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Luxembourg, the only Grand Duchy in the world, is a landlocked country in northwestern Europe surrounded by Belgium, France, and Germany. Despite its small landmass and small population (640,000), Luxembourg is the third-wealthiest country in the world based on Gross Domestic Product (GDP) per capita.

Luxembourg’s economy proved resilient during the stresses of the last few years including COVID disruptions and Russia’s ongoing war in Ukraine, with real GDP declining by only 1.3 percent during 2020 due to COVID shutdowns, but rebounding 6.9% in 2021, and 1.6% in 2022. This resilience was supported by a well-performing financial sector able to adjust quickly to remote work, and a financially stable government supported by a triple-A credit rating, and able to fund a large economic stimulus package equivalent to 18.5 percent of GDP.

Luxembourg is a major global financial center thanks to the growth of the investment fund sector through the launch and development of cross-border funds in the 1990s, and in more recent years through the growth of alternative asset classes such as private equity and alternative assets. Luxembourg is the world’s second largest investment fund asset domicile, after only the United States, with over $5 trillion of assets in custody at local financial institutions. The dependence on revenues relating to the financial sector for about one-third of GDP however, means that financial market volatility represents a major risk for the economy.

  • Luxembourg is consistently ranked as one of the world’s most open and transparent economies and has no restrictions on foreign ownership. It is also consistently ranked as one of the world’s most competitive and least-corrupt economies.
  • Over the past decade, Luxembourg has adopted major regulatory reforms to counter money-laundering, terrorist-financing, and tax evasion.
  • The Government of Luxembourg actively supports the development of new sectors to diversify the country’s economy, given the dominance of the financial sector. Target sectors include space, logistics, and information technology, including financial technology and biomedicine.
  • Luxembourg has positioned itself as “the gateway to Europe” to establish European company headquarters operations by virtue of its central European location and road, railway, and air connectivity.
  • It has also benefited from Brexit, with over 50 insurers, asset managers and banking institutions re-locating their EU headquarters to Luxembourg or transferring a significant part of their activity to the country.
  • Luxembourg is actively seeking logistics companies to expand the new logistics hub at Luxembourg Airport, home to Cargolux, Europe’s largest all cargo airline.
  • Luxembourg is also seeking ICT companies to use the existing high-security, state-of-the-art datacenters, affording high-speed internet connectivity to major international data hubs.
Table 1: Key Metrics and Rankings




Website Address

TI Corruption Perceptions Index


10 of 180

Global Innovation Index


19 of 132

U.S. FDI in partner country ($M USD, historical stock positions)



World Bank GNI per capita



Policies Towards Foreign Direct Investment

Luxembourg offers a public policy framework and political stability that is highly attractive for foreign investors, particularly for U.S. investors, given the focus on growth sectors and the historically strong bilateral relationship between the two countries. The government has increased its outreach toward companies looking to expand in Europe. Luxembourg is in the process of implementing the EU standards for the screening of foreign investment but missed the Fall 2020 implementation deadline.

In 2017, Luxembourg’s Deputy Prime Minister and Minister of the Economy and Foreign Trade, Etienne Schneider, unveiled a strategy to promote economic growth focusing on attracting FDI and supporting companies’ moving into other markets. The Luxembourg “Let’s Make It Happen” campaign, developed by the state Trade and Investment Board, focuses on five key objectives:

  • Improving Luxembourg-based companies’ access to international markets
  • Attracting FDI in a “targeted, service-oriented” way
  • Strengthening the country’s international “economic-promotion network”
  • Improving Luxembourg’s image as a “smart location” for high-performance business and industry
  • Ensuring the coherence of economic promotion efforts

There are no economic policies that have discriminatory effects on foreign investors, either at a market-access or post-establishment phase of investment. Luxembourg strives to attract and retain foreign investors with its unique model of “easy access to decision makers” and an ability to “act swiftly.”

The Trade and Investment Board has taken the lead in investment promotion and includes representatives from the ministries of Economy, Higher Education and Research, Finance, Foreign and European Affairs, and State. Public-private trade associations such as FEDIL (Business Federation of Luxembourg, the main employers’ trade association), the Luxembourg Chamber of Commerce, and the Chamber of Skilled Trades and Crafts, and Luxinnovation, are also represented.

