Luxembourg’s economy is one of the most dynamic in Europe. In global rankings about territorial competitiveness, digitalisation and innovation, it regularly ranks in the top 10.
- World Competitiveness Ranking: 5th
- Index of Economic Freedom: 7th
- Digital Economy and Society Index: 8th
- World Digital Competitiveness Ranking: 8th
- European Innovation Scoreboard: 7th
- Global Innovation Index: 11th
Even though its financial centre remains the economy’s mainstay besides the classical steel industry, much effort has gone into diversification: it is a logistics hub, as well as a leader in satellite technology and digitalisation.
In order to increase the resilience of Luxembourg’s economy, recent governments have also encouraged economic diversification and transformation through a number of initiatives that are starting to bear fruit:
- Spaceresources.lu: Luxembourg has implemented a legal framework for the utilisation of resources mined on asteroids. Together with its already existing focus on satellite technologies, this has created a new center of gravity for startups and established companies seeking to strike gold in this sector. More information here.
- Green Finance: The Luxembourg Green Exchange (LGX) is the only stock exchange in the world to trade exclusively sustainable bonds. It accepts only issuers and asset managers that provide full disclosure and fulfil their reporting obligations in the realm of labelled or unlabeled securities.
- Luxembourg Cluster Initiative: This Luxinnovation-managed initiative brings together businesses, research and development hubs and public stakeholder in defined sectors in order to promote growth:
- automotive and wood industries,
- HealthTech,
- creative industries,
- cleantech,
- logistics and
- materials and manufacturing.
- House of Startups: A one-stop shop. This house unites a range of incubators under one roof with access to investors.
The Luxembourg financial centre offers a diverse range of financial services, making Luxembourg a hub for global financial institutions.
Luxembourg offers standard financial aid to foster investments in research and development (R&D) for companies and tailor-made consulting to future entrepreneurs and start-ups.
Taxation:
The CIT rate is 17 % for companies with taxable income in excess of 200 001 € leading to an overall tax rate of 24.94 % in Luxembourg City (taking into account the solidarity surtax of 7 % on the CIT rate and including the 6.75 % municipal business tax rate applicable).
- Businesses with taxable income lower than 175,000 € are subject to corporate income tax (CIT) at a rate of 15 %.
- Businesses with taxable income between 175 000 and 200 001 € are subject to CIT computed as follows: 26 250 € plus 31 % of the tax base above 175 000 €. A 7% solidarity surtax is imposed on the CIT amount. Municipal business tax is levied by the communes and varies from municipality to municipality. The municipal business tax for Luxembourg City is 6.75 %.
The CIT does not apply to tax-transparent entities (e.g. general or limited partnerships or European Economic Interest Groupings) unless they are subject to the reverse-hybrid rules.
Both Luxembourg resident companies and Luxembourg branches of non-resident companies are subject to a NWT net wealth tax on their net wealth as at 1 January,
- On a taxable base of up to EUR 500 million: 0.5 %.
- On the taxable base exceeding EUR 500 million: NWT of EUR 2.5 million, plus 0.05 % on the component of the NWT base above EUR 500 million. No cap is set.
- A minimum NWT charge applies.
Further Information: PWC Luxembourg Tax Summary
Useful links:
Belgian-Macedonian Business Club 