administrative law


Non-profit Organization : full understanding and consequences of the 2023 reform.

With the new law on non-profit Organization and foundations1, Luxembourg is taking a decisive step in the development of its associative sector. This legislation, which thoroughly revises the regulatory framework for Non-Profit Associations (ASBL) and foundations, is much more than a simple legal update. It embodies a major transformation aimed at strengthening transparency, governance, and efficiency, while aligning Luxembourg with international practices in the management of non-profit organizations.

What is an ASBL non-profit organization?

Nonprofit Associations (ASBL), by nature, are organizations dedicated to the pursuit of non-profit objectives, without seeking to generate profits for their members. Their field of action is vast, encompassing social, cultural, educational and environmental initiatives useful to common life in the Grand Duchy of Luxembourg. These organizations play a key role in forging social bonds and promoting life together, often by filling the gaps left by the public and private sector.

Some examples of Luxembourg non-profit organizations:

  • Info-Handicap
  • Centre de médiation Asbl
  • Cultur’all a.s.b.l.
  • Solina Solidarité Jeunes Asbl – Péitrusshaus
  • Mobbing Asbl
  • Société préhistorique luxembourgeoise a.s.b.l.
  • Fédération des syndicats de chasse du luxembourg Asbl
  • Etc…


Operation of a non-profit organization


The formation of a non-profit organization begins with the collaboration of at least two founding members. The acquisition of legal status is made official with registration in the Trade and Companies Register. The statutes must clearly define the objectives, the founding members, the name and the head office, to create the basis of an organized structure.


The governance of a non-profit organization is divided between the board of directors and the general meeting of members. The board of directors, often composed of dedicated and experienced members (at least 3 people), manages daily operations and legally represents the non-profit organization. The general assembly, for its part, is the democratic pillar of the non-profit organization, where major decisions, including statutory modifications and appointments, are taken.


With the reform, non-profit organizations are required to ensure impeccable financial transparency, reflected by careful accounting (adapted to the size of the association) and the annual submission of accounts for validation at the general meeting. In addition, keeping an up-to-date register of members is imperative and reinforces the responsibility and involvement of management. The activities of the association must be strictly confined to the pursuit of its non-profit purpose. This does not prohibit the association from carrying out economic operations (provided that these operations are not exclusively aimed at the product)


The dissolution of a non-profit organization is similar to a classic dissolution of a company following the same stages:

  • Decision by the general assembly: requires two-thirds of the members and a majority of three-quarters of the votes for dissolution.
  • Liquidation management: appointment of one or more liquidators, the liquidator(s) will use the remaining assets to settle debts and determine the net assets of the association at the end of the liquidation.
  • Closing of the liquidation: auditor's report, final formalities, dissolution.
  • Administrative procedures: registration of the dissolution and publication of the necessary acts.

The dissolution of a non-profit organization is strictly regulated to ensure that its resources and assets are allocated in accordance with its initial non-profit goal. This implies, in fact, that the assets of the liquidated association are transmitted to an organization of the same nature, which will pursue a common goal.


What are the differences between the association and the foundation?

A foundation is created by one or more people who decide to allocate assets to achieve a permanent general interest goal (creation of designated assets). This objective must imperatively be part of an approach beneficial to the common good, whether through philanthropic or social actions, or which contribute to the protection and enrichment of our common heritage. This can manifest itself through initiatives in the religious, scientific, artistic and cultural fields, or through efforts in education and pedagogy. Sports, therapeutic, medico-social activities, as well as those promoting tourism, the protection of the environment and animals, or the defense and promotion of human rights, are also among the purposes admitted by the law. Foundations cannot therefore engage in commercial operations for material gain. They do not include members or associates and their constitution requires approval by grand-ducal decree as well as a minimum initial allocation of 100,000 euros. The initial allocation of a foundation is the assets, properties or rights transferred to the foundation at the time of its incorporation. Despite an absence of members, the foundation must be managed by a board of directors composed of at least three administrators.

The main differences between a foundation and an ASBL are found in their formation formalities, the pursuit of their objective and their mode of operation. The foundation is more limited in its action given that it is limited to a goal of general interest and that it is legally required to have a significant initial capital. In contrast, the non-profit organization benefits from greater flexibility in its structure with an organization focused on collaboration between its members in order to pursue a non-profit project, without the constraint of having a minimum capital or the obligation to serve a general interest.


The impact of the 2023 reform

The 2023 reform has led to significant improvements in the functioning of non-profit organizations in Luxembourg. By clarifying legal obligations and optimizing the governance structure, it has not only made non-profit organizations more efficient but also more transparent in their operations.


Non-profit organizations can now hold their general meetings and boards of directors by videoconference and send notices electronically. For foundations, this possibility is limited to board meetings.


The register of members of a non-profit organization can be kept in electronic form, eliminating the need to file a list of members annually in the Luxembourg Business Register (RCS).


Two founding members are required to constitute an ASBL, compared to three in the previous law. This makes it possible to reduce the incorporation requirements while continuing to not admit a non-profit organization founded by a single member. Concerning the constitution of a foundation, the amount of the initial dotation required decreases from 250,000 to 100,000 euros, the reform here is part of a logic of easing access to foundations.


Non-profit organizations are classified into small, medium and large, with accounting requirements adapted to each category. For more details on the accounting standards of non-profit organizations following the 2023 reform, an article dedicated to this subject is also available on our site.


Non-profit organizations and foundations can now keep buildings not directly linked to the achievement of their purpose and use the income generated to support their activities. The obligatory sale of the building within 6 months when it is not used for the purposes of achieving the corporate purpose is no longer an obligation since the reform.


The rules relating to dissolution and liquidation have been detailed, stipulating the specific allocation of the assets of the non-profit association in the event of dissolution, this allocation must necessarily pursue the objective of general interest of the dissolved association. This precaution ensures that the legacy and efforts of the non-profit organization continue, even in the event of cessation of activity.


The need to comprehensively document and report activities, finances and statutory changes reinforces the accountability of non-profit organizations to their members and the public. This also contributes to a culture of transparency and responsibility (establishment of a integrity check, transparency of the authorization procedure, new accounting rules, etc.)


The new law introduces restructuring possibilities which allow non-profit organizations to retain their legal personality when they undergo a transformation.
From now on, when a non-profit organization decides to transform itself into another type of legal entity (foundation or a societal impact company), it can do so without losing its original legal identity. This modification provides flexibility and facilitates the transition of existing structures to new forms adapted to their evolving needs, while preserving their legal and organizational continuity.
The non-profit organization can also be involved in a merger operation with other legal entities but in this case, its disappearance is inevitable, it will be absorbed by another company (merger by absorption) or dissolved in order to form a new company (merger by constitution).


1New law of August 7, 2023 on non-profit associations and foundations, entered into force on September 23, 2023