The Board works in cooperation with Luxembourg embassies and trade and investment offices worldwide, as well as economic and commercial attachés, honorary consuls, and foreign trade advisers, to attract FDI and retain investors. In 2016, the Ministry of the Economy expanded the role of Luxinnovation to incorporate promotion of Luxembourg abroad and to attract FDI into the country. Luxinnovation is a public private partnership agency that carries out business intelligence to target relevant investors and regions and also provides a soft-landing service for investors as they arrive in Luxembourg. Emerging from COVID-19 restrictions, the government has resumed “road shows” to major overseas economic centers in the United States, Asia, and within Europe to promote itself as a financial and business hub.

Limits on Foreign Control and Right to Private Ownership and Establishment

There is a right for foreign and domestic private entities to establish and own business enterprises and engage in all forms of remunerative activity. There are no limits on foreign ownership/control or sector-specific restrictions. The government recommends that each corporate board have at least two independent members, however this is generally not a requirement. Companies must also maintain a local physical presence, including of key employees.

General screening of foreign investment exists in line with that of domestic investment. There are no major sectors in Luxembourg in which foreign investors are denied national (domestic) treatment. Luxembourg is in the process of implementing the EU rules for national security screening of investments, however the final law continues to be discussed in Parliament. Once implemented, these rules will replace the current ad-hoc and case by case screening, which lacks transparency.

Other Investment Policy Reviews

Luxembourg is included in Trade Policy Reviews (TPRs) of the EU/EC; see the TPR gateway for explanations and background.

Business Facilitation

In terms of the United Nations Conference on Trade and Development (UNCTAD) Global Action Menu for Investment Facilitation, Luxembourg’s business facilitation efforts are aligned with most of the recommended action points. Over the past decade, Luxembourg has been furthering accessibility and transparency in investment policies and regulations, as well as procedures relevant to investors. The Government has improved the efficiency of investment administrative procedures, notably in the context of the overall “digitization” movement to offer a multitude of government services electronically. This has led to a reduction by 2-3 months of the time it takes to start a business, which now averages just a few weeks.

The Government provides a website in multiple languages, including English, that explains the business registration process: . A new business must register with the Registry of Commerce (Registre du Commerce: Foreign companies can use the site, but it is best to consult with a local lawyer or fiduciary to complete the overall process. It is necessary to engage a notary to submit the company’s by-laws for registration.

In 2017, the Government reduced the required minimum capitalization of a new company from 12,500 euro to just 1 euro, to encourage start-up creation. After receiving a certificate from the Registry of Commerce, companies are required by law to register with and pay annual dues to the Luxembourg Chamber of Commerce, as well as the Social Security Administration, the Tax Administration (Administration des Contributions Directes) and the Value-Added-Tax Authority (TVA = taxe à la valeur ajoutée). The company will receive an official registration number reflecting the date of inception of the entity, and this number will be used in all business transactions and correspondence with administrative authorities.

The House of Entrepreneurship, opened in 2016 within the Luxembourg Chamber of Commerce, also provides guidance on the entire registration and creation process of a business. This resource receives over 10,000 enquiries per year by entrepreneurs interested in setting up a business in the country. The organization plays a key role during the COVID-19 pandemic, as it serves as a point of contact and information for businesses looking to apply for Government aid.

The Ministry of Economy continues to support networks and associations acting in favor of female entrepreneurship. The Law of December 15, 2016 incorporated the principle of equal salaries in the Grand Duchy’s legislation, which makes illegal any difference in the salaries paid to men and women carrying out the same task or work of equal value.

Outward Investment

The same government services website listed above, , includes an “International Trade” tab which provides guidance on outward investment by Luxembourgish companies on various topics, including intra-EU trade and services; import, export, and transit; licensing; and transport. The Luxembourg Government promotes outward investment via the Trade and Investment Board, which functions as a promotion entity for both inward and outward investment.

The “Let’s make It Happen” initiative, among its many missions, is working to facilitate access to international markets for Luxembourgish companies and to strengthen Luxembourg’s international economic promotion network. Luxembourg does not restrict domestic investors from investing abroad.

Luxembourg also has a public export credit agency, the Office du Ducroire to help companies engage in export and outward investment through funding and export insurance.

The United States and Luxembourg have shared a Friendship, Establishment, and Navigation Treaty since 1963, which assures national treatment and other investor protections. In 2019, the U.S. Senate ratified the amendment to the Convention between the United States and the Grand Duchy for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital. Luxembourg and the United States also have an aviation treaty.

