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Luxembourg: Country and Foreign Investment

Business Environment

This page was last updated on 17 June 2020.

In terms of business and communications infrastructure, Luxembourg offers western European standards. The business environment is particularly well-attuned to the finance sector as a result of the heavy concentration of banks and investment funds. A wide range of professional services is available, but costs are high, particularly since legal and regulatory procedures in this 'civil code' jurisdiction may seem cumbersome and bureaucratic by comparison with more relaxed Anglo-Saxon countries.

To counter the economy's dependence on the steel industry, the government encourages manufacturing industry and high-technology companies by providing a range of incentives and grants. Favourable tax and legal regimes have also been developed for insurance, reinsurance, group treasury operations, and other financial service sectors. Interestingly for a land-locked country, Luxembourg has also introduced a maritime shipping register. See Offshore Business Sectors for descriptions of these various special regimes.

The government also provides equity funding for certain types of project. This applies to small and medium-sized companies and those located in development areas.

Some capital grants are provided by the National Credit and Investment Corporation. New companies, or those introducing new manufacturing systems, can also apply for temporary or restricted income tax exemptions.

There are fairly extensive registration requirements for different types of professional and business activity in Luxembourg, although to some extent these have been eaten away by more liberal EU single market legislation. 'Reserved' activities, including many types of state work, and the professions, are accessible only through the appropriate governing body.

Individuals or companies wanting to carry on other types of economic activity must obtain a permit from the Ministry of the Middle Classes (Ministre des Classes Moyennes); issue of the numbered permit takes from two to four months, and the number must be printed on letterhead, etc.

A survey in October 2005 ranked Luxembourg City as the European capital with the most expensive property, and it has regularly been ranked as one of the world’s most expensive cities.



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