Share premium and account 115 in Luxembourg

Share premium and account 115 in Luxembourg: what are we talking about?

Share premium and account 115 in Luxembourg refer to two equity contributions that do not increase subscribed capital: the premium paid above nominal value when securities are issued, and the contribution paid without any securities being issued in exchange, booked to account 115 of the standard chart of accounts under the caption « equity contribution not remunerated by securities ».

What separates the two is a consideration. In the first case the shareholder subscribes securities and pays more than their nominal value: the excess is a premium, and the number of securities held changes. In the second the shareholder pays in funds and receives nothing in exchange: the shareholding percentage is unchanged, and the strengthening of equity is pure. Practitioners commonly call that second route, by shorthand, « a 115 contribution ».

Account 115 is not a firm's invention: it sits in the standard chart of accounts, whose content is today set by the Grand Ducal Regulation of 12 September 2019 and which applies to financial years starting on or after 1 January 2020. It was introduced there by the Grand Ducal Regulation of 10 June 2009, and the opinion issued on the revision of the chart notes that this introduction amplified a practice that had until then been marginal.

The rest of heading 11 holds the other premiums, which the same chart distinguishes: 111 for share premiums, 112 for merger premiums, 113 for contribution premiums. Account 101 carries subscribed capital. That architecture governs the split of a capital increase by contribution in kind, and it is the one to have in mind before choosing how to strengthen equity.

Where does the share premium appear on a Luxembourg balance sheet?

The share premium appears on a Luxembourg balance sheet under equity item A.II, immediately after subscribed capital, in the layout set out in Annex I to the Grand Ducal Regulation of 18 December 2015, and the abridged balance sheet in Annex II carries the same item in the same position.

The caption of that item has changed. For financial years starting on or after 1 January 2016 the published layout reads « Share premium », where the earlier layout read « Share premium and similar premiums »: CNC question and answer 16/010 sets the two captions side by side in its comparison table. The change is cosmetic as to presentation, but it removes the word that told the reader this item aggregates more than the share premium in the strict sense.

That is the least understood consequence of the whole subject. The accounts under heading 11, account 115 included, all roll up into the same item A.II of the filed balance sheet. A third party reading the annual accounts at the trade and companies register therefore sees a single amount, with no way of telling whether it is a premium paid on an issue of securities or a contribution paid without securities.

Only the general ledger tells them apart, which is why the internal audit trail matters as much here as the entry itself. The overall presentation of these items is governed by the rules described on our annual accounts page.

Account 115 has no written regime in Luxembourg company law

Account 115 has existed in the Luxembourg chart of accounts since 2009, but no provision of the amended law of 10 August 1915 on commercial companies governs a contribution without an issue of securities, and the official materials published on the revision of the chart therefore recommend caution in its use.

The wording of those materials is worth quoting as it stands: in the absence of express provisions of Luxembourg company law on the admissibility of such transactions, companies are advised to exercise caution in using account 115. That is a rare warning in a technical text, and it bears on an account that thousands of balance sheets use.

The legislature took up the subject in 2026. Parliamentary question no. 4192 of 4 June 2026, tabled by MP Laurent Mosar, is precisely about the legal and tax framework of contributions to account 115; the deadline for answering was extended to 4 August 2026, and the joint answer of Justice Minister Elisabeth Margue and Finance Minister Gilles Roth was recorded on 30 July 2026.

What that answer says, and what it does not, shapes the whole file of a contribution decided today. On company law, the Ministry of Justice recalls that the practice of contributing without issuing securities had already been studied with input from company law practitioners and that it had not then been considered appropriate to institutionalise it in the law of 10 August 1915.

It accepts that the characterisation of such contributions may raise questions, while stating that it sees neither major practical difficulties nor significant litigation calling into question the overall legal certainty of the arrangement, and announces that the current practice will be re-examined with practitioners to determine whether a change would strengthen legal certainty.

In other words the practice is tolerated, recognised by the chart of accounts, flagged by the government as capable of improvement, and still without a text. An operation that rests on a tolerance is documented differently from one with a statutory framework: that is the one operational conclusion to draw from the answer, and it applies from the first euro paid in.

Account 115 contribution, capital increase or shareholder advance: how to choose?

An account 115 contribution in Luxembourg is decided among the shareholders and documented in writing, with no notarial deed and no amendment to the articles, where a capital increase goes before a notary and where a shareholder current account advance remains a debt of the company towards its shareholder.

