Companies’ consolidated accounts

Registered with the Ordre des Experts-Comptables in Luxembourg (OEC) as well as in France (CNOEC), our experts and specialists at CELIANCE supports you, thanks to a multidisciplinary and competent team. We can guide you step by step through the whole consolidation process:

  • Analysis of the consolidation context and the group’s needs ;
  • Definition of the applicable perimeter: standard and applicable method according to the type of control identified;
  • Support in the processing and monitoring of accounting data;
  • Preparation and establishment of the consolidated balance sheet
  • Audit

What is consolidation?

As part of its growth, the company must adopt an accounting methodology adapted to the size of its activity and its stakes. Consolidation allows the conglomerate of entities concerned by a group growth to be brought together by a global evaluation method aimed at obtaining a complete overview of its financial and economic health. It thus makes it possible to present a true picture of the group’s overall results.

What is the legislative framework ?

Consolidation is a key step in the development of an entity on a group level. Therefore, companies within a group of companies must in principle consolidate the accounts of the group they own.
In some cases, companies may be exempted from preparing consolidated accounts if they meet specific criteria, for example if they are wholly owned by another company or if they carry out activities that are not subject to consolidated accounts, such as financial institutions, insurance companies and investment companies.
It is important for companies to understand the legal scope of consolidated accounts in Luxembourg and to consult a professional accountant or legal advisor to ensure compliance with all relevant regulations and requirements. This can help ensure that the company’s financial statements accurately reflect its financial position and performance, and that they are prepared in accordance with the relevant accounting standards and regulations.

The legal provisions and application criteria for consolidation are listed in Title XVII – Consolidated Accounts” of the Law on Commercial Companies of August 10, 1915 (Articles 1711-1 et seq.). These provisions stem from Directive 2013/34/EU of the European Parliament and of the Council of June 26, 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of companies, amending Directive 2006/43/EC, repealing Council Directives 78/660/EEC and 83/349/EEC.

In practical terms, this accounting method is part of the desire to perpetuate the main accounting principles by transposing them to the scale of a group of companies. As a reminder, the principles are as follows:

  • Business Continuity;
  • Prudence;
  • Consistency of accounting policies;
  • Comparability of information;
  • Materiality;
  • Non-compensation;
  • Precedence of substance over form,
  • Accrual accounting.


Which standards and methods ?

Consolidation requires the application of specific standards and methods:

Applicable accounting standards:

  • “LUXGAAP” (Luxembourg standard)
  • “IFRS” (International Standard)


Consolidation methods :

  • Full consolidation
  • Proportional consolidation
  • Equity method


To what extent should consolidation be considered?

Consolidation is carried out for internal purposes or to meet the requirements of the law of August 10, 1915 on commercial companies “Title XVII – Consolidated accounts”.

In order to determine whether consolidation is necessary, it is necessary to look at the ownership and control of an entity, i.e., by analyzing the composition of the shareholder base, the identification of the power of dismissal or appointment of the members of the administrative, management or supervisory board of an entity, the shareholder or sole proprietor has sole control over the majority of the shareholder base in accordance with the legal provisions.

  • Sole control: control by voting rights (directly or indirectly) of more than 50% in an entity; (Full consolidation method)
  • Shared control: control by voting rights (direct or indirect) shared equally among the shareholders; (proportional integration method)
  • “De facto” control: through political, financial or operational influence without holding a majority of voting rights (direct or indirect) equal to or less than 20%; (equity method)


Insofar as the consolidation work constitutes an additional workload, the legislator has established a reduction in the scope of eligibility in order to relieve small groups of companies of their consolidation obligation. 3 main criteria are to be retained:


Criterion 1 :

The realization of the consolidation of the accounts can be exempted if by derogation of article 1711-1, of the LSC of August 10, 1915 if on the basis of the last annual accounts, at least two of the three following criteria are not exceeded:

  • Balance sheet total >20 million euro ;
  • Net turnover : >40 million euro ;
  • Number of employees employed full time on average during the financial year: 250.

However, for the assessment of these 3 criteria, consolidated group data is required. In order to avoid any unnecessary consolidation on behalf of the group, a threshold has been established for which the group will be able to establish by simply adding the data of the companies making up the group (24 million euros for the balance sheet and 48 million for the turnover).

Criterion 2 :

The company at the head of the group (parent company) is at the same time the daughter of another company already subject to consolidation: as the company is already subject to consolidation, it is necessary to consider the choice of any minority shareholders of the company concerning the choice to be exempted from consolidation. In the case of exemption, the legal appendix of the company must include the exemption mention as well as all the information of the parent company which has consolidated its accounts.

Criterion 3 :


The company only has subsidiaries that are of negligible interest individually and collectively: the consolidated assets, consolidated financial position and consolidated result are similar to the assets, financial position and result of the parent company.
The exemption from consolidation also applies in the following cases:

  • Financial participation companies;
  • Companies owned and acting exclusively on behalf of venture capital and private equity companies;
  • Companies in the process of liquidation.

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