An attractive financial ecosystem

Located in the heart of Europe, Luxembourg has a thriving economy. It is particularly renowned for its banks and financial institutions.

When moving to Luxembourg, it’s important to know what to expect in terms of finances. We’ll tell you more here.

Sound Finances in Luxembourg

Once sometimes viewed as a tax haven, the country has undergone profound restructuring over the past several years. Today, it demonstrates a high degree of transparency and strictly enforces global compliance standards.

As the world’s second-largest private fund manager, Luxembourg ranks among the top financial markets globally. Following the COVID crisis and a challenging year in 2023, Luxembourg is expected to return to annual growth exceeding 2%, driven by the financial sector, which accounts for one-third of GDP.

Luxembourg’s finances are sound, as evidenced by its triple-A rating, which is regularly reaffirmed by the major rating agencies.

With an average annual growth rate of 2.1% over the past five years, Luxembourg’s average growth is four times higher than that of the eurozone. While 2023 is likely to see a recessionary trend (-0.4% as of November 2023), projections for 2024 look more favorable, with 1.5% growth, and even exceeding 2.3% in subsequent years.

Luxembourg demonstrates a high degree of transparency and strictly enforces global compliance standards. As the second-largest private fund manager, Luxembourg ranks among the world’s top financial markets.

Luxembourg’s Future Economy

Luxembourg’s openness ratio stands at 168.5%, making it the most open economy in the world. Luxembourg ranks as the country receiving the most foreign direct investment, with €2.39 trillion, behind the United States and the Netherlands.

Luxembourg is focusing its strategy on sustainable and competitive economic development, with an eye toward the future and cutting-edge technologies. Its development is clearly centered on digital innovation and environmental sustainability. Priority sectors include the development of information and communication technologies, healthcare, logistics, Industry 4.0, financial services, and space.

More information on the banking system.

Quality of life for Luxembourg residents

Luxembourg is also described by its residents as a place offering a high quality of life, with high standards.

Overall, the standard of living in Luxembourg is high. In fact, 280 Luxembourgish families are classified as "UHNWIs (ultra-high-net-worth individuals)," holding a fortune of over $30 million. 7% of the population holds assets exceeding $1 million.

Luxembourg’s GDP per capita ranks among the highest in the world, at $90,900 per capita in 2023 according to the World Bank.

However, according to the latest figures, 19% of the population is affected by poverty in the country. The poverty line in the Grand Duchy is set at less than 2,177 euros per month. Learn more about minimum wages in Luxembourg.

Household Finances and Cost of Living

Living in Luxembourg requires opening a local bank account to manage your finances, receive your salary, or other income such as child benefits, for example.

Nearly half of government spending is funded by direct taxes, such as income tax. Unlike in many countries, virtually all personal income is subject to taxation.

Salaries in Luxembourg are higher than the European average, and particularly higher than in other parts of the Greater Region. Nevertheless, it is important to put the actual cost of living in the Grand Duchy of Luxembourg into perspective.

Housing prices are comparable to those in London and Paris. In certain neighborhoods of Luxembourg City, prices per square meter reach 15,000 euros or more.

The costs of food and clothing are also higher than in neighboring countries.

Conversely, certain products are cheaper, such as alcohol, tobacco, fuel, and, until recently, vehicles. The Value-Added Tax (VAT) is 17 %. Learn more about shopping in Luxembourg.

Even more information about Luxembourg to help you settle in.

Luxembourg, a country for millionaires?

According to consulting firm Capgemini’s “World Wealth Report,” Luxembourg has a proportionally higher number of millionaires than its two neighboring countries, France and Belgium.

In fact, approximately 7% of the population are millionaires. Most of them are estimated to have a fortune between $1 million and $5 million. 280 people are said to have a fortune exceeding $30 million.

Banks offer specialized wealth management services for individuals with substantial assets. Be sure to inquire about these services when opening your bank account.