Luxembourg implements CRD VI  

The implementation of CRD VI marks an important development for cross‑border lending into Luxembourg, particularly for banks and lenders established outside the EU/ EEA.  

While the directive introduces a new requirement for certain third‑country undertakings to establish a local branch, its practical impact is far more nuanced. This article examines how CRD VI affects the Luxembourg financial landscape, clarifies which activities fall within scope and outlines why some established lending structures may remain unaffected. 

CRD VI in Luxembourg: key takeaways 

• CRD VI introduces a new obligation for certain third‑country undertakings to establish a Luxembourg branch when providing core banking services in Luxembourg
• The obligation targets only third country undertakings that would qualify as EU credit institutions or class 1 investment firms if they were established in the EU 
• Core banking services in scope include deposit taking, lending and guarantees
• The obligation applies only where the characteristic performance of the service takes place in Luxembourg
• Cross-border lending into Luxembourg should remain unaffected to the extent services are performed entirely remotely 
• Several important exemptions apply, including reverse solicitation, ancillary banking services, intra-group financings and non‑bank entities such as investment funds

Background to CRD VI in Luxembourg 

The Luxembourg Chamber of Deputies formally approved on 30 April 2026 the draft law no.8627, which transposes 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 (CRD VI) in Luxembourg law. The new law referred to as the law of 5 May 2026 (the New Law) was published in the Luxembourg Official Journal on 6 May 2026.

One of the most important developments introduced by CRD VI is the requirement to establish a branch for the provision of certain banking services by firms established in a third country. The new regime is documented in the new article 32-2 of the Luxembourg law of 5 April 1993 on the financial sector (the Financial Sector Law).  

The requirement applies to third-country undertakings who offer, inter alia, any of the following services in Luxembourg (the In Scope Services):  

1. acceptance of deposits and other repayable funds; 
2. lending, including, inter alia, consumer credit, mortgage credit, factoring, with or without recourse, financing of commercial transactions (including forfeiting) 
3. guarantees and commitments,  

The requirement also applies to those who, if they were established in the EU, would qualify as credit institutions or class 1 investment firms (the In Scope Entities). 

The applicability of the requirement to establish a branch depends on (a) the services provided, (b) the qualification of the third-country undertakings providing such services and, (c) the provision of the services in Luxembourg 

Implication for US, UK and other non-EEA lenders?  

In Scope Entities providing Core Banking Services in an EU or EEA country will have to establish at least a branch in that country

No change for In Scope Entities providing Core Banking services outside Luxembourg 

The obligation to establish a branch applies only to activities carried out “in Luxembourg,”. Therefore, it is necessary to first understand when a third-country company is deemed to provide Core Banking Services on Luxembourg territory.  

The European Commission clarifies that, to determine the place of business, it is necessary to determine the place of the “characteristic performance” of the service in question. Therefore, identifying Luxembourg as the place where the service is actually provided implies that the characteristic performance is carried out in Luxembourg.  

In accordance with existing practice, and as reminded by the parliamentary comments, to the extent a banking activity is carried out entirely and exclusively remotely from a third country, without any relevant connecting factors being linked to Luxembourg territory, the provision of a banking service is likely to be considered as taking place outside Luxembourg. 

No change: for lenders/ guarantors which would not qualify as In Scope Entities 

If third-country undertakings do not meet the criteria to be classified as banks or class 1 investment firms if they were established in the EU/ EEA, they are out of scope of the new law and may continue to benefit from the possibility of carrying out those activities without having to establish a local branch. This would be the case, for example, with regard to the origination of loans by investment funds or other non-bank entities established in a third country. 

No change: in case of reverse solicitation

If an EU/ EEA based client requests the provision of Core Banking Services, third country undertakings are allowed to provide Core Banking Services without having to establish a branch on a reverse solicitation basis. However, it is worth noting that, the burden of proof of the initiative of the client lies with the third-country firm providing or intending to provide services based on the reverse solicitation exception. Third-country undertakings must keep records tracing the establishment of the relationship with the client and, more specifically, how the client initiated the request for specific services. This documentation may be provided in any form. 

No change: for Core Banking Services provided on an ancillary basis  

The obligation to establish a branch is not applicable, if the Core Banking Services referred to under paragraphs (ii) and (iii) above are provided only incidentally within the framework of the provision of an investment service. This means that companies established in a third country may continue to provide banking services on a cross-border basis, provided that these services are ancillary to the provision of investment services and, necessarily, subject to compliance with the applicable investment services regime.  

For example, services such as the granting of credit, loans, or guarantees is part of the related cash management service or guarantees connected with the custody, administration, and safekeeping of financial instruments on behalf of clients, and would be considered as provided on an ancillary basis.  

The same would apply if a loan is granted to an investor to enable them to carry out a transaction in one or more financial instruments, in which the company granting the credit or loan is involved, by providing investment advice, brokerage, order execution, or underwriting services, for example. The distinction between banking activities and investment activities for the purpose of determining the ancillary nature of the banking services provided must be made on a case by case.

No Change for intra-group financings. 

Conclusion  

The New Law and the CRD VI more generally mark an additional step towards the uniformization and harmonisation of the European legal framework for banking services.

The introduction of the requirement to establish a branch in Luxembourg for the provision of services such as lending and guaranteeing, should not fundamentally affect the position of third country lenders to the extent the performance of the services does not take place in Luxembourg. The analysis as to whether the service has actually been performed in Luxembourg is a fact based matter to be examined on a case by case basis. It underlines the importance of giving special care to what could potentially be a connecting factor and keeping a comprehensive documentation of all such factors

How Ogier can help 

Ogier's team in Luxembourg advises banks, alternative lenders and financial sponsors on the structuring of cross‑border lending into Luxembourg and the regulatory implications of CRD VI.  

Our experts can help assess whether activities fall within scope, analyse the availability of exemptions and support clients in navigating branch‑establishment considerations where relevant. 

If you would like to discuss how CRD VI may affect your lending activities, contact our team below.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice