Today, 23 September 2025, marks the end of the transitional period for adapting the constitutive documents of non-profit associations (ASBLs) and foundations to the Law of 7 August 2023 on non-profit associations and foundations, as amended. With this reform, the almost century-old Law of 21 April 1928 on non-profit associations and foundations is definitively repealed. The purpose of the reform was to modernise the applicable regime, to strengthen transparency, and to implement international recommendations, in particular those of the FATF (Recommendation 8).
As from today, all existing structures are subject exclusively to the new legal framework. Associations and foundations that have not yet adapted their constitutive documents must henceforth comply ex lege with the new mandatory provisions. By way of reminder, the key innovations for foundations are summarised below (for innovations concerning associations, please click here):
In Luxembourg, any natural or legal person may, by notarial deed and subject to approval by Grand-Ducal regulation, dedicate all or part of his, her or its assets to a foundation to be established. The initial endowment must be at least EUR 100,000, and this minimum amount must be paid in cash.
Those assets and the income derived therefrom must serve a purpose of general interest and extend beyond a purely local interest. The purpose must be described with precision in the constitutive documents and must include an indication of the activities the foundation intends to undertake to achieve its objects. The 2023 reform further requires that the objects of the foundation be of a permanent nature and that real and substantial activity be carried out in the Grand Duchy of Luxembourg. This ensures that foundations do not merely exist formally, but also make a genuine contribution to the common good.
Whereas the former law did not set a minimum capital, the reform prescribes, as noted, a minimum endowment of EUR 100,000, and there must be a coherent financing plan for projects for the first three financial years. In addition, the net assets of a foundation must not permanently fall below EUR 50,000 (not applicable to foundations incorporated under the former law). If they do, the board of directors must meet within two months to decide either on dissolution or on recapitalisation measures, which must be successfully implemented within six months of the determination that the net assets have decreased.
One of the principal innovations introduced by the reform concerns the ability going forward to acquire and hold land or buildings even where these are not directly necessary for achieving the purpose set out in the constitutive documents. This substantially broadens the scope for action and affords foundations greater flexibility in the management of their assets.
The governance of foundations has also been fundamentally modernised. The board of directors may henceforth be composed of both natural persons and legal entities. Moreover, the day-to-day management may be delegated to persons who are not necessarily members of the board. Notices convening meetings must be sent at least eight days prior to the meeting and, since the reform, may be sent by email in addition to by post. A director may represent only one other director at a meeting. Long awaited since the expiry of social distancing measures during the Covid period: meetings may now be held by videoconference, and, if the constitutive documents so permit, unanimous written resolutions are also possible in urgent cases.
One of the most significant changes is the introduction of a strict accounting regime. Foundations must henceforth keep double-entry accounts and be subject to an external audit by an approved statutory auditor (réviseur d’entreprises agréé). All accounting records must be retained for ten years from the end of the financial year to which they relate.
At the same time, the reform provides meaningful simplification: the board of directors must approve the annual accounts and the budget for the following financial year within six months of the close of the financial year and thereafter file only the annual accounts with the RCS. This removes the previous obligation to submit these documents to the Ministry of Justice within two months of the end of the financial year.
However, certain reporting obligations now apply. The board of directors is required to submit to the Ministry of Justice a detailed activity report relating to the past financial year within one month of filing the accounting documents with the RCS. In addition, the notes to the annual accounts must henceforth contain supplementary information, namely: the volume of funding provided to other entities; the estimated percentage of activities carried out in Luxembourg, in the EU or EEA, and outside those regions; and the percentage of funds transferred abroad.
The new law also makes transformations and mergers possible. Foundations may change their legal form or merge with other foundations without losing their legal personality. A merger with an association is not envisaged.
In addition, the legislature has introduced new sanctions. A foundation that repeatedly breaches its statutory obligations may face administrative dissolution without judicial proceedings. The improper use of the term “foundation” by a founder or a director is punishable by a fine. A director who, in bad faith, misuses the foundation’s assets, credit, or powers to the detriment of the foundation for personal purposes or for the benefit of a related entity risks a fine and/or a term of imprisonment.
Over the past two years, all existing associations and foundations have had the opportunity to adapt their constitutive documents to the new framework. Those that have not done so must now accept that any conflicting provisions in their constitutive documents are automatically repealed or deemed unwritten and that the new mandatory rules apply directly as from today.
For foundations that have not yet adapted their constitutive documents, or that require assistance in implementing the new requirements, we would be pleased to advise. Drawing on our many years of expertise, we support clients from the review of existing constitutive documents through to compliant amendments and registration with the RCS.