One of the world’s smallest countries, Luxembourg is bordered by Belgium on the west and north, France on the south, and Germany on the northeast and east. Luxembourg has come under the control of many states and ruling houses in its long history, but it has been a separate, if not always autonomous, political unit since the 10th century. The peoples of Luxembourg and their languages reflect the grand duchy’s common interests and close historical relations with its neighbors. Luxembourg has a high proportion of foreigners living within its borders. This is chiefly the result of an extremely low birth rate among native Luxembourgers, which has led to a chronic labor shortage. Nearly half of the total population is of foreign birth and consists mainly of Portuguese, French, Italians, Belgians, and Germans. Among the foreign workers are many in the iron and steel industry, and numerous others work in foreign firms and international organizations located in the capital.
Luxembourg’s economy is notable for its close connections with the rest of Europe, since Luxembourg itself is too small to create a self-sustaining internal market. Luxembourg’s prosperity was originally based on the iron and steel industry, which in the 1960s represented as much as 80 percent of the total value of exports. By the late 20th century, however, the country’s economic vigor stemmed chiefly from its involvement in international banking and financial services and in such noncommercial activities as hosting intra-European political activities. In the 21st century, information technology and electronic commerce also became important components of Luxembourg’s economy. The result of the country’s adaptability and cosmopolitanism is a very high standard of living; the Luxembourgers rank among the world’s leaders in standard of living and per capita income.
Luxembourg is an attractive business location. The country has an active economic policy that encourages international businesses. A good geographical location, political and social stability and business incentives are just some of the reasons why more and more investors choose to open a business in Luxembourg.
Luxembourg’s economic policies encourage investments and private initiative. The Luxembourg Government encourages innovation and investments in certain business fields through a series of incentives for activities such as:
- automotive components,
- environmental and health technologies and others.
Financial support in Luxemburg, just like in other countries like for businesses in Singapore, can be granted for special projects and to medium and small-sized companies. The Luxembourg Government also offers capital grants and other long-term loans are available in Luxembourg.
The workforce in Luxembourg is highly educated and skilled and also multilingual. The country’s high productivity is largely due to its people. Citizens from EU and EEA countries, including Switzerland, have free access to the labor market.
Just like our partners in Switzerland, our lawyers in Luxembourg will help you in any legal matter regarding the Labor Law in Luxembourg or other specific details, if you are interested in the Luxembourg labor market.
The tax environment in Luxembourg is also competitive compared to taxation in other European countries. The standard VAT rate is 15%, levied on the supply of goods and services. An intermediate rate of 12% can apply on certain goods and a reduced rate of 6% is also available. The corporate income tax in Luxembourg is 21% for taxable income that exceeds 15,000 EUR and 20% otherwise.
Ideally situated at the heart of Europe and benefiting from a skilled multicultural and multilingual workforce, Luxembourg is a leading center for companies in both financial and non-financial industries.