Management report in Luxembourg: content and exemption

Management report in Luxembourg: who must prepare one, and what goes in it?

The management report in Luxembourg is the narrative document the management body attaches to the annual accounts: it must contain at least a fair review of the development of the business, the results and the position of the company, together with a description of the principal risks and uncertainties it faces. Small companies are exempt.

The obligation sits in the amended law of 19 December 2002 on the trade and companies register and on the accounting and annual accounts of undertakings. In its consolidated version it covers Luxembourg companies falling within article 1 of Directive 2013/34/EU and imposes that minimum content, with, to the extent needed for an understanding of the business, references to the amounts stated in the annual accounts and additional explanations. The Guichet.lu portal attaches the main obligation to large European companies, public limited companies and private limited companies, and, in certain cases, to partnerships limited by shares and limited partnerships.

The text prescribes no form: no imposed outline, no minimum length, no official template. Only content is regulated. Hence the gap we see from one file to the next, between a two-page report that genuinely analyses margin and cash, and the generic paragraph copied from one year to the next. The second rarely satisfies the fair-review requirement, and it is spotted at once when a buyer or a bank reads the filing.

The hierarchy is simple. The annual accounts — balance sheet, profit and loss account, notes — carry the figures. The management report carries the reading the people running the company make of them: where the result came from, what threatens the coming year, what the company is preparing.

Which companies are exempt from the management report?

The exemption from the management report in Luxembourg covers small companies within the meaning of article 35 of the 2002 law, on condition that the notes carry the information on the acquisition of own shares required by the 1915 law. The cross-reference is to article 430-18, paragraph 2, of the amended law of 10 August 1915 on commercial companies. The exemption is therefore never automatic: it is bought with a disclosure.

The scale of this changed in 2024. The Grand-Ducal Regulation of 25 October 2024, transposing Delegated Directive (EU) 2023/2775, raised the size criteria of articles 35 and 47 of the 2002 law and of article 1711-4 of the 1915 law. Luxembourg took the maximum ceilings the directive allows for small companies, namely EUR 7,500,000 of balance sheet total and EUR 15,000,000 of net turnover, the headcount criterion remaining at 50 employees on average. It also took the option of applying the new thresholds early, to financial years beginning on or after 1 January 2023.

The Commission des normes comptables published question and answer 24/034 straight away to set out the practical effects of that increase, and it states the mechanism without ambiguity: the change of category is not immediate, because article 36 of the law requires the criteria to be exceeded or not exceeded over two consecutive financial years.

In the example of a pre-existing company taken by the Commission, reclassification as a small company occurs in principle during the 2025 financial year. And that reclassification carries two simultaneous effects which the same question and answer lists: exemption from the statutory audit of the accounts by an approved statutory auditor, and exemption from preparing a management report.

This is the quiet consequence of the reform, and it keeps coming up in our closing conversations: companies that produced a report because they were medium-sized are no longer required to, without anyone having decided to stop. We do not recommend dropping the document by reflex. Where there is a minority shareholder, a lender or a sale in prospect, a voluntarily maintained report costs a few hundred euros against our fee schedule and avoids an awkward question two years later. The exemption is taken in a documented management decision; it is not drifted into.

Two special cases are worth knowing. A newly incorporated company may be classified as small from its first financial year if a good-faith estimate does not foresee two or more criteria being exceeded. And a company placed in liquidation leaves the scheme: in its question and answer 21/022, the Commission des normes comptables states that the management report does not apply to companies in liquidation, a liquidator's report generally being prepared under Title XI of the 1915 law.

Do post-balance-sheet events belong in the management report or in the notes?

Material events arising after the balance sheet date belong in the notes to the annual accounts in Luxembourg, not in the management report, where they are not already reflected in the balance sheet or in the profit and loss account. Guichet.lu lists among the information to be presented in the notes the nature and financial effect of material events arising after the balance sheet date which are not reflected in the profit and loss account or in the balance sheet.

