Luxembourg Slammed For Failure To Transpose Accounting Rules

by Ulrika Lomas, for LawAndTax-News.com, Brussels

03 July 2006

The European Commission last week called on Luxembourg to comply with the judgement of the European Court of Justice in the case of Commission v. Grand-Duché de Luxembourg, delivered on 8 December 2005.

In this Judgment, the European Court of Justice declared that Luxembourg has failed to fulfil its obligations to transpose Directive 2001/65/EC on accounting rules into its national legal order.

Directive 2001/65/EC amends Directives 78/660/EEC, 83/349/EEC and 86/635/EEC. These Directives define which types of companies have to produce accounts, establish which format should be used for the profit and loss account and the balance sheet and lay down which valuation principles should be applied. The Directives also impose requirements to disclose the accounts.

Directive 2001/65/EC brought EU accounting requirements into line with modern accounting theory and practice. It allows for certain financial assets and liabilities to be valued at fair value. This will enable European companies to report in conformity with current international developments.

The Commission's request to Luxembourg takes the form of a letter of formal notice. If the national authorities do not reply satisfactorily within two months, the Commission may, if appropriate, issue a reasoned opinion.

The Court of Justice may impose financial penalties on a Member State that fails to comply with its judgment.

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