Luxembourg Update on CRD VI – the implementation continues to progress

Transposition in Luxembourg

On 14 April 2026, the Commission des Finances (the Finance Committee) of the Chambre des Deputies published its report on Draft Law No. 8627¹ (the Draft Law), paving the way for Luxembourg’s transposition of CRD VI² (the Directive) and EMIR 3³. The Committee broadly endorses the Draft Law’s policy direction, confirms full alignment with EU requirements following substantial amendments, and clears all constitutional and EU‑law obstacles identified by the Conseil d’État and the European Central Bank.

In its report, the Finance Committee reaffirms that Luxembourg’s existing framework is already largely aligned with CRD VI and EMIR 3. The Committee sees the Draft Law as a refinement and consolidation exercise rather than a disruptive force, strengthening supervisory tools while respecting proportionality. There is therefore little disruption expected for the Luxembourg financial sector, compared to some other Member States.

We expect Parliamentary voting in the coming weeks. In practice this means that credit institutions and investment firms will be subject to enhanced governance and ESG‑related supervisory scrutiny. Third‑country banks need to reassess their EU strategies, particularly cross‑border service models. Also, group transactions and intragroup restructurings may face tighter procedural timelines. Last but not least, supervisory engagement with the CSSF is expected to become more structured, data‑driven and intrusive.

Below we provide an overview of the key points addressed by the Finance Committee in its report to the Draft Law.

 

1. New regime for third‑country branches validated

Arguably the point being discussed most amongst practitioners and market participants is third-country access and the requirement to set up a branch - also referred to as Art. 21c. The Finance Committee endorses the Directive’s comprehensive and highly structured regime for third‑country branches and introduces only minor drafting clarifications in the text which had been recommended by the Conseil d’Ėtat.

By way of reminder, the Directive imposes an obligation to require undertakings established in a third country to establish a branch in their territory and apply for authorisation to commence or continue carrying out certain activities in that Member State Those activities are, in short, activities carried out by a third‑country undertaking that would qualify as a credit institution (or meets the CRR criteria to be treated as one): taking deposits or other repayable funds from the public and granting credit for its own account. The Draft Law seeks to make these requirements easier to navigate by consolidating the relevant provisions from two articles into a single, more readable rule set.

The activities in question cover lending activities, including consumer credit, credit agreements relating to immovable property, factoring, with or without recourse or financing of commercial transactions including forfeiting.

In practice, the analysis turns on two questions: (1) are you a credit institution? And (2) are you carrying out lending activities? The branch requirement is therefore assessed not only by reference to the services provided, but also by reference to the nature of the relevant third‑country undertaking.

With respect to the lending activity, if the third-country entity is not considered a “credit institution”, the third-country branch requirement does not apply. Such actors are permitted to (continue to) carry out their activities on a cross-border basis without having to establish a local branch. For Luxembourg this includes for example loan origination by investment funds or other non-bank entities established in a third country.

By contrast, when it comes to the activity of taking deposits or other repayable funds, essentially the activity which is the essence of a credit institution, there is no regard to the nature of the undertaking. A third-country branch is therefore required, unless an exception or exemption applies.

The exceptions provided for in the Directive and also in the Draft Law are reverse solicitation, interbank transactions or intra-group transactions or when provided only an ancillary basis in the context of the provision of an investment service (i.e. MiFID activities).

From a Luxembourg perspective it is important to remember that these requirements concern activities carried out “in Luxembourg” only, i.e. a territorial approach. Here reference is made to the place of the characteristic performance of the service. In practice it will need to be assessed and identified whether Luxembourg is the place where the service is actually provided. In line with existing practice, if a banking activity is performed entirely and exclusively on a remote basis from a third country, without any relevant connecting factor being linked to Luxembourg territory, the provision of a banking service may be characterised as taking place outside Luxembourg.

 

2. Systematic alignment with Conseil d’État objections

The Finance Committee adheres to the Conseil d’État’s formal objections. In practice, this results in the removal of national deviations not permitted by CRD VI; corrections where Luxembourg draft wording departed from the mandatory language of CRD VI; as well as completion of provisions where CRD VI or EMIR 3 obligations (e.g. notification or supervisory access requirements) had been incompletely transposed.