In addition to its open trade with other member states of the European Union, and free-trade agreements between the EU and other countries, Luxembourg also signed bilateral agreements with the countries listed at: 

Luxembourg is a member of the Multilateral Investment Guarantee Agency (MIGA).

Luxembourg is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

Transparency of the Regulatory System

The Government of Luxembourg uses transparent policies and effective laws to foster competition and establish clear, non-discriminatory ground rules. The legal system is welcoming with respect to FDI, and legal, regulatory, and accounting systems are transparent and consistent with international norms. With the exception of the mandatory membership in the Luxembourg Chamber of Commerce, there are no regulatory processes managed by non-governmental organizations or private sector associations. In addition to the Government, the Luxembourg Institute of Regulation, a public agency, proposes regulatory policies.
The Luxembourg Government publishes forward looking regulatory plans – a public list of anticipated regulatory changes and proposals intended to be adopted and implemented. These plans are available to the public, as the texts of proposed legislation are published before Parliamentary debate and voting. In addition, plans and proposed legislation is subject to review by the State Council and the Grand Duke.

Draft texts are published on a unified website ( ) where all proposed regulations are directly distributed to interested stakeholders. In addition, the Government solicits comments on proposed laws and regulations from the public. The comments are received on the same website (, through public meetings, and through targeted outreach to stakeholders, such as business associations.

Publicly listed companies adhere to the International Financial Reporting Standards (IFRS), and their accounts must be audited accordingly by an officially accredited auditor.

The Government does not mandate, but strongly encourages companies to disclose information on their environmental, social and governance (ESG) targets. Luxembourg has also created an ESG label for investment products called LuxFlag and is home to the first and largest ESG bond exchange in the world, the Luxembourg Green Exchange (LGX).

The law requires the rulemaking body to solicit comments on proposed regulations. The consultation period is typically three months, and the Government reports the results of the consultation in the form of a consolidated response on the same website. The official journal Mémorial publishes the final text of laws, both online and in print.

Proposed legislation also includes a factsheet on the impact on public finances. The Luxembourg Government is transparent with its public finances and debt obligations through the annual budget procedure that requires Parliamentary approval. The Government also discloses new state borrowing.

International Regulatory Considerations

Luxembourg is a member of the EU and routinely transposes EU directives and regulations into domestic law. Luxembourg has been a World Trade Organization (WTO) member since 1995 and notifies all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT). Luxembourg ratified the Trade Facilitation Agreement on October 5, 2015 and has an implementation rate of 100 percent.

Legal System and Judicial Independence

Luxembourg is a  parliamentary   representative democracy  headed by a  constitutional monarch . The Constitution of 1868 provides for a flexible separation of powers between the executive and the parliament, with the judiciary watching over proper application of laws.

The Grand Duchy has a written commercial/contractual law. The Magistrates’ courts deal with cases of lesser importance in civil and commercial matters and under the urgent procedure in the field of law enforcement.

The  district courts , of which there are three, adjudicate civil and commercial matters for all cases not specifically attributed by law to any other court. The current judicial process is considered procedurally competent, fair, and reliable, albeit notably slow. Regulation and enforcement actions are appealable, and they are adjudicated in the national court system.

Laws and Regulations on Foreign Direct Investment

Luxembourg has assimilated the laws of neighboring countries according to the nature of the laws: German tax law, French civil law, and Belgian commercial law (written and consistently applied). The website for doing business is:, and the new one-stop-shop for setting up a business is the House of Entrepreneurship within the Luxembourg Chamber of Commerce (  ).

Competition and Antitrust Laws

The Competition Inspectorate, a department within the Ministry of the Economy, oversees competition investigations and cases.

Expropriation and Compensation

The laws governing expropriation of property are quite complex and deliberative. The Ministry of the Interior, along with the Ministry of Justice, sets forth the specific regulations according to specific circumstances. There have been no known expropriations in the recent past or policy shifts which would indicate such actions soon. There is no evidence the Luxembourg Government discriminates against U.S. investments, companies, or representatives in expropriation. There are no instances of indirect expropriation or governmental action tantamount to expropriation, such as confiscatory tax regimes, that might warrant special investigation.

