Interim dividend in Luxembourg: the four conditions

Interim dividend in Luxembourg: which conditions apply?

An interim dividend in Luxembourg requires four cumulative conditions: the articles must authorise the management body, interim accounts must show that the funds available for distribution are sufficient, the amount must stay within the result realised since the last approved financial year, and the decision must follow within two months of those accounts.

The most common confusion is a matter of vocabulary. An ordinary dividend is declared by the general meeting on approved annual accounts; an interim dividend is declared during the year by the board of directors, the management board or the managers, on a result that has been neither finalised nor approved. Precisely because it anticipates an approval that has not taken place, the amended law of 10 August 1915 surrounds it with safeguards: a figured statement and accounting tests designed to protect third parties, in exchange for the speed of the payment.

For the private limited company, this regime is recent in its very principle. Interim dividends were practised there without a legal basis before the 2016 company law reform, which gave them a written foundation and the same conditions as in a public limited company, with one nuance on the supervisory body. A SARL whose articles have not been recast since that reform therefore often fails to authorise its managers, and the first condition is missing before the figures are even examined.

We regularly see interim dividend minutes that are perfectly reasoned on the substance and irregular on this single point: the articles say nothing. The check amounts to reading the profit allocation clause, and it belongs before the interim accounts are drawn up, not after. The order of magnitude of fees for an interim dividend file appears in our fee schedule; what moves it is whether a supervisory body has to be involved, rarely the amount distributed.

How much may be paid out as an interim dividend?

An interim dividend in Luxembourg may not exceed the result realised since the end of the last approved financial year, increased by profits carried forward and withdrawals from available reserves, and reduced by losses carried forward and mandatory legal or statutory reserve allocations.

The formula reads as a four-step calculation, and each of its terms is evidenced by a document. The starting point is the result of the period elapsed since the close of the last approved financial year: not the forecast result of the full year, but the result actually realised at the date of the interim accounts. Added to it are profits carried forward, readable in the approved balance sheet, and withdrawals from available reserves, which presuppose a reserve free of allocation and a decision to withdraw. Deducted from it are losses carried forward and mandatory allocations.

The allocation most often forgotten is the legal reserve. Each year, at least one twentieth of net profit is set aside to build a reserve; that allocation ceases to be mandatory once the reserve reaches one tenth of the share capital, and resumes if that tenth is encroached upon. A company whose legal reserve has not yet reached its ceiling must therefore deduct that allocation from the distributable amount before setting the interim dividend, even though the year is not closed.

A word on the starting point, because it is counter-intuitive. The reference is the last financial year whose accounts have been approved, not the last financial year closed. A company that closed in December and whose annual meeting has not yet approved the accounts — the annual general meeting being due within six months of the close — therefore computes its distributable amount from the close of the preceding year, folding the result of the closed but unapproved year into the result realised. In that configuration we advise postponing the interim dividend until after the annual meeting where the calendar allows: the calculation then becomes verifiable by a third party without reconstruction.

Interim accounts, the two-month rule and the verification report

Interim accounts supporting an interim dividend in Luxembourg cannot be dated freely: the decision to distribute may not be taken more than two months after the date those accounts were drawn up, failing which a fresh statement is needed.

This two-month limit is the calendar constraint that derails files most often, because it runs counter to intuition. It does not penalise a slow payment but a slow decision: interim accounts drawn up on 30 June require a resolution by 31 August at the latest, whatever the date on which the money later leaves. In between, the board's agenda, the availability of the supervisory body and, often, the summer break consume most of the window.

The verification report is the document that closes the file. The commissaire or the approved statutory auditor verifies, in a report addressed to the management body, whether the conditions set out above are met. In a private limited company that verification only occurs where the company has such a body, which is not always the case. The rule that decides between a commissaire and an approved statutory auditor, its thresholds and its two-consecutive-year condition are set out in our article on choosing between an approved statutory auditor and a commissaire.

