Guidance

Overseas business risk: Luxembourg

Updated 11 February 2021

1. Political and economic

Luxembourg is the world’s only Grand Duchy. Gaining its independence in 1839, Luxembourg is a founding member of NATO and the European Union, among other major international institutions, and one of the first-wave countries to adopt the euro. Luxembourg is one of the 3 administrative capitals of the European Union and home to major EU institutions, including the European Court of Justice, the European Investment Bank, the European Court of Auditors and administrative departments of the European Commission and the European Parliament.

The Grand Duchy of Luxembourg is a constitutional monarchy. The Grand Duke is its head of state. As in other parliamentary democracies, the 3 branches of power (executive, legislative and judicial) are strictly separated. The executive power rests with the Grand Duke, represented by his government. Legislative power is handled by the Chamber of Deputies, a single-chamber parliament whose members are elected every 5 years. The elective system in the Grand Duchy is based on proportional representation and voting is compulsory.

Luxembourg’s governments are often the result of coalitions. The current government has been in place since December 2013 and comprises the Democratic Party (liberals), LSAP (socialists) and the Déi Gréng (the greens); with the main opposition party currently the Christian Social People’s Party (CSV). The Coalition was confirmed during the elections of 2018.

Its diminutive size has compelled Luxembourg to look outward, becoming expert at importing knowledge via long-term immigrants and cross-border commuters. Overall, this adds up to two-thirds of the workforce originating from outside the country. Luxembourgish, French and German are official languages with English widely spoken.

Luxembourg is part of the Grande Region (an interregional body consisting of the Grand Duchy of Luxembourg, the Belgian regions of Wallonie and the German community, the territory of French region Lorraine and the German Federal States of Sarre and Rheinland Pfalz). The Grande Region is home to 11.5 million people and has a GDP of EUR 352 Billions. Over 250,000 people are commuting daily from one country to another for work, of which 200,000 workers commute daily to Luxembourg

2. Economy

Located at the heart of Europe, with the continent’s 3 top industrialised nations as its neighbours, Luxembourg is the gateway to a European market with 500-million-plus consumers. Thanks to this fortuitous geography, neighbouring states worth 80% of the European Union’s GDP can be visited within a day. Taking full advantage of this opportunity, Luxembourg has established itself as a key hub for logistics, ICT, life sciences, the satellite and space sector (including new niche of space mining), clean technologies, finance (private banking and investment funds), FinTech and IP.

Per capita GDP is among the highest in the world, largely thanks to financial services. Luxembourg also hosts the HQ of Arcelor Mittal, the world’s largest steel company; SES Astra, Europe’s largest satellite company; RTL and a number of high-tech companies such as Amazon, Microsoft/Skype and eBay. In terms of manufacturing, Guardian is among the 3 top players in the glass industry worldwide and has its European Headquarter in two production sites based in Luxembourg.

Luxembourg’s strong performance, even during economic downturns, is founded on strategic commercial policy. Diversification has been a priority since the 1960s, when the country began to move away from its reliance on the steel industry into high-tech manufacturing and banking.

Today’s economy is a blend of financial services, high value-added manufacturing, retail, e-commerce, communications and logistics services, with a focus on exporting goods and services throughout the European Union and beyond. Domestic fiscal stability is a key feature. Public debt is among the lowest in the European Union. Corporate taxes encourage investment and entrepreneurship. Value-added tax at a standard rate of 17% is among the lowest in the EU.

• Luxembourg is rated 20 (PDF,11.9MB) on the global competitiveness index

• Luxembourg is rated 72 in the ease of doing business, according to the latest World Bank annual ratings

• Luxembourg’s economic profile

3. Human rights

According to international observers, human rights in Luxembourg are generally respected. See the Office of the Commissioner for Human Rights. The Grand Duchy of Luxembourg is a signatory to the Universal Declaration of Human Rights and to the majority of the international human rights conventions.

Luxembourg is a member of the European Union (EU) and of the Council of Europe and applies the Charter of Fundamental Rights and the European Convention for the Protection of Fundamental Rights and Freedoms (ECHR).

According to the latest Trafficking in Persons ranking, Luxembourg belongs to the group of Tier 1 countries and fully meets the minimum standards for the elimination of trafficking.

4. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere. For more information go to our bribery and corruption page.

Corruption in the business sector is not reported to be a serious obstacle for investors in Luxembourg, reflected by its low ranking for corruption . In 2022 Luxembourg was ranked 10 of 180 countries in the Corruption Perceptions Index. All companies are recommended to conduct due diligence when investing or planning to invest in Luxembourg, as with any investment decision in any country.

Visit the Anti-Corruption portal and the Risk and Compliance Portal to obtain advice and guidance about corruption in Luxembourg and some basic effective procedures you can establish to protect your company from them.

5. Terrorism threat

Please refer to the section on terrorism in the FCDO travel advice.

6. Protective security advice

Luxembourg is a peaceful democratic country, with low levels of crime – according to Mercer, Luxembourg City ranks as one of the safest cities in the world. Law enforcement is effective and violent crime is not common. Property crimes are the most prevalent and tend to be opportunistic: stealing on buses and trains when travellers are preoccupied; burglary during the traditional vacation periods in August and around Christmas when residents are not present.

More information on political risk, including political demonstrations, is available at FCDO travel advice.

There has not been any evidence of British organisations or businesses being specifically targeted, but high profile British organisations operating in Luxembourg should remain vigilant and regularly review their security measures.

7. Intellectual property

In Luxembourg, trademarks and models & designs are registered with the Benelux Office for Intellectual Property. These IPRs are regulated by the Benelux Convention:

These Intellectual Property Rights (IPRs) are regulated by the Benelux Convention:

• Law of 26 May 2006 relating to the approval of the Benelux Convention in terms of intellectual property (trademarks and designs or models)

• Regulation of 11 August 2006 of the Benelux Convention in terms of intellectual property (trademarks and designs or models)

Patent and copyrights (including related rights) depend on the Luxembourg legislation. They are regulated by the following legislation:

• Law of 11 August 2001 relating to patent

• Law of 18 April 2001 relating to copyright, related rights and database

The main institutions managing IPRs in Luxembourg are:

• Intellectual Property Office (Ministry of Economy): registration of patent

• Benelux Office for Intellectual Property (BOIP): registration of trademarks and design

7.1 Europe

• European Patent Office (EPO): registration of patent

• Office for Harmonization in the Internal Market (OHIM): registration of trademarks and design worldwide

• World Intellectual Property Organization (WIPO): registration of all IPRs

Other support for IPRs in Luxembourg:

• Luxembourg Law of 5 June 2009: provides the framework for contributing to the costs associated with the protection of technical industrial property and with innovation advisory and support services

• Luxembourg tax scheme (article 50bis of the L.I.R): set up to encourage use of IPRs in SMEs. Under certain conditions, up to 80% of the net income generated by an IPR can be tax exempt

You are advised to take professional advice if in doubt as to ownership of any potential patents or rights.

For more information visit:

• Luxinnovation

• UK Intellectual Property page

8. Organised crime

The incidence of serious crime is low, however petty crimes such as muggings, bag snatching, and pick pocketing do take place, as in any European country. Business travellers should pay very close attention to their personal belongings on public transport, and around public transport hubs and shops.

Normal common sense procedures, such as not leaving valuables unattended, or in plain sight in cars where a thief may spot them, should be employed. Luxembourg’s crime statistics can be found at the Luxembourg Police website.

Read the information provided on our organised crime page.

9. Contact

For information on conducting business in Luxembourg, contact the Department for Business and Trade (DBT) team based in the country.