Dispute Settlement

ICSID Convention and New York Convention

Luxembourg is a member state to the International Center for Settlement of Investment Disputes (ICSID Convention) and is a signatory of the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Investment disputes involving U.S. or other foreign investors in Luxembourg are extremely uncommon. There are no known claims by or disputes with a U.S. person or foreign investors.
The Luxembourg Chamber of Commerce and the Mediation Center offer the services of domestic dispute settlement and, on an international level, commercial dispute settlement with the International Chamber of Commerce.
Within the WTO, there are no known trade-related dispute settlement cases involving Luxembourg either as a complainant, respondent, or third-party entity.

International Commercial Arbitration and Foreign Courts

The Government accepts international arbitration of investment disputes between foreign investors and the state, and the courts recognize and enforce foreign arbitral awards. International arbitration is accepted as a means for settling investment disputes among private parties, and there is a domestic arbitration body within the host economy, the Centre de Médiation (Mediation Center). Luxembourg is a member state to the International Centre for Settlement of Investment Disputes (ICSID) Convention.
As investment disputes are practically non-existent, it is difficult to estimate the duration of a resolution in the local courts.

Bankruptcy Regulations

Luxembourg has assimilated the laws of neighboring countries according to the nature of the laws: German tax law, French civil law, and Belgian commercial law (written and consistently applied). Judgments of foreign courts are accepted and enforced by the local courts, and Luxembourg does have a written and consistently applied bankruptcy law, which is based on EU-wide legislation. Monetary settlements are usually made in local currency (euro). Bankruptcy is not criminalized. A revised bankruptcy law was adopted in November 2022 streamlining the process of dissolution.

Investment Incentives

Luxembourg is considered to be a very attractive tax location for conducting business: low effective corporate tax rates of 18 percent (with an adjusted rate of 15 percent for entities with annual taxable income less than 25,000 euro); the lowest VAT (value-added tax) rate in Europe (at 17 percent); and a variety of tax incentives, including investment tax credits, new business tax credit, subsidies for film productions, venture capital investment certificates, small business incentives, regional and national incentives, research and development incentives, and environmental incentives. The investment incentives are provided within the limitations of the EU rules on State aid.

The European Court of Justice has been increasingly stringent on individual tax treatment, including a ruling specific to Luxembourg and its tax treatment of Apple, and an ongoing case involving Amazon.

U.S. and foreign firms can participate in government/authority-financed and subsidized research and development programs. The Government offers discounts on electricity rates, tax credits as well as subsidies for companies investing into energy efficiency and the reduction of carbon emissions. These investments need to be externally audited to qualify for government aid. The Government also promotes low-carbon transport through the roll-out of charging stations for electric vehicles. The measures regarding energy efficiency have been popular with energy intensive companies, which have benefited from millions of dollars of price advantages over the years on their electricity and gas rates. The de-carbonatization aid measures are a more recent tool whose effects will be seen in the coming years.

Foreign Trade Zones/Free Ports/Trade Facilitation

Luxembourg opened a free-trade zone called Le Freeport in 2014, built and integrated into the cargo logistics center at Luxembourg Airport. This zone, modeled after other successful customs warehousing in premier trade regions such as Geneva and Singapore, allows the warehousing and handling of high-value merchandise (art, cars, wines) in a secure location free of fiscal obligations [no Value-Added-Tax (VAT) or import duties to be paid as long as the goods remain on the premises]. Taxation only occurs when the articles leave the zone as imports into the country of consumption (or if a bottle of wine is opened at Le Freeport, for example, it is also subject to taxation).

Performance and Data Localization Requirements

Data storage has been enhanced via state-of-the-art data centers, built by the government as part of the long-term ICT infrastructure development plan which includes replacing old transmission lines with fiber-optic cable across the country. The data centers have served to optimize international connectivity to large hubs such as Paris, Amsterdam, and Frankfurt, and have attracted major ICT and e-commerce players such as Amazon and PayPal, which have located their EU headquarters in Luxembourg. The centers are rated at the highest security level for data storage. Enforcement on the respect of data storage rules, such as the EU GDPR, rests with the Luxembourg data protection regulator CNPD.

Real Property

Secured interests in property in Luxembourg are recognized and enforced through intellectual property rights (IPR) and community laws. The legal system that protects and facilitates acquisition and disposition of all property rights, such as land and buildings, is based on a land register, called cadastre in French, where each parcel of property is documented in terms of ownership and duration. There is adherence to key international agreements on iIPR, as well as protection for patents, copyrights, trademarks, and trade secrets.

