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Basic Information

Area: 2,586.4 km²

Calling code: +352

Population: 480,222

Official Language: Luxembourgish (de jure since 1984), German, French

Time zone: CET (UTC+1), Local time: 17:30


The Grand Duchy of Luxembourg is a small country which is located in Western Europe, and spans just 2,586km2. It is landlocked, and shares it boundaries with 3 other countries: Germany, Belgium and France. Like its neighbouring countries, Luxembourg is a member of the European Union (EU) and uses the euro (EUR) as its national currency system.
The largest and most populated area is the capital of Luxembourg: Luxembourg City. It is located in central Luxembourg and covers a total of 51km2. The population for Luxembourg is 502,202, with 88,586 people living in the capital city, making it the least populated country in the European Union. The country is sub-divided into a total of 3 main districts, and a further 12 cantons. Despite Luxembourg's small size, it is the third wealthiest country in the world, based on the GDP per capita figure of $77,600. It is also a city of historical importance, and the old quarter is listed by UNESCO as a world heritage site.


Luxembourg's original economy was based around the industrial sector, particularly in the manufacturing of steel, yet in recent years it has seen a boom in service related industries, which now account for 86% of the countries total GDP. The financial sector is particularly strong, generating a quarter of the national GDP, with many international companies choosing to run their operations from Luxembourg. The biggest employers in the country are Arcelor Mittal, Dexia BIL, Cactus, CFL, Goodyear, BGL, and Luxair. The highly skilled workforce and strong infrastructure have also attracted foreign companies such as Skype and eBay to the country.

Luxembourg exported $14 billion worth of goods in 2009. Main export partners are Germany, France, Belgium and Italy, and major exported goods are machinery, steel, chemicals, glass and rubber. The total GDP stands at $46.51 billion (2009). The government have injected cash into the financial sector and the economic forecast looks bright.


The strategic positioning of Luxembourg's only airport - Luxembourg Findel Airport (LUX) - allows for convenient transportation to the rest of Europe. The airport is located just 6km away from the city centre, and has two terminals, which handle 1.6 million passengers annually (2008). It also has a separate cargo terminal, with 3 airlines transporting goods to locations in America, Asia and Europe.
There are a number of modern expressways which connect Luxembourg City to the rest of the country, as well as cities in Germany France and Belgium. Luxembourg has a railway station, with a new terminal inside Luxembourg airport. The entire railway system is owned and operated by Chemins de Fer Luxembourgeois, and offers domestic services, as well as high speed trains to France, Germany and Belgium. Luxembourg is committed to continuously expanding its transportation structure, with new plans for a metro system currently underway (2010).

The country has a strong and stable Internet backbone, along with a well developed telecommunications system; a study by the ITU ICT development Index, ranked Luxembourg as having the 7th best Internet and communications infrastructure in the world.


Luxembourg is a cosmopolitan city, with a large number of foreign nationals working in the country. Only 63% were officially born in the country, while the remaining 37% consist of Portuguese, French, Italian, German, and British residents. The current labourforce stands at 208,000 (2009) of which over half commute to work from the bordering countries. Over 80% of the population work within the service sector, particularly in banking and information technology, while 14.2% work in industry, and only 2.2%in agriculture. The official language of the country is Luxembourgish, with German and French being used for administrative purposes. Many Luxembourgers are bi-lingual and speak the English language fluently.

The University of Luxembourg is the only higher education facility in the country. It is a multilingual university, with courses being held in French, German and English. It specialises in law, economics, the sciences and languages, with several international accredited degree types on offer. Currently over 4,500 students, from 94 different countries are enrolled in study programmes (2009).

Luxembourg's competitive salary rates, and high quality of living attracts professional workers from around the world. Luxembourg's unemployment rate still remains relatively low at 6.8% (2009)

Business Costs

Office rentals are highest in the capital city, with the average office rental in Luxembourg CBD costing $67.62 per square foot per annum. It is placed at number 11 on the list of the most expensive office rental locations in the world (Cushman & Wakefield 2010), but it is still lower than costs in London, Paris and Milan.

Luxembourg has a complex corporate and personal tax system. Any individual who works in the country for over 6 months of the year is classed as a resident, regardless of what nationality they are. Income taxes are charged on a total of 9 different income sources, and can vary depending on what municipality the individual works in. Flat tax rates range from 20%-21.5%, with a 4% employment fund surcharge, and an additional municipality tax of up to 10.5% Social security charges are also contributed by both the employer and employee in three areas: accident insurance, pension insurance and sickness insurance. Corporate taxes are charged at 3 levels: income tax, municipal tax on all profits, along with a wealth tax. Again rates vary depending on what municipality the business is in, and will never exceed 28.59% (2010). In 2008 Luxembourg reduced the corporate tax rate by 1%, and in 2009 capital duty was abolished, providing more favourable tax rates for businesses. Luxembourg has some of the lowest VAT rates in the E.U with a flat rate of 15% for most goods and services, along with discounted rates of 3%, 6% and 12% for selected items.

Anyone legally working under a contract in Luxembourg is entitled to a minimum wage of €1,682 per month, which is one of the highest minimum wages in Europe. However the workforce are generally extremely proficient, hard-working and highly skilled, providing a good cost-benefit ratio for the employer.
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