The choice is therefore not an accounting one, it is legal, and it is paid for later. Booking funds to subscribed capital means accepting that they can only come back out through a capital reduction with repayment, with its publication, its waiting period and its creditor protection. Booking them to share premium or to account 115 preserves the flexibility of an equity distribution. Lending them through a shareholder current account creates a debt that must carry arm's length interest and that weighs on the financing ratio.

For a holding company or a SOPARFI that has to strengthen a subsidiary's equity ahead of an acquisition, the question arises in exactly those terms, and the answer depends on what the amount is expected to do over five years. We recommend settling that question in the minutes, before the entry, and not the other way round.

On what conditions may a share premium be repaid?

A share premium is repaid in Luxembourg like an available reserve, through a withdrawal decided by the shareholders and within the limit set by article 461-2 of the amended law of 10 August 1915, without going through the subscribed capital reduction procedure.

That article sets two locks, and both are checked against the accounts. The first is a net asset test: except in cases of a reduction of subscribed capital, no distribution may be made to shareholders where, on the closing date of the last financial year, the net assets as shown in the annual accounts are, or would become following such a distribution, lower than the amount of subscribed capital increased by the reserves which the law or the articles do not allow to be distributed.

The second is a ceiling on the amount: a distribution may not exceed the result of the last closed financial year, increased by profits carried forward and by withdrawals made from reserves available for that purpose, and reduced by losses carried forward and by amounts to be placed in reserve in accordance with the law or the articles. The same text states that the term distribution covers in particular the payment of dividends and of interest relating to shares, and that its paragraph 1 does not apply to fixed capital investment companies.

Two practical consequences follow. First, a share premium is only distributable if the articles have not made it unavailable: a statutory clause locking it brings it within the non-distributable reserves of the net asset test, and many sets of articles contain such a clause without anyone rereading it before the general meeting.

Second, the premium never dispenses with the legal reserve: article 461-1 of the same law requires an annual withdrawal of at least one twentieth of net profits until the reserve reaches one tenth of the share capital, a withdrawal that resumes as soon as that tenth is touched, and the amounts to be placed in reserve are deducted from the distributable ceiling.

The timetable matters as much as the calculation. The test is assessed on the annual accounts of the last closed financial year, which presupposes closed accounts: deciding a premium repayment before the allocation of the result for the year means giving up the reference the law requires. An authorised accountant quantifies both locks before the notice of meeting, not after.

The tax boundary: repayment of a contribution or dividend subject to withholding?

The repayment of a share premium in Luxembourg does not automatically escape withholding tax: article 97 L.I.R. classifies as income from capital the proceeds allocated, in whatever form, by reason of shares, capital units, profit units or other participations in companies limited by capital.

Three rules frame the outflow to the shareholder, and they are verifiable. Article 97 L.I.R. gives the characterisation above. Article 164, paragraph 3 L.I.R. adds hidden distributions, that is the benefits a shareholder receives directly or indirectly and which they would not normally have received had they not held that capacity. Finally, a distribution bears a withholding tax on income from capital of 15% of the gross amount, to be declared on form 900 within eight days of the income being made available, the parent-subsidiary regime being capable of exempting the distribution where its conditions are met on that date.

What the official pages consulted do not give has to be said plainly: none states the criterion that would take a repayment of a contribution outside the characterisation as income from capital. On account 115 the finding is sharper still, and it comes from the government itself. Parliamentary question no. 4192 asked about clarifying the tax treatment of such contributions, in particular as regards the participation exemption and the computation of the acquisition price of participations: the answer of 30 July 2026 restates that question without closing it. A point the Finance Minister did not settle in July 2026 is not settled in minutes drafted in November.

The course of action follows. A company considering returning a contribution booked to share premium or to account 115 asks the competent tax office for a written position before the operation, keeps the dated contribution agreement that set its terms, and states the reasons for the outflow in the minutes on the day of the decision. Our tax adviser page describes the framework of that assistance; it does not replace the written position of the administration, and no firm can replace it.

What we regularly see on account 115 contributions

On account 115 contributions we regularly see three file defects in Luxembourg: no dated agreement between the shareholder and the company, an intention to repay that was never formalised, and an effect on minimum net wealth tax that nobody had quantified before the payment.

The first defect is the costliest because it cannot be repaired. Two financial years later, with nothing in writing, nothing distinguishes a definitive contribution from a loan the shareholder expects to recover: the same amount arrived in the same bank account. Yet that distinction governs the balance sheet classification, between equity and creditors, and the whole tax analysis that follows.

