables and Other Liabilities (Dettes)

  • I. Trade payables
  • II. Other payables
  • III. Accruals and deferred income

E. Accruals and Deferred Income (Comptes de régularisation)

Abbreviated Balance Sheet​

Article 35: Small companies may prepare an abbreviated balance sheet showing only:

  • Items preceded by capital letters and Roman numerals (A, B, C, D, E, I, II, III, etc.)
  • Separate mention of receivables and debts with residual maturity > 1 year
  • Global presentation for each relevant item

Exception: Not allowed for companies with securities admitted to trading on a regulated EU market.

Income Statement (Compte de Profits et Pertes)​

Structure​

The income statement follows a standardized format as defined in Article 46 of the Accounting Law.

Operating Section​

A. Operating Income (Produits d'exploitation)

  • Net turnover
  • Variation in finished goods and work in progress
  • Production capitalized
  • Other operating income

B. Operating Expenses (Charges d'exploitation)

  • Raw materials and consumables
  • Other external charges
  • Personnel expenses
  • Depreciation and provisions
  • Other operating expenses

C. Operating Result (RĂ©sultat d'exploitation) = A - B

Financial Section​

D. Financial Income (Produits financiers)

  • Income from securities
  • Other financial income

E. Financial Expenses (Charges financières)

  • Interest and similar charges
  • Other financial expenses

F. Financial Result (RĂ©sultat financier) = D - E

Exceptional Section​

G. Exceptional Income (Produits exceptionnels)

H. Exceptional Expenses (Charges exceptionnelles)

I. Exceptional Result (RĂ©sultat exceptionnel) = G - H

Result Before Tax​

J. Result Before Tax (RĂ©sultat avant impĂ´ts) = C + F + I

Tax Section​

K. Taxes (ImpĂ´ts)

  • Corporate income tax
  • Other taxes

Net Result​

L. Net Result (RĂ©sultat de l'exercice) = J - K

Abbreviated Income Statement​

Article 47: Medium companies may prepare an abbreviated income statement combining certain items, provided the notes provide necessary detail.

Notes (Annexe)​

The notes are an integral part of the annual accounts and must provide:

Mandatory Information​

  1. Accounting Policies: Methods and principles applied
  2. Detailed Breakdowns: Of balance sheet and income statement items
  3. Contingencies: Commitments not shown in balance sheet
  4. Related Party Transactions: Transactions with related companies
  5. Events After Balance Sheet Date: Significant events occurring after year-end
  6. Segment Information: If applicable
  7. Employee Information: Average number of employees by category
  8. Management Remuneration: For large companies
  9. Audit Information: Auditor's fees and services

Small Company Exemptions​

Small companies may provide abbreviated notes with less detail, focusing on essential information.

Presentation Currency​

General Rule: Annual accounts are prepared in the currency of the share capital.

Exception: Companies may prepare accounts in another currency (e.g., group reporting currency), provided this is clearly indicated.

Luxembourg Compliance Note​

All annual accounts must:

  1. Follow the standardized format (Article 34 for balance sheet, Article 46 for income statement)
  2. Include comparative figures (N-1)
  3. Provide adequate notes for understanding
  4. Be prepared in accordance with LUX GAAP
  5. Give a true and fair view
  6. Be filed electronically in eCDF format

Think It Through​

Marie's restaurant needs to prepare annual accounts. What are the three mandatory components? What additional information might be required in the notes for a restaurant business?

Concepts in Practice​

Example: Complete Annual Accounts Package

Le Petit Bistro (SĂ rl) prepares:

  1. Balance Sheet:

    • Assets: Equipment (Class 2), Inventory (Class 3), Cash (Class 5)
    • Liabilities: Suppliers (Class 4), VAT payable (Class 4), Bank loan (Class 1)
    • Equity: Share capital, Retained earnings

  2. Income Statement:

    • Revenue: Food sales (Account 701), Beverage sales (Account 701)
    • Expenses: Food purchases (Account 601), Rent (Account 641), Salaries (Account 621)
    • Net result: Profit or loss for the year

  3. Notes:

    • Accounting policies (inventory valuation, depreciation methods)
    • Breakdown of fixed assets
    • VAT treatment
    • Employee information
    • Related party transactions (if any)

All three components are filed together through the eCDF platform.