Small company thresholds in Luxembourg: lighter annual accounts

The short version. A Luxembourg company qualifies as a small company if it does not exceed at least two of these three thresholds: €7.5m balance sheet total, €15m net turnover and 50 employees on average. The thresholds were raised by around 25% by the Grand Ducal regulation of 25 October 2024. Small companies are exempt from statutory audit by an approved auditor and from producing a management report.

Plenty of directors are still paying for an audit they have been exempt from since 2025 without knowing it. The reason is simple: the thresholds that determine a company's category were raised in late 2024, and the switch mechanism is deferred in time, so it is invisible unless somebody is watching. Here are the exact figures, the two-year rule, and what the change actually saves you.

Why your company's size decides your obligations

Luxembourg accounting law does not treat all companies alike. It sorts them by size, and the category drives the format of the annual accounts you prepare and file, whether an approved statutory auditor must audit them, whether a management report is required, and how detailed the notes must be. The classification rests on articles 35 and 47 of the amended law of 19 December 2002 on the trade and companies register and on the accounting and annual accounts of undertakings.

The same SME can therefore carry a very different administrative load depending on which side of a line it falls. That line has just moved.

The thresholds that apply today

The Grand Ducal regulation of 25 October 2024 transposed delegated directive (EU) 2023/2775 of 17 October 2023, which raised the balance sheet and net turnover thresholds by around 25% to account for inflation between 2013 and 2023. Luxembourg made two choices it was allowed to make, and both favour companies: it took the top of the permitted range for small companies, and it brought the first application forward to financial years starting on or after 1 January 2023 rather than 2024. Both choices are set out by the Luxembourg accounting standards commission in its Q&A 24/034.

The headcount criterion did not move: the adjustment only touched the monetary amounts, since its purpose was to correct for inflation. A company with 30 staff and €9m of turnover used to tip into the next category on that single criterion. It no longer does.

The two consecutive years rule, the part that catches everyone

You do not change category in the year you cross a threshold. Article 36 of the same law imposes a repetition test: exceeding or ceasing to exceed a threshold only takes effect if it happens in two consecutive financial years. And on the reading adopted by the accounting standards commission, the recategorisation takes effect during the year following the one in which the threshold was crossed for the second time.

Take a company that reported a €10m balance sheet, €13m of turnover and 25 employees in 2022. Under the old thresholds it exceeded two of the three criteria and was therefore a medium-sized company. With stable figures, the new thresholds mean it stops exceeding two of three in 2023 and again in 2024. So it becomes a small company in 2025. Not in 2023, not in 2024. That two-year lag is why so many Luxembourg companies have not yet noticed their regime changed.

One useful exception: a newly incorporated company has no history. Its governing bodies make a good faith estimate for the first financial year, and the company is categorised from that year. If the first year runs shorter or longer than twelve months, net turnover is annualised.

What you gain as a small company

The first gain is financial and often substantial: a small company is exempt from having its accounts audited by an approved statutory auditor. The second is administrative: no management report is required. The third concerns confidentiality: it can file an abridged balance sheet and condensed notes, so it publishes less about itself at the trade register, which matters when your competitors can read your filed accounts freely.

None of this changes the calendar. Approval within six months, filing within seven, penalties for late filing: the rhythm is the same for everyone, as we set out in our article on filing annual accounts in Luxembourg. You file less, but not later.

The micro company category does not exist here yet

This is a permanent source of confusion, fed by articles written from France or Belgium. The European directive does provide for a micro company category, with an exemption from producing notes. Luxembourg accounting law has not introduced it. Draft law no. 8286 proposes to, but until it is passed, the smallest category available in Luxembourg remains the small company. If you read somewhere that your Luxembourg Sàrl is exempt from notes because it is a micro company, the source is not talking about Luxembourg.

Tracking your criteria without thinking about it

The hard part is not understanding the rule, it is knowing where you stand during the year. Balance sheet total and net turnover for a financial year are only known at closing, and in the traditional accounting model, often long after. By the time the information lands the following spring, the category switch has already happened and any audit budget has already been committed.

At Advena the books are kept continuously in the Odoo system we configure for the PCN 2020 chart of accounts. Balance sheet total and cumulative turnover are readable at any moment, average headcount is tracked alongside payroll, and all three criteria can be compared against the thresholds before closing rather than after. A director watching turnover approach €15m in October can plan for what that triggers two years out. That is the principle behind our accounting service for Luxembourg SMEs, and it starts at €325 per month, all inclusive.

The honest counterpoint

Dropping into the small company category is not automatically good news to accept with your eyes closed. A voluntary audit still has value if you are preparing a fundraise or a sale, or if your banks and major clients rely on audited figures. Filing an abridged balance sheet also reduces the information available about your company, which can work against you with a partner trying to assess your strength. The relief is an option, not an obligation: the question is what your counterparties expect, not only what the law requires.

A note on method: the thresholds quoted here are those in force as of July 2026. They are assessed company by company, and group classification follows its own rules.

Frequently asked questions

What are the criteria for a small company in Luxembourg?

A small company does not exceed at least two of these three thresholds: €7.5m balance sheet total, €15m net turnover and 50 employees on average. These amounts come from the Grand Ducal regulation of 25 October 2024, which raised them by around 25%.

Since when do the new thresholds apply?

To financial years starting on or after 1 January 2023, Luxembourg having exercised the early application option. Because of the two consecutive years test, an existing company is in principle recategorised during the 2025 financial year.

Does a small company need its accounts audited?

No. A company classified as small is exempt from statutory audit by an approved auditor and from producing a management report. It can still commission a voluntary audit if its partners ask for one.

How do I know whether I change category this year?

Compare your three criteria against the thresholds over your last two closed financial years. If you stopped exceeding at least two of the three thresholds in both of those years, the new category applies to the current year.

Is there a micro company category in Luxembourg?

Not in Luxembourg accounting law to date. The category appears in the European directive and draft law no. 8286 proposes to introduce it, but until it is adopted the smallest applicable category remains the small company.

Related reading

• Filing annual accounts in Luxembourg: deadlines and late fees
• The standard chart of accounts in Luxembourg (PCN 2020)
• Accounting firm in Luxembourg: the complete guide for an SME
• What an accounting firm costs in Luxembourg
• Outsourcing your accounting in Luxembourg: when, why, how much

Why Advena?

We keep the books of Luxembourg SMEs inside the management system we deploy ourselves, which makes your size criteria readable during the year rather than a year late. The monthly fee starts at €325 per month, all inclusive, with no hourly billing and no invoice outside that monthly amount. We explain the applicable rules, we do not replace tailored advice, and we say plainly when our model is not the right fit.