CRD6 is arriving to Luxembourg

The Chamber of Deputies is currently discussing draft law (projet de loi) N°8627 (Draft Law), initiating the implementation of Directive (EU) 2024/1619 (CRD6) into national law. The Draft Law introduces various significant changes to the law of 5 April of 1993 on the financial sector, as amended (FS Law), it introduces harmonised framework for third-country branches (TCBs) and strengthens governance, ESG risk management, and supervisory powers across the EU banking sector. CRD6 must be transposed by 10 July 2026, with full application from 11 January 2027.

Impact on TCBs

In this Newsflash we are focusing on the potential impact of the CRD6 implementation on TCBs with further updates to follow in the coming weeks.

Third-country financial institutions must prepare for branch authorisation if providing core banking services in the EU. Existing TCBs may require re-authorisation. Reverse solicitation will be subject to stricter scrutiny. Governance rules for senior managers will be harmonised and expanded. Based on the Draft Law Luxembourg plans to apply the “characteristic performance” test to exclude incidental or remote cross-border activity. This narrows the territorial scope compared to the EU baseline, keeping Luxembourg as a preferential location for third-country financial service providers.

Luxembourg Remains Attractive as a Financial Hub

Luxembourg being a financial hub for Europe, is well known for its favourable regulatory climate welcoming financial service providers. Such preferential approach is to be expected when implementing CRD6 rules into Luxembourg Law, including measures of the Draft Law as follows:

• Scope & Definitions. CRD6 defines core banking services as deposit-taking, lending, and guarantees. Luxembourg distinguishes between provider-neutral (eg deposit-taking) and provider-dependent activities (eg lending only triggers authorisation if the provider qualifies as a credit institution).
• All CRD6 exemptions are to be retained in Luxembourg (eg reverse solicitation, interbank, intragroup).
• Gold-Plating Measures. Two additional conditions shall apply in Luxembourg, such as compliance with national statutory audit rules and mandatory participation in domestic deposit and investor protection schemes.
• Subsidiarisation Thresholds. EU threshold is set at EUR40 billion group-wide EU assets. Luxembourg adds a national threshold of EUR10 billion at branch level, allowing earlier supervisory intervention.

How Can DLA Piper Assist?

We are closely monitoring the legislative process resulting in the implementation of CRD6 regulations in Luxembourg and continue providing regular updates. Simultaneously we are available to help our Clients find and implementing the best strategies for accommodating all legislative changes. Our team is available to assist with any matters related to the operations of companies in or outside Luxembourg and to answer any questions you may have. Please feel free to reach out to any of the DLA Piper contacts listed below for further information.

To learn more, see our earlier publication on CRD6