Registration of third-country audit entities
The Statutory Audit Directive 2006/43/EC (“Audit Directive”), as amended by Directive 2014/56/EU, requires that third-country statutory auditors and audit entities providing an audit report concerning the annual or consolidated accounts to companies incorporated outside the EU/EEA whose securities are admitted to trading on an EU-regulated market should be entered in a public register and subject to a level of regulation equivalent to the minimum required for EU auditors and audit entities.
Article 45 of the Audit Directive sets the regulatory framework for registration of third-country audit entities, for ongoing oversight including the external monitoring of the quality of their audit work, and for investigations and penalties. In this regard, and according to Article 45 of the Audit Directive, third-country audit entities must register with a competent authority in each Member State in which the transferable securities are admitted to trading.
Article 46 of the Audit Directive sets the framework for a possible reliance on a third-country oversight system in Europe, subject to reciprocity. Article 46 permits Member States to exempt third-country audit entities from these requirements if these entities are subject to a system of public oversight, inspection and investigation that has been recognised as equivalent by the European Commission, or if these entities originate from a third country listed in Commission Implementing Decision (EU) 2016/1223 amending Decision 2011/30/EU on transitional arrangements.
In Luxembourg, the CSSF is the competent authority for registration of third-country audit entities.
The term “third-country audit entity” refers to both single practitioners and audit firms originating from a third country.
Who must register as third-country audit entity in Luxembourg?
Under Article 57 of the Law of 23 July 2016 concerning the audit profession (“Audit Law”), every third-country audit entity is required to apply for registration with the CSSF if it audits the annual or consolidated accounts of a company incorporated outside the EU/EEA whose transferable securities are admitted to trading on the regulated market of the Luxembourg Stock Exchange, which is operated by Société de la Bourse de Luxembourg (Bourse de Luxembourg).
However, under the current legal framework in Luxembourg, no registration is required if one of the following applies:
- the company is an issuer exclusively of debt securities within the meaning of Article 2(1)(b) of Directive 2004/109/EC, prior to 31 December 2010 and, the denomination per unit of which is, at the date of issue, at least EUR 50,000 or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least EUR 50,000;
- the company is an issuer exclusively of debt securities within the meaning of Article 2(1)(c) of Directive 2004/109/EC from 31 December 2010 and the denomination per unit is, at the date of issue, at least EUR 100,000 or, in the case of debt securities denominated in another currency, equivalent, at the date of issue, to at least EUR 100,000;
- the audit entity performing the audit of a company incorporated outside the EU/EEA is a registered audit entity already approved by the CSSF in accordance with the Audit Law or is approved in accordance with the Audit Directive by another EU competent authority to carry out audits of annual accounts or consolidated accounts.
What are the different classes of registration as a third-country audit entity?
Third-country audit entities are classified in three groups, according to the country in which they are established. The registration requirements and the regulatory regime that apply differ according to the country:
Equivalence is assessed by the European Commission in cooperation with Member States. Pursuant to Article 46 of the Audit Directive, equivalence of third countries’ regulatory systems is determined by the European Commission with regard to the comitology procedure provided for in the Audit Directive.
A Commission Decision may also exempt, for a transitional period, auditors of companies incorporated in certain third countries from most of the regulatory requirements of Article 45 of the Audit Directive, on the condition that they provide relevant Member States with specific information.
Third-country audit entities that are established in countries that are neither “equivalent” nor “transitional” are subject to the full requirements of Article 45 of the Audit Directive.
Equivalence Decision from the European Commission can be found on the following page.
European auditors’ oversight bodies, together with the European Commission, recognise the importance of implementing practical arrangements which do not overburden third-country audit firms and which follow, as far as possible, a common approach across the EU/EEA.
In this regard, EU audit regulators have worked together in order to develop, as far as national regulatory systems allow, common registration arrangements amongst Member States. Accordingly, third-country audit entities will be able to use “common application forms and guidance material” when they apply for registration in Member States.
The registration of third-country audit entities shall be carried out in each individual Member State. Therefore, the registration of third-country audit entities remains necessary in each Member State. These entities still have to apply separately for each registration with the competent oversight authorities.
A third-country audit entity that wishes to register with the CSSF should apply:
- using “Form A (LU)“, where the audit entity’s home country has been declared “equivalent” or where the transitional arrangements apply;
- using “Form B (LU)“, where the full registration requirements of Article 45 apply.
We invite you to read the detailed guidance notes and FAQ in order to help you decide on the type of registration regime that applies to your situation.
To apply for registration, a third-country audit entity must complete and submit the relevant registration forms, including all applicable annexes indicated in the forms. The forms may be downloaded below, completed electronically and sent to the CSSF by email to email@example.com. These forms must also be signed and sent to the CSSF by post.
The CSSF will inform the applicant on the approval or rejection of the registration application. The necessary information about the registered entity will be published in the register kept by the CSSF.
A registration fee is payable on application and on each anniversary of the registration date.
In this regard, the level of the fee depends on:
- the country in which the third-country auditor or the audit entity originates;
- the number of relevant audit clients.
|Annual registration fees for registration as third-country auditor or audit entity|
|Number of relevant audit clients||“Equivalent” or “Transitional” countries||“Non-Equivalent” countries|
|0-9||€ 1,000||€ 2,200|
|+10||€ 2,000||€ 5,400|
Grand-ducal Regulation of 21 December 2017 relating to the fees to be levied by the Commission de Surveillance du Secteur Financier defines, amongst other requirements, the level of fees applicable to third-country auditors and audit entities.
Registration fees are an annual lump sum intended to cover the ongoing costs related to the oversight of third-country auditors and audit entities. In accordance with the requirements of the preceding Grand-ducal Regulation, travelling costs are not included and will therefore be charged separately to individual third-country auditors and audit entities. The CSSF shall review the level of fees necessary to achieve its registration and oversight of third-country auditors and audit entities in the light of its experience.
How to pay the registration fees?
The fee is payable on submission of the application form and shall be transferred to the account of the CSSF.
(Note to the payee: “Registration: “Name of the auditor/audit entity”, “Country Name”, “Year”, “Month”” (Example: Registration PWCUS200912).
- Bank name: Banque et Caisse d’Épargne de l’État
- BIC (SWIFT-CODE): BCEELULL
- Owner of the account: Commission de Surveillance du Secteur Financier – Audit
- Account number: IBAN: LU80 0019 3255 0877 1000
Please note that the CSSF will proceed to the instruction of the information submitted by the third-country auditors or audit entities concerned only upon payment of the registration fees by the latter.
If all the requirements are fulfilled, the CSSF will give the third-country auditor or audit entity a single registration number and provide the latter with a paid off invoice.
Cooperation with competent authorities from third countries
The CSSF has entered into agreements with the following third-country regulators on cooperation and exchange of information related to the oversight of auditors.