That allocation surprises people, and it surprises for a precise historical reason. Under the Fourth Directive, the management report had to carry particulars of important events that had occurred since the end of the financial year. Directive 2013/34/EU moved the requirement: it is now its article 17(1)(q), on the content of the notes, that requires the nature and financial effect of material events arising after the balance sheet date and not reflected in the profit and loss account or the balance sheet to be described. The obligation has not disappeared, it has changed document.

The point is not academic. A company exempt from the management report is still bound by the post-balance-sheet disclosure, because that disclosure lives in the notes: exemption from the report does not erase the note. Conversely, a company that still prepares a management report and puts that information there alone leaves its notes incomplete. We see both mistakes, and the second is the more costly, because it affects the document the approved statutory auditor or the supervisory auditor reviews.

The sorting rule turns on one question. A major loss occurring in February is described in the notes, because it changes how the balance sheet at 31 December is to be read; the commercial strategy for the current year is described in the management report, under likely future development. Does the fact illuminate the accounts as drawn up, or the trajectory of the company?

Non-financial statement and corporate governance: who adds them to the report?

The non-financial statement sits inside the management report and concerns only a small number of Luxembourg companies: those that are public-interest entities within the meaning of article 2(1) of Directive 2013/34/EU and that exceed the threshold of 500 employees. The corporate governance statement, for its part, forms a specific section of the management report of companies whose securities are admitted to trading on a regulated market.

Its content is detailed. It covers at least environmental matters, social and employee matters, respect for human rights and anti-corruption, describing for each the business model, the policies applied and their outcomes, the principal risks and key performance indicators. The comply-or-explain logic is express: absent a policy on one of those matters, the company must give a reasoned explanation.

The associated review is deliberately limited, and it is useful to know that before commissioning an engagement. The approved statutory auditor confines itself to checking that the non-financial statement has been provided: it does not certify its content. That asymmetry between a heavy content obligation and a mere existence check would disappear under the sustainability regime coming from the corporate sustainability reporting directive, whose Luxembourg transposition is not complete.

For almost every company we work with, neither of these two statements applies. The notion of public-interest entity is narrow: the law of 23 July 2016 on the audit profession places within it entities whose transferable securities are admitted to trading on a regulated market of a Member State, and the Commission de surveillance du secteur financier adds Luxembourg credit institutions and insurance undertakings. An unlisted company under ordinary law does not fall within it.

What does the approved statutory auditor check in the management report?

The review of the management report by the approved statutory auditor covers two points and two only: whether the report is consistent with the annual accounts for the same financial year, and whether it has been prepared in accordance with the applicable legal requirements. It is not a certification of management's judgement on the company's future.

The law of 23 July 2016 on the audit profession organises that work: to prepare its report on the consistency of the management report and the financial statements, the professional examines both documents. The Guichet.lu page on overseeing a private limited company states the requirement in the terms taken up in practice: giving an opinion stating whether the management report is consistent with the accounts for the year and whether it has been prepared in accordance with the applicable legal requirements.

That page adds a sequencing point that closing timetables often ignore: the auditor's engagement only begins once the annual accounts and the management report have been prepared by management. A management report delivered after the auditor's work has started mechanically shifts the date of the audit report, hence the date of the meeting, hence the date of filing. We regularly see one to three weeks lost on that sequence alone, when the document can be prepared alongside the filing package, within the same timetable as the rest of the licensed accountant's engagement.

The choice of auditor depends on the company's size, and it moved with the 2024 increase in thresholds: a company that has become small again loses, at the same time, the management report obligation and the statutory audit obligation. The dividing line between approved statutory auditor and supervisory auditor is rechecked at each closing rather than rolled forward.

Filing with the register, publication and the penalty for omission

The management report follows the timetable of the annual accounts in Luxembourg: approval by the meeting within six months of the closing date, then filing with the trade and companies register within one month of approval, seven months at most. It is attached to the filing in PDF/A format, among the unstructured documents.