Luxembourg law allows the securitization of many types of assets, risks, revenues, and activities. It makes securitization accessible to all types of investors (institutional or individual), which means that securitization can easily facilitate the financing of a company or the management of personal or family wealth. An extremely wide range of assets can be securitized: securities, loans, subordinated or non-subordinated bonds, risks linked to debt (commercial and other), moveable and immovable property (whether tangible or not).

Under Luxembourg law, a securitization vehicle can be constituted either as a company or a fund. Securitization companies can benefit from EU directives and double tax treaties. Securitization organizations that continually issue transferable assets for the public must be approved and supervised by the financial sector supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF).

Intellectual Property Rights

Trademarks, designs, patents, and copyrights are the principal forms of intellectual property rights (IPR) available to companies and individuals. Luxembourg has been proactive in developing its IPR standards and participates in all the major IPR treaties and conventions, including theBerne Convention, the Patent Cooperation Treaty (PCT), Paris Convention, Patent Law Treaty (PLT), Madrid Agreement and Protocol.

The country is a signatory to the European Patent Convention, created by the European Patent Office (EPO), and a member state of the World Intellectual Property Organization (WIPO).

Luxembourg has implemented and enforces the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The regulation stipulating the measures to prohibit the release for free circulation, export, re-export, or entry for the suspension of counterfeit and pirated goods states that the competent authority to receive applications must be a customs authority. In Luxembourg, this is the Litigation and Research Department (Division des Contentieux et Recherches) of the Directorate of Customs and Excise (Direction des Douanes et Accises). Customs officers have the right to seize (but not necessarily destroy) goods. Most cases are related to customs declaration abuses by the owner (importing products above the maximum allowable amount for tax-free treatment within the EU), and not counterfeit goods.

The merits of a counterfeit goods case are decided by judicial proceedings in ordinary law courts. A few provisions within the agreement deal with different IPR and allow for the possibility of confiscating, or even destroying, counterfeit goods and the tools or implements used for their production.

The Luxembourg customs authorities may impose measures for a period of six months, which may be renewed at the request of the rights holder. The customs office tracks the seizures of counterfeit goods, notably at Luxembourg Airport, but this is a small part of customs work. There are no public statistics on such seizures.

The main rules of civil procedure are contained in the Luxembourg Code of Civil Procedure and in the Administration of Justice Act. In the absence of specific rules concerning material and local jurisdiction for certain IPR, ordinary law applies.
In an effort to become the prime location for Europe’s knowledge-based and digital economy, Luxembourg implemented a new IPR tax regime in 2008, providing for a very competitive tax rate (starting at 8% and declining to 3%) applicable to a broad range of IPR income generated by taxpayers. However, due to pressure from the EU Commission in Brussels to harmonize global tax practices, Luxembourg has ended this IPR fiscal regime and IPR income is now subject to the standard VAT rate of 17%.

In 2018, the Luxembourg Government approved and implemented new IPR legislation consistent with recommendations made by the OECD’s Forum on Harmful Tax Practices, including those set out in the OECD/G20 BEPS Project Action 5 Final Report published in October 2015.

IPR assets qualifying for the new regime also benefit from a full exemption from Luxembourg’s net wealth tax. Luxembourg is not included in the USTR’s 2021 Special 301 Report or 2020 Notorious Markets List.

For additional information about national laws and points of contact at local IPR offices, please see WIPO’s country profiles at .

Capital Markets and Portfolio Investment

The Luxembourg government encourages foreign portfolio investment through investor-friendly government policy, clear regulation, access to regulatory authorities, and multiple legal structures that can be used for investments. The country has its own stock market, a subset of which was rebranded in 2016 as a “green exchange” (LGX) to promote securities (primarily bonds) reflecting ecologically sound investments. LGX has become the largest ESG and Green Bond market in the world.

Luxembourg government policies, which reflect the European Union’s free movement of capital framework, facilitate the free flow of financial resources. Credit is allocated on market terms, and foreign investors can borrow in the local market, taking advantage of Luxembourg’s sophisticated financial sector. The private sector has access to a variety of credit instruments, including those issued by the National Public Investment Agency (SNCI), and there is an effective regulatory system established to encourage and facilitate portfolio investment.
Luxembourg has strict enforcement of anti-money-laundering laws and regulations, an active regulator carrying out investigations and inspections, and regular fines for alleged weakness in bank’s processes and procedures for stopping money-laundering.

