The Luxembourg Accounting Standards Board, Commision des Normes Comptables ("CNC") issued on April 2nd 2014 a general notice (CNC 0172014) regarding the accounting term of floating financial year. The notices issued by the CNC aim at creating an accounting doctrine and represent the opinion of the CNC on a certain matter, with no binding effect.
The floating financial year is not fixed by reference to specific dates (for instance closing date of September 30th), but is determined pursuant to a floating date (for instance the last Friday of September).
Given that the Luxembourg Trade and Companies Register ("Registre du Commerce et des Sociétés" – "RCS") requires from all undertakings to file with the RCS the relevant starting and ending dates of their financial year, the entities adopting the floating principal would need to file on an annual basis with the RCS the necessary adjustment to their financial year opening and closing dates.
International accounting standards (such as international financial reporting standards - IFRS) already implement the floating financial year principal.
According to the CNC, there should therefore also be a possibility for every Luxembourg entity using LUX GAAP to use the floating principal when establishing its annual accounts. However, the following conditions have to be fulfilled:
- The duration of the floating financial year must be:
- close to the duration of a civil year; and
- comparable from one year to the other; and
- The dates of opening and closing of the floating financial year have to be determinable and predictable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.