The filing mechanics separate two types of document. Unless international accounting standards apply, the company first validates its filing package on the eCDF platform using the standard chart of accounts; the validation box lets the register retrieve the balance sheet, the profit and loss account and the trial balance. The other documents, including the notes and the management report, are filed as attachments. The filing is mentioned in the Electronic Register of Companies and Associations within fifteen days.

The penalty is criminal and personal. Article 1500-2, point 2°, of the amended law of 10 August 1915 punishes with a fine of EUR 500 to EUR 25,000 managers or directors who have not submitted to the general meeting, within six months of the closing date, the annual accounts, the consolidated accounts, the management report and the certificate of the person responsible for auditing the accounts. The same text covers failure to publish them. It is not the company that is hit, it is the people who run it, which changes the conversation with a non-resident director. Late filing also triggers its own surcharges, separate from that fine.

One last point calls for caution. The law provides publication reliefs, and the text read in extract allows companies referred to in article 77 not to publish their profit and loss account, their management report or the report of the person responsible for auditing the accounts. How those cross-references map onto the size categories could not be verified here: that mapping is confirmed against the consolidated text before filing, not after.

What may still change: two bills to watch

Two texts going through the legislative process may alter the management report regime in Luxembourg: bill 8286, lodged on 28 July 2023, which recasts accounting law, and bill 8370, which transposes the corporate sustainability reporting directive. Neither is in force, and the law applicable to the 2026 closing remains the one described above.

Bill 8286 rewrites the subject in a new provision. Its drafting widens the exemption to micro-undertakings and relaxes the formal condition: the information on the acquisition of own shares could appear after the balance sheet or in the notes, where the current text points to the notes. The same bill contains provisions specific to undertakings in discontinuity. We flag it as a bill: none of those provisions can be relied on today.

Bill 8370 has had a bumpier path. The parliamentary file shows it in committee, last updated on 22 December 2025, and government amendments of 6 May 2025 brought in Directive (EU) 2025/794, the so-called stop-the-clock directive, which postpones certain application dates for sustainability reporting. The original transposition deadlines have been missed since 2024, and the Chamber of Deputies' October 2026 meeting records still list the text as pending.

The course of action is therefore stable and inexpensive. An unlisted Luxembourg company applies the current regime, checks its size category at each closing, and records in a management decision the choice of preparing a management report or not. The day either text comes into force, that documentation makes the transition mechanical.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, licensed accountant (authorisation 10077274). The minimum content of the management report, the small-company exemption and its disclosure condition, the thresholds of EUR 7,500,000, EUR 15,000,000 and 50 employees, the two-consecutive-years rule, the attachment of post-balance-sheet events to the notes, the 500-employee threshold of the non-financial statement, the subject matter of the approved statutory auditor's opinion, the six- and seven-month timetable, the fine of EUR 500 to EUR 25,000 and the status of bills 8286 and 8370 were verified on 21 October 2026 against the sources below.

The sources consulted are as follows. From Legilux, the amended law of 19 December 2002 on the trade and companies register and on the accounting and annual accounts of undertakings, in its consolidated version applicable as at 23 December 2025, read for the obligation to prepare a management report containing at least a fair review of the development of the business, the results and the position of the company, for the references to the amounts in the annual accounts and the additional explanations, for the criteria of the non-financial statement and for the abridged notes of small companies;

the amended law of 10 August 1915 on commercial companies, in its consolidated version applicable as at 2 March 2025, for article 1500-2, point 2°, which punishes with a fine of EUR 500 to EUR 25,000 the failure to submit to the meeting the annual accounts, the consolidated accounts, the management report and the auditor's certificate within six months of the closing date, as well as the failure to publish them;

and the law of 23 July 2016 on the audit profession, for the examination of the financial statements and the management report with a view to the report on their consistency, and for the definition of public-interest entities. From the Guichet.lu portal, the page on methods for preparing annual accounts, for the content of the management report, for the scope of the companies concerned, for the disclosure in the notes of the nature and financial effect of material events arising after the balance sheet date, and for the corporate governance statement of listed companies;