Money and Banking System

Luxembourg is home to 120 banks, with total assets of EUR 1 trillion and 26 thousand employees, as of the beginning of 2023. Luxembourg’s banking system has a reputation for conservative risk management and high security. Capital standards were increased following the global financial crisis when emergency measures were taken by the Government of Luxembourg to support BGL BNP Paribas (formerly Banque Generale du Luxembourg and then Fortis) and in Banque Internationale a Luxembourg (BIL, formerly Dexia).

Luxembourg has a central bank, Banque CeLuxembourg. Foreign banks can establish operations, subject to the same regulations as Luxembourgish banks.

Raiffeisen bank refuses U.S. citizens as clients, due to data sharing requirements associated with the U.S. FATCA law. However, two banks do serve U.S. citizen customers: BIL and the State Bank and Savings Bank (Banque et Caisse d’Epargne de l’Etat).

On February 21, 2018, the Luxembourg House of Financial Technology (LHoFT) signed a Memorandum of Understanding (MoU) with the European FinTech platform, B-Hive, based in Brussels, and the Dutch Blockchain Coalition, that will favor collaboration in the field of distributed ledger technology (blockchain).

The Ministry of Finance is tracking developments in the formation and use of virtual currencies and has said it will adapt its legislation in accordance with the results of ongoing European and international studies. Luxembourg places virtual currencies under the legal regime of payment companies, with the CSSF having responsibility for oversight.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments, or lease payments) into a freely usable currency and at a market-clearing rate. Luxembourg was a proponent of the euro currency and adopted it immediately at inception in 1999 as part of the “Eurozone.” The European Central Bank is the authority in charge of the euro. Pre- COVID, Luxembourg has taken steps to move toward a cashless system and the COVID-19 pandemic further accelerated the move towards an increasingly cashless economy.

Remittance Policies

There have not been recent changes to remittance policies with respect to access to foreign exchange for investment remittances. There is no difficulty in obtaining foreign exchange, which has been freely traded since the 1960s, and the Luxembourg stock market trades in forty different currencies.

The time required to remit returns such as dividends, return of capital, interest and principal on debt, lease payments, royalties and management fees through normal, legal channels is approximately 24 hours. Investors can remit through a legal parallel market including one utilizing cash and convertible negotiable instruments (such as dollar-denominated host government bonds issued in lieu of immediate payments in dollars). There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported inputs.

Sovereign Wealth Funds

Luxembourg created a sovereign wealth fund in 2014, that is overseen by the Ministry of Finance and is estimated to have about 500 million euros in assets. The sovereign wealth fund only invests outside of Luxembourg and is independently audited, however it does not disclose information on its specific portfolio mix such as the proportion of investments in U.S. assets.

The most prominent state-owned enterprise (SOE) in Luxembourg is POST (formerly P&T, postal and telecommunications), whose sole shareholder is the government of Luxembourg and whose board of directors is composed of civil servants. POST responded to the competition created by new players in the market (Orange, Proximus) by transforming itself from a passive utility company into a commercial enterprise, recruiting from the corporate sector, and improving consumer products and services. POST also publishes an annual report and communicates in a similar manner to a private company.

Another sector in which SOEs have historically been active is the energy sector (electric and gas utilities), which is now liberalized as well. Anyone can become a provider or distributor (via networks) of electricity and gas. The former state electricity utility, Cegedel, was absorbed into a private company, Encevo, along with a nearby German utility and the former state gas utility, with an independent board of directors. Creos, the new distribution network for energy, is jointly held by the government and private shareholders.

Finally, an important market which appears to have barriers to entry is freight air transport, due to the dominance of the majority state-owned Cargolux. The company competes internationally and is the largest consumer of U.S. exports to Luxembourg in terms of value, owing to their all-Boeing fleet of 30 747-freighter aircraft (including 14 of the new-generation 747-8F, of which Cargolux was a launch customer). A Chinese state-owned aviation and investment group owns 35% of Cargolux, and the company has aggressively expanded in China.

SOEs compete in domestic markets in accordance with commercial considerations, and private enterprises can compete with public enterprises in Luxembourg under the same terms and conditions. All markets are now open or have been liberalized via EU directives to encourage market competition over monopolistic practices. There is a national regulator (National Institute of Regulation), which sets standards for economic sectors, mostly derived from EU directives transposed into local law. While markets continue to open, the government has maintained a large stakes in critical sectors such as energy, as a national security measure.

Luxembourg is an OECD member with established practices consistent with OECD guidelines concerning SOEs. There is no centralized ownership entity that exercises oversight of the SOEs.