 

3. ECB comments mostly acknowledged and selectively followed

The European Central Bank had been asked by the Luxembourg Ministry of Finance to provide its opinion on the Draft Law⁴, which was published in December 2025. This opinion did not raise any particular red flags regarding Luxembourg’s approach to the transposition of the new rules. The Committee addresses the European Central Bank’s opinion with nuances. It acknowledges that supervisory independence, as prescribed by Article 4bis of CRD VI is not covered in the Draft Law but explicitly defers it to a future legislative proposal, confirming expectations of renewed ECB consultation. Further, despite ECB suggestions that the 20‑day deadline for intragroup mergers could restrict supervisory discretion, the Committee’s recommendation is not to remove it at this stage, while emphasising that supervisory judgment must remain intact in practice.

 

4. Governance and “fit‑and‑proper” changes confirmed

The Committee endorses far‑reaching updates to the governance framework. As such, a reinforced fit‑and‑proper regime for board members, senior management and (for CRR entities) key function holders; clearer allocation of responsibilities within management bodies; expanded supervisory powers to assess and, where necessary, challenge governance arrangements are principles embedded in the draft legal text. These principles are already embedded in the practice of the CSSF and the Draft Law now clearly includes these expectations, in line with the text of the Directive.

 

5. ESG and concentration risk firmly embedded

ESG continues to be a priority for policy makers and the financial sector in Luxembourg and the Committee report confirms Luxembourg’s full adoption of the Directive’s requirements for integrated ESG risk management. This means mandatory integration of ESG risks into governance, risk management and remuneration frameworks; ESG transition planning obligations, subject to proportionality; as well as enhanced supervisory powers to require mitigating measures.

In parallel, EMIR 3‑driven provisions significantly strengthen oversight of concentration risk towards central counterparties (CCPs), with new planning, monitoring and potential exposure‑reduction requirements.

As a conclusion, with the Finance Committee’s report adopted and all major legal obstacles resolved, Draft Law No. 8627 is expected to proceed without further structural changes. Market participants should treat the report as a clear intention of the legislator to move from monitoring to implementation planning as we are entering the final stage before the law is formally adopted. Stay tuned for more information.

 

---

¹ Draft law providing for: 1. amendment of: a) the amended law of 5 April 1993 on the financial sector; b) the amended law of 17 December 2010 on undertakings for collective investment; c) the amended law of 18 December 2015 on the failure of credit institutions and certain investment firms; d) the amended law of 15 March 2016 on over‑the‑counter derivatives, central counterparties and trade repositories and amending various laws relating to financial services; 2. transposition of: a) Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third‑country branches and environmental, social and governance risks; b) Directive (EU) 2024/2994 of the European Parliament and of the Council of 27 November 2024 amending Directives 2009/65/EC, 2013/36/EU and (EU) 2019/2034 as regards the treatment of concentration risk arising from exposures to central counterparties and counterparty risk from centrally cleared derivative transactions; 3. implementation of Regulation (EU) 2024/2987 of the European Parliament and of the Council of 27 November 2024 amending Regulations (EU) No 648/2012, (EU) No 575/2013 and (EU) 2017/1131 by measures aimed at mitigating excessive exposures to third‑country central counterparties and improving the efficiency of Union clearing markets.
² Directive (EU) 2024/1619 of the European Parliament and of the Council of 31 May 2024 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third‑country branches, and environmental, social and governance risks.
³ Regulation (EU) 2024/2987 of the European Parliament and of the Council of 27 November 2024 amending Regulations (EU) No 648/2012, (EU) No 575/2013 and (EU) 2017/1131 as regards measures to mitigate excessive exposures to third‑country central counterparties and improve the efficiency of Union clearing markets.
⁴ Opinion of the European Central Bank of 18 December 2025 on the notification and assessment procedure for intra‑group mergers (CON/2025/44).