Agefi Luxembourg - mars 2025

Mars 2025 7 AGEFI Luxembourg Banques / Assurances ByRaphael CHARLIER ,Partner&Kevin VENTURA , SeniorManager at Deloitte Luxembourg T he landscape of Luxembourg’s Professionals of the Financial Sector (PSF) continues to evolve at a rapid pace underpinned by stringent regulatory frame- works. In the context of the publication of our 2025 regulatory and tax guide, we delved into the latest develop- ments impacting the PSF market, focusing on market evolution and emerging regulatory challenges. The evolution of the PSFMarket By 31 January 2025, the number of PSF decreased slightly to 246 (from 251 as at 31 January 2024), highlighting a slowdown in the concentration trend. However, this marginal changemasked un- derlying dynamics within specific PSF categories. Support PSF remained stable at 60PSF, the number of investment firms slightly decreased from 92 to 91 and, Specialized PSF decreased from 99 to 95.From a financial perspective, PSF have shown robust growth. By2024, the sector’sprovisional net results soared to €384million,a34%increasefrom2023’s€287million. This growthwas seen seen across the three types of PSF, with a remarkable increase of 79% for invest- ment firms (from EUR 57.7 million in 2023 to EUR 103.5million in 2024), reflecting themarket surge. The digital finance package: What does this mean for PSF? The EU is expanding its regulatory landscapewith its digital finance package. Launched by the Euro- peanCommission, this comprehensive framework aims to promote responsible innovation, ensure a harmonized market for digital assets, and provide clear guidelines across Member States. The package’s primary goals include harmonizing regulations by standardizing the rules across all EU Member States, thus simplifying compliance for businesses operating within the single market. It promotes innovation by encouraging responsible innovation and competition in the EU’s financial services sector. Furthermore, the package enhances security with measures aimed at mitigating risks and protecting market integrity. Two cornerstones of this package are: - Regulation (EU) 2023/1114, or the Markets in Crypto-Assets (MiCA) Regulation; and - Regulation (EU) 2022/858, or the Distributed Ledger Technology (DLT) Pilot Regime. Both regulations contribute to a broader strategy to harness DLT’s potential in the financial sector, enabling the safe and regulated adoption of DLT- based assets and technologies to enhance financial markets’ efficiency and transparency. By provid- ing structured frameworks, these initiatives en- sure that innovations like crypto-assets can be explored and implemented without compromis- ing market integrity or investor protection. It is important to note that MiCA and the DLT Pilot Regime cover different sets of assets, with the former focusing on crypto-assets and the latter mainly covering traditional financial instruments like stocks and bonds. In their DLT-based form, these tokenized financial instruments retain their MiFID II regulatory classification and obligations, ensuring continuity in their legal and regulatory treatment. Revision of the long form report for the investment firms More recently, on 9 January 2025, the CSSF pub- lished Circular CSSF 25/870 amending Circular CSSF 24/853 on the revised long formreport for in- vestment firms. By this update, the application of Circular CSSF on the revised long form report of investment firms is extended to all investment firms under Luxem- bourg Law, including their branches, from the fi- nancial year ending December 31, 2024. However, considering the principle of proportion- ality, theCSSF introduces a reduced scope of the re- quirements for the investment firms that are subject to theprovisions ofCircularCSSF24/853 for thefirst time as from the year endedDecember 31, 2024. These investment firms (the “Partial Scope IF”) are exempted from the requirement to submit the Agreed Upon Procedure (AUP) reports as part of their revised long formreport. ThisCircular further includes practical rules concerning the self-assess- ment questionnaire to be submitted by investment firms and the mission and related reports of the réviseurs d’entreprises agréés. The implementationof Pillar II The global shift towards a 15%min- imum taxation level for multina- tional enterprise (MNE) groups, as mandatedby theOECD’s Pillar Two framework, has brought significant changes to Luxembourg’s tax land- scape. The Pillar Two rules were transposed intoLuxembourg’s domestic legislation on 23 December 2023, target- ing MNE groups and large-scale domestic groups with annual revenues of at least €750 million. For the fiscal year 2024, the Qualified Domestic Minimum Top-up Tax (QDMTT) and the In- come Inclusion Rule (IIR) are the primary concerns. The undertaxed payments rule (UTPR) will become applicablefromfiscalyear2025,addinganotherlayer of complexity for impactedentities. It is important to note that these changes primarily affect the largest PSF entities that are part of international groups. On 12 June 2024, Luxembourg introduced Bill No. 8396 (the “Bill”), amending the initial Pillar Two Law to incorporate the Organisation for Economic Co-operation and Development (OECD) 2023 July AdministrativeGuidance. This Billwas adoptedon 19December 2024. Its amendments include changes and clarifications regarding investment fund struc- tures, theCbCR safe harbor, the deemed consolida- tion test, and domestic minimum top-up tax (DMTT). Navigating these intricate regulatory frameworksdemands strategic foresight andmetic- ulous planning. Adaptation to these sweeping changes, particularly within digital finance and minimumtaxation, is crucial for PSFentities striving tomaintain compliance and leveragenewopportu- nities in the evolving financial sector. Newaccounting lawreform A significant regulatory development is the release of the draft Bill of Law no. 8286 on 28 July 2023, whichproposes a comprehensive reformof theLux- embourg Accounting Law of 19 December 2002. This bill seeks to consolidate various accounting provisions into a single legislative text, redefining key accounting and audit requirements. The forth- coming lawwill extend its scope, mandating com- pliance froma broader spectrumof undertakings. 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