The nature of that control deserves to be understood for what it is. It is an objective verification of the conditions for the distribution, not a qualitative review of the underlying financial information: the supervisory body says whether the four conditions are met, not whether the interim accounts give a true and fair view. That very distinction is one of the points a bill currently in procedure seeks to move, which we return to at the end of this article.

How to account for an interim dividend in Luxembourg

An interim dividend in Luxembourg is booked to account 15 of the standard chart of accounts and appears under item A.VII of equity as a negative figure: it reduces equity without passing through the profit and loss account.

The presentation logic is that of the Luxembourg balance sheet. Within equity, items with a credit balance are shown as positive values and items with a debit balance as negative values; the interim dividend, a debit account by nature, therefore appears as a deduction under item A.VII. In a single line, the reader of the accounts sees the share of the result already paid out before any allocation decision. The standard chart of accounts determined by grand-ducal regulation, applicable to financial years beginning on or after 1 January 2020, is set out in detail in our article on the standard chart of accounts.

The entry itself is unremarkable, and it is its unwinding that calls for attention. The interim dividend is debited to account 15 and credited to the shareholder payable account, then to the bank on payment; withholding tax, where due, sits in the tax payable account. At the meeting that approves the accounts, the allocation of the result clears account 15 up to the dividend decided. Until that meeting has resolved, the interim dividend remains a standalone line of equity, not a reduction of retained earnings.

The mirror treatment at shareholder level follows a different rule, and the confusion costs a financial year. A dividend received attaches to the distribution decision, not to the cash: we developed this for the receiving company in our article on accounting for a dividend received. In a Luxembourg group where the subsidiary pays an interim dividend in November and the parent closes in December, the income therefore attaches to the year of the subsidiary board's decision, not to the year of the meeting that will ratify it.

Withholding tax: the eight days run from the interim payment

Withholding tax on an interim dividend in Luxembourg follows the same rules as an ordinary dividend: 15 % of the gross amount, to be declared on form 900 and paid to the competent tax office within eight days of the income being made available.

Tax law does not share company law's distinction between a dividend and an interim dividend, and that is the costliest source of error on this type of transaction. The trigger for the withholding is the moment the income is made available to the beneficiary: payment, set-off or crediting to an account. Waiting for the meeting that will approve the accounts before filing form 900 means the eight-day deadline has been running for several months, and the catch-up is then negotiated on the ground of late-payment interest.

Two parameters complete the calculation. The base is the gross amount allocated, with no deduction; where the debtor bears the tax instead of deducting it from the interim dividend, the withholding is computed on the amount actually made available to the beneficiary, at a rate of 17.65 %. The parent-subsidiary exemption, for its part, is assessed at the date on which the income is made available: we set out its conditions, the filing of form 900 even where the withholding is nil, and treaty rates, in our article on dividend withholding tax.

One clarification is useful for holding companies distributing in a chain. An interim dividend paid during the year reduces, by the same amount, the undistributed result to be taken into account at the level of the Luxembourg shareholder for that year: a company realising a net result of 150 and paying an interim dividend of 50 in the same year leaves 100 of undistributed result. The mechanism is arithmetic, but it assumes the interim dividend was correctly dated in both sets of books.

Interim dividend above the final dividend: set-off, restitution, liability

Where interim dividends paid exceed the dividend subsequently decided by the shareholders, they are, to that extent, treated as an advance on the following dividend: the excess is not automatically repayable, it is set off against the next year's distribution.

This set-off rule is a safety valve, not an immunity. It deals with a prudent estimate contradicted by the end of the year, and avoids demanding repayment for a timing gap of a few months. It does not cover an interim dividend distributed outside the legal conditions. Any distribution made in breach of those rules must be restituted by the shareholders who received it where the company establishes that those shareholders knew of the irregularity or could not have been unaware of it in the circumstances. The burden of proof lies with the company, but it is easily discharged where the shareholder is also the manager who signed the decision.