In general, if the government has a share of an enterprise, they will receive seats on the board of directors in proportion to their share, with no formal management reporting directly to a line minister.

Court processes are transparent and non-discriminatory.

Privatization Program

Foreign investors can participate equally in any privatization programs, with a transparent bidding and no barriers against foreign investors. There are no laws or regulations requiring private firms to adopt articles of incorporation or association, which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to force local ownership or restrict foreign investment, participation in, or control of domestic enterprises. There has been no evidence to suggest that potential conflicts of interest exist. Government officials sitting on boards of directors do not appear to have impacted freedom of investment in the private sector.

There is a heightened awareness of responsible business conduct in Luxembourg, whether it is in the corporate sector or among the consuming public. In financial matters, a desire to avoid inclusion on the OECD’s tax haven grey list has driven a push for greater transparency. While Luxembourg has traditionally placed high importance on ecological matters, including stringent trash sorting and mandatory recycling procedures, the global discussion on climate change including the Paris Agreement on Climate Change (COP 21) and pressure from the EU in terms of concrete goals and directives, has made green finance a high priority.

In 2016, Luxembourg Stock Exchange (LuxSE) created the Luxembourg Green Exchange (LGX), the world’s first stock exchange to deal with securities related to climate change. It has issued roughly $900 billion in sustainable bonds as of early 2023.

There have been no major instances of corporate impact on human rights in Luxembourg. There are independent NGOs, worker organizations/unions, and business trade associations promoting and monitoring responsible business conduct. These organizations can do their work freely and often are directly integrated into the review, oversight, and supervisory process.

There are no systemic labor or human rights concerns relating to responsible business conduct, with the government encouraging companies to respect human rights and arguing for a duty-of-care principle at the international level. In June 2018, the government adopted the country’s first National Action Plan to Implement the UN Guiding Principles on Business and Human Rights, an initiative welcomed by civil society actors. In Luxembourg, there have been a few cases of labor exploitation and labor trafficking, mostly in the catering and construction sectors. Given the high bar of evidence for trafficking crimes and the fact that many victims travel to Luxembourg by their own means, perpetrators were often sentenced for the employment or exploitation of illegal workers, and benefited from a suspended sentence if first-time offenders.

Luxembourg signed the Montreux Document on Private Military and Security Companies in 2013.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Luxembourg has committed to the EU target of 55 percent Greenhouse Gas (GHG) Emissions reductions by 2030 and net-zero emission by 2050, and has also set itself a national target of 25 percent renewable energy and 35-40 percent energy efficiency improvement by 2030. The government also established in 2021 specific sectoral targets to contribute to the overall objective for five specific sectors: transport, industry, agriculture, buildings, and waste disposal. Luxembourg has both implemented EU directives concerning emissions reduction, and set new energy policies to promote clean energies and energy conservation.

The government offers subsidies for zero-emissions vehicles, hybrid plug-in electric vehicles (PHEV) owned by private customers, and zero emission (100 percent electric) vehicles owned by companies. The government also adopted measures to make public transportation free. In the context of the COVID-19 stimulus package, the Government increased these support measures in 2020 and introduced new incentives for low energy buildings.

Companies must adhere to strict pollution standards and provide biodiversity offsets when requesting planning and operation permits for industrial facilities. Public procurement rules also take into account environmental and green growth considerations at national and local levels.

Regulations are enforced by the Financial Sector Surveillance Commission (CSSF, which is equivalent to the U.S. Securities and Exchange Commission). U.S. firms have not identified corruption as an obstacle to FDI in Luxembourg. There are no known areas or sectors where corruption is pervasive, whether in Government procurement, transfers, performance requirements, dispute settlement, regulatory system, or taxation.

Giving or accepting a bribe, including between a local company and a public official, is a criminal act subject to the penal code. Senior Government officials take anti-corruption efforts seriously. International, regional, or local nongovernmental watchdog organizations do not operate in the country, given the low risk.

Luxembourg has laws, regulations, and penalties to combat corruption, and they are enforced impartially with no disproportionate attention to foreign investors or any other group. The country ranks very favorably on the World Bank’s corruption index.

Luxembourg prioritizes anti-money laundering and suppression of terrorism financing to protect its status as a leading world financial center. The government has taken the lead in freezing bank accounts suspected to be connected to terrorist networks, and since 2004 extended the law against money-laundering and terrorist financing to additional professional groups (including auditors, accountants, attorneys, and notaries).