the page on overseeing a private limited company, for the opinion on the consistency of the management report with the accounts for the year and on its compliance with legal requirements, and for the auditor's engagement beginning only once the documents have been prepared; the page on filing annual accounts with the trade and companies register, for approval within six months, filing within the following month and the overall seven-month deadline, for prior validation on the eCDF platform using the standard chart of accounts and for the filing of unstructured documents in PDF/A;

the page on publication and advertising of filings, for the mention in the Electronic Register of Companies and Associations on the day of filing or on a chosen date within fifteen days; the page on consolidated accounts of undertakings, for the possibility of combining the management report and the consolidated management report into a single document.

From the Commission des normes comptables, question and answer 24/034 on the raising of the size criteria of articles 35 and 47 of the 2002 law and of article 1711-4 of the 1915 law, for the transposition of Delegated Directive (EU) 2023/2775, for the Luxembourg choice of the maximum ceilings of EUR 7,500,000 and EUR 15,000,000, for early application to financial years beginning on or after 1 January 2023, for the deferral of reclassification caused by the repetition criterion of article 36, and for the simultaneous exemption from statutory audit and from the management report that follows;

question and answer 21/022 on discontinuity of operations and liquidation basis accounting, for the article 68 exemption benefiting small companies and for the inapplicability of the management report to companies in liquidation, replaced in practice by a liquidator's report under Title XI of the 1915 law.

From EUR-Lex, Directive 2013/34/EU, for article 17(1)(q), which places in the notes the nature and financial effect of material events arising after the balance sheet date and not reflected in the profit and loss account or the balance sheet, and for article 19, which defines the content of the management report around the fair review and the principal risks and uncertainties; and the summary of the Fourth Directive, for the former attachment of those events to the management report.

From the Chamber of Deputies, parliamentary file 8286 for the new provision on the management report and the extension of the exemption to micro-undertakings, and parliamentary file 8370 for the state of transposition of the corporate sustainability reporting directive, for the government amendments of 6 May 2025 bringing in Directive (EU) 2025/794 and for the text being listed as pending in the October 2026 records of meetings. From the Commission de surveillance du secteur financier, the pages giving an overview of that directive and setting out the specific requirements for public-interest entities.

Five points could not be verified against an official source at that date. The primary texts first: the domains legilux.public.lu, guichet.public.lu, cnc.lu, cc.lu, chd.lu and cssf.lu are blocked by the network proxy of our drafting environment, and those pages were read through indexed extracts by means of a search restricted to official domains; the statements above reproduce those extracts without extrapolation.

Next, the internal numbering of the paragraphs of the article devoted to the management report: the small-company exemption is cited by the Commission des normes comptables as sitting in paragraph 3 of article 68, without the consolidated text having been read in full, so this article offers no finer cross-reference. Next, the presence of the existence of branches in the Luxembourg list of report content, mentioned by the directive but absent from the extracts consulted: it is not asserted here.

Next, the exact mapping of the size categories onto the points of article 77 that open the exemption from publishing the profit and loss account, the management report and the auditor's report, read in extract without the cross-reference table. Finally the monetary criterion accompanying the 500-employee threshold of the non-financial statement, which the Guichet.lu page and the consolidated text word differently, one taking headcount at the closing date and the other an average over the year. These points can be verified on legilux.public.lu, on cnc.lu and on guichet.public.lu.

This article sets out the state of the law at the date of publication and does not constitute personalised legal or tax advice: a company's size category, the decision whether or not to prepare a management report, what counts as a sufficient fair review and the publication regime that applies all depend on the documents available, on the accounting framework applied and on the company's own situation. Texts, regulations and practice change, and any decision binding your structure should be verified as at the date you rely on it. Report an error to contact@financialservices.lu: the correction is dated in the article.