We find that after-the-fact reconstruction relies on email exchanges, which is exactly what a tax audit does not accept. A one-page document, dated the day of the transfer, stating that the contribution is made without an issue of securities and specifying whether it is repayable, is enough to close the question.

The second effect is measured in euros, and it is mechanical. Minimum net wealth tax is due by bracket according to the balance sheet total: EUR 535 up to a balance sheet total of EUR 350,000, EUR 1,605 up to EUR 2,000,000, and EUR 4,815 above that. A cash contribution inflates assets as much as equity: a holding company whose balance sheet total is close to a threshold can therefore move up a bracket by reason of the contribution alone, for an amount owed every year thereafter. It is a three-line calculation, and it is missing from most of the files we take over.

One last point, flagged as such. The commentary on the articles of a tax bill tabled in 2026 states that amounts recorded in account 115 cannot be taken into account for the start-up tax credit. We are citing a parliamentary document here, not an enacted text: a young company counting on that credit should check the text in force before choosing between a 115 contribution and a capital increase, because the choice may turn on that reason alone.

Sources and verification

Written for Financial Services Luxembourg and reviewed before publication by Mickaël LOC, authorised accountant (authorisation 10077274). The sources were verified on 8 November 2026, the publication date of this article.

The sources consulted are as follows. On the chart of accounts, the Grand Ducal Regulation of 12 September 2019 determining the content and presentation of a standard chart of accounts, published on legilux.public.lu, which gives the structure of class 1 and account 115 under the caption « equity contribution not remunerated by securities », together with the « Plan comptable des entreprises » page of Guichet.lu, which places the application of the chart in financial years starting on or after 1 January 2020;

the Grand Ducal Regulation of 10 June 2009, which introduced account 115, and the opinion published on the revision of the chart, which notes that this introduction amplified a previously marginal practice and advises caution in the absence of express company law provisions.

On presentation in the balance sheet, the Grand Ducal Regulation of 18 December 2015 determining the form and content of the balance sheet and profit and loss account layouts, whose Annex I places share premium at equity item A.II and whose Annex II carries that item in the abridged balance sheet, applicable to financial years beginning on or after 1 January 2016, and CNC question and answer 16/010, which sets the former caption « Share premium and similar premiums » against the new one.

On company law, the amended law of 10 August 1915 on commercial companies, whose article 461-1 gives the withdrawal of at least one twentieth allocated to the legal reserve up to one tenth of the share capital and its resumption, and whose article 461-2 gives the net asset test, the ceiling on the distributable amount, the inclusion of dividends and of interest relating to shares within the notion of distribution, and the exclusion of fixed capital investment companies.

On tax, articles 97 and 164, paragraph 3 of the amended law of 4 December 1967 on income tax, the « Distributions de dividendes » page of Guichet.lu and the pages of the Administration des contributions directes on withholding tax on income from capital, which give the 15% withholding on the gross amount, the declaration on form 900 within eight days of the income being made available, and the exemption from withholding where the conditions of the parent-subsidiary regime are met.

Finally, on the state of the subject in 2026, parliamentary question no. 4192 of 4 June 2026 from Mr Laurent Mosar on the legal and tax framework of contributions to account 115, the extension of the answering deadline to 4 August 2026 and the joint answer of Justice Minister Elisabeth Margue and Finance Minister Gilles Roth recorded on 30 July 2026, published by the Chamber of Deputies.

Four points could not be verified in this run, and we flag them rather than present them as established. First, the tax criterion that would take a repayment of a contribution outside the characterisation as income from capital under article 97 L.I.R.: no official page consulted states it, and the reader can only secure the position by asking the competent tax office for a written position before the operation.

Second, the position of account 115 as regards the participation exemption and the computation of the acquisition price of participations: the ministerial answer of 30 July 2026 restates the question without closing it, and the tax part of the document consulted stops before its conclusion, so we present no position of the Finance Minister on that point; the full text is available on the Chamber of Deputies website.

Third, whether a posting account exists beneath grouping account 115 in the chart currently in force, to be read in the standard chart of accounts and its mapping table on legilux.public.lu before any accounting setup. Fourth, the exclusion of amounts recorded in account 115 from the base of the start-up tax credit, read in the commentary on the articles of a bill and not in an enacted text, to be confirmed against the published law.

Direct access to the texts on legilux.public.lu, impotsdirects.public.lu and cnc.lu was blocked by the network in this run: the references above come from searches restricted to those official domains and not from reading the documents in full, which human review must check before publication.

This article sets out the state of the law at the publication date and is not personalised advice: a specific situation is assessed on documents. Report an error to contact@financialservices.lu: the correction is dated in the article.