Money and tax system in Luxembourg

The Grand Duchy of Luxembourg, a small country situated in the centre of Europe, is known for its banks and financial institutions and its services of private management. Sometimes still considered as a tax haven given its history, the country has undergone profound banking and tax restructuring and is now transparent.

Quality of living of Luxembourg residents

Overall, the standard of living in Luxembourg is high. In fact, Luxembourg ranks more than 400 families in the “UHNWI (ultra high net worth individuals)” category with assets of more than 30 million dollars.  In addition, it is estimated that more than 18% of the population is currently living in poverty.

The housing reaches price levels comparable to those of London and Paris. In some districts of Luxembourg-City, prices per square meter reach 10,000 euros or more.
The costs of food and clothing are also rather high compared to the surrounding countries.
On the other side, some products are cheaper such as alcohols, tobacco, fuels, vehicles. Value Added Tax amounts to 17%. See our page about cost of living.

At the same time, wages in Luxembourg are above the European average, and more particularly in the other components of the Greater Region.
According to the IMF, GDP stood at $107,708 per capita in 2017, well ahead of other European countries including Switzerland (2nd in the ranking) with $80,837 per capita.

Economy and finance

Luxembourg’s finances are healthy as evidenced by the triple AAA of S & P, Fitch and DBRS regularly renewed by the main rating agencies. Growth stabilizises around 3%. Almost half of the Government expenditure are financed by direct taxes such as the income tax. Contrary to numerous countries, almost all of the income of the private individuals are subjected to taxation.



To help you settle and integrate in Luxembourg, as a resident or cross-border commuter, download our practical Just Arrived guides on Luxembourg.

You will find all the information and procedures necessary for a serene expatriation, an easy installation of your whole family in your new host country and a simplified integration in your new environment.




    Easter traditions in Luxembourg

    Easter traditions in Luxembourg

    Spring break is coming up… Even if they are special this year because of the Covid-19 pandemic, it is nevertheless the occasion to remind what the traditional Easter holidays are and what they represent in Luxembourg. Easter is celebrated this...

    Summer job in Luxembourg, who and how much?

    Summer job in Luxembourg, who and how much?

    Are you between 15 and 27, studying in Luxembourg or even abroad? Then you have the opportunity to apply for a summer job in Luxembourg for a maximum of 2 months. Jobs for students and under-18s are common in Luxembourg. The communes themselves...