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Luxembourg: Offshore Business Sectors

Offshore Banking Units

This page was last updated on 17 June 2020.

A substantial international banking sector has developed in Luxembourg, mostly due to a relatively relaxed regulatory regime, the 'holding' company legislation, the growth of the Euromarkets and the existence of the Luxembourg Stock Exchange on which most eurobonds are listed. It is also significant that CEDEL is based in Luxembourg.

Broadly speaking, the needs of domestic companies are handled by local Luxembourg banks, while the international banks provide cross-border services. A very wide range of capital markets and commercial banking products are on offer; some of the key services are:

  • multi-currency lending and loan syndication
  • issuance and listing of securities, particularly eurobonds
  • custodial and depositary services
  • 'fiduciary' business which is the local equivalent of the trust
  • project and international financing vehicles
  • equity and financial derivatives issuance and trading
  • foreign exchange trading
  • trade finance
  • gold trading (settled through CEDEL)

In June 2013, there were 143 banks registered in Luxembourg, with a balance sheet total of €738,441bn.

Private banking services are particularly strong in Luxembourg, due to the absence of withholding tax on interest payments, and tight banking secrecy, alongside the very wide range of financial products that is available.

Banking secrecy has a statutory basis in Luxembourg, under articles 458 and 459 of the penal code, the grand-ducal regulation of 1989 which prevents disclosure to the tax authorities, and most recently the law of 5th April 1993 which prevents bank staff from passing information on deposit accounts to parent banks. It is a criminal offence for bank staff to break secrecy laws except in clearly defined and very limited circumstances.

However, these laws have been challenged since the ‘Luxleaks’ scandal broke in November 2014. Although the whistle-blowers who exposed dubious tax practices were initially jailed, their sentences were later quashed or reduced.



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