Directors' liability is the third storey. Managers or directors who, in the absence of inventories, despite inventories, or by means of fraudulent inventories, have made distributions of dividends or interest not taken from real profits incur the penalties laid down by the law. It is the interim accounts, and they alone, that place a director on the right side of that line: an interim dividend decided without a figured statement is not a defect of form, it is the very scenario the text targets.

One legislative development deserves watching here, without confusing it with the law in force. Bill 8286, deposited on 28 July 2023 and recasting accounting law — annual accounts, consolidated accounts and the related reports — provides for the abolition of the commissaire function in company law and for an obligation, on public limited companies, European companies and private limited companies distributing interim dividends, to involve an approved statutory auditor. The parliamentary file was still open in the latest compilation consulted, dated 16 February 2026, and the professional opinions filed in it discuss that very point. None of this applies today: the law in force remains as set out above.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274). The documentary review dated 6 October 2026 relies on the accessible sources identified below. Points not confirmed against primary texts are explicitly identified in this section.

The sources consulted, all read on 6 October 2026, are the following. The amended law of 10 August 1915 on commercial companies gives the prohibition on distributing an interim dividend without authority granted to the management body by the articles, the requirement for interim accounts showing that the funds available for distribution are sufficient, the cap on the distributable amount and its five terms, the two-month limit between the date of the interim accounts and the decision, and the verification of the conditions by the commissaire or the approved statutory auditor in a report to the management body.

It also gives the treatment of any excess over the dividend finally decided as an advance on the following dividend, the restitution by shareholders of an irregular distribution where the company establishes their knowledge of the irregularity, the penalties incurred by managers and directors for distributions not taken from real profits, and the legal reserve of one twentieth of net profit up to one tenth of the share capital.

On Guichet.lu: « Distributions de dividendes » for the 15 % withholding and the filing of form 900 within eight days of the income being made available; the pages on the public limited company, the private limited company and their supervision for the competent bodies and for holding the annual general meeting within six months of the close.

The documents of the Luxembourg direct tax administration, including form 900F and the pages on withholding tax on investment income, give article 146 L.I.R., the 17.65 % rate where the debtor bears the tax, and the treatment of an interim dividend in the shareholder's undistributed result. The standard chart of accounts determined by the grand-ducal regulation of 12 September 2019, applicable to financial years beginning on or after 1 January 2020, gives account 15 for interim dividends, its place under item A.VII of equity and the presentation of debit balances as negative values.

Parliamentary file 8286 of the Chamber of Deputies, in its compilation of 16 February 2026 and the professional opinions filed in it, gives the purpose of the bill and the measure announced on interim dividends.

Four points could not be verified in their primary source and are therefore not asserted here. The full text of the sources first: the domains guichet.public.lu, legilux.public.lu, impotsdirects.public.lu and cnc.lu are blocked by the network proxy of our editorial environment, and these pages were read through indexed extracts using a search restricted to official domains; the statements above reproduce those extracts without extrapolation. Next comes the numbering of the articles of the coordinated 1915 law, which no extract read ties unambiguously to the interim dividend rules: no number is therefore quoted, only the law itself.

Next comes the existence of a minimum delay between the close of a financial year and a first interim dividend, or between two successive interim dividends: none of the conditions read mentions one, but we do not infer from that that none exists. Last comes the state of progress of bill 8286, of which we saw only the file compilation of 16 February 2026, without being able to confirm that no vote has taken place since; the announced measure is therefore presented as a bill and not as law in force.

These points can be checked in the coordinated text of the law of 10 August 1915 on legilux.public.lu, in that of the law of 4 December 1967 on impotsdirects.public.lu, and on the page for file 8286 on chd.lu.

This article sets out the state of the law at the date of publication and does not constitute personalised legal or tax advice: the authority of the management body, the distributable amount, the need for a verification report, the withholding tax treatment and the consequences of an excessive interim dividend depend on the form of the company, its articles, the state of its reserves and the status of the receiving shareholder. Report an error to contact@financialservices.lu: the correction is dated in the article.