There have been numerous publications on how IFRS 16 Leases
changes the accounting for leases and what the main challenges are.
One would think that by now the hype around the new standard has
settled, yet the circular letter issued by the CSSF recently seems
to have caused anxiety among some Luxembourg's credit
institutions.
The circular requests all credit institutions to fill in a
concise questionnaire providing details about the lease
arrangements they have. Essentially, the credit institutions have
to:
Identify all lease arrangements that fall within the scope of
IFRS 16 and where the asset is itself in the scope of IAS 16
Property, Plant and Equipment.
This could be challenging when identifying leases embedded in
service and concession arrangements or when determining whether the
bank acts as a lessee and lessor or only as an intermediary when it
comes to staff company car leases. Another common difficulty we
have observed is whether a contract qualifies