On February 14, 2018, a new law implementing a substantial part of the fourth anti-money laundering (AML) directive was published in the Official Journal of Luxembourg. The law entered into force on February 18, 2018. Local police, responsible for combating corruption, also work closely with neighboring countries’ law enforcement officials, as well as with Interpol and Europol.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Luxembourg signed and ratified the UN Anticorruption Convention (signed December 2003 and ratified in November 2007).

Luxembourg is a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Resources to Report Corruption

The contacts at government agency or agencies are responsible for combating corruption are:

Director of Criminal and Judicial Affairs
Ministry of Justice
13 rue Erasme
L-1468 Luxembourg
Telephone: +352 247 84537

Contact at “watchdog” organization
D. Goedert
Section Chief
Financial Sector Surveillance Commission (CSSF)
283, route d’Arlon L-1150 Luxembourg
+352 26 251 2217 / 

Luxembourg has consistently ranked among the most politically stable and safest countries in the world. There have been no recent serious incidents involving politically motivated damage to projects or installations. The few demonstrations that do occur in Luxembourg are generally not aimed at the Grand Duchy, but rather at the EU offices located within Luxembourg such as the European Court of Justice and periodic European ministerial meetings. There are no known nascent insurrections, belligerent neighbors, or other politically motivated activities.

Luxembourg boasts a very stable, diverse, multilingual, and qualified labor market, benefiting from the approximately 200,000 industrial and service employees (known as “cross-border” workers) who come to work in Luxembourg on a daily basis from neighboring Belgium, France, and Germany. Foreign (non-Luxembourger) workers are treated by Luxembourg the same as nationals. Work permit constraints have been somewhat relaxed for non-EU applicants (including Americans), particularly for qualified persons for skilled positions. Foreign investors often cite Luxembourg’s labor relations as a primary reason for locating in the Grand Duchy.

Most industrial workers are organized by unions, linked to one of the major political parties. Luxembourg is proud of the system of representatives of business, unions, and Government participating in a tripartite process in the conduct of major labor negotiations, which serves to avoid strikes, common in neighboring France and Germany.

Luxembourg has a strong trade relationship with the United States. Every employee working in Luxembourg, whether a resident, European, or a third-country national, is subject to the provisions of labor law. Most active laws and regulations regarding work and employment in Luxembourg are incorporated in the Labor Code. The Inspectorate of Labor and Mines has responsibility for working conditions and protection of workers.

Collective bargaining agreements are common in the public and private sectors. The country has a labor dispute resolution mechanism in place called office de la conciliation (conciliation office).

The DFC does not operate in Luxembourg.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other

Economic Data





Host Country Gross Domestic Product (GDP) ($M USD)





Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





BEA data available at

Host country’s FDI in the United States ($M USD, stock positions)





BEA data available at

Total inbound stock of FDI as % host GDP





UNCTAD data available at

* Source for Host Country Data: Luxembourg Statistics office STATEC (

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward



United States



United Kingdom



United Kingdom



The Netherlands



The Netherlands



United States















“0” reflects amounts rounded to +/- USD 500,000.

Political and Economics Section
U.S. Embassy Luxembourg
22 Boulevard Emmanuel Servais
L-2535 Luxembourg, LUXEMBOURG

On This Page

  2. 1. Openness To, and Restrictions Upon, Foreign Investment
    1. Policies Towards Foreign Direct Investment
    2. Limits on Foreign Control and Right to Private Ownership and Establishment
    3. Other Investment Policy Reviews
    4. Business Facilitation
    5. Outward Investment
  3. 2. Bilateral Investment and Taxation Treaties
  4. 3. Legal Regime
    1. Transparency of the Regulatory System
    2. International Regulatory Considerations
    3. Legal System and Judicial Independence
    4. Laws and Regulations on Foreign Direct Investment
    5. Competition and Antitrust Laws
    6. Expropriation and Compensation
    7. Dispute Settlement
      1. ICSID Convention and New York Convention
      2. Investor-State Dispute Settlement
      3. International Commercial Arbitration and Foreign Courts
    8. Bankruptcy Regulations
  5. 4. Industrial Policies
    1. Investment Incentives
    2. Foreign Trade Zones/Free Ports/Trade Facilitation
    3. Performance and Data Localization Requirements
  6. 5. Protection of Property Rights
    1. Real Property
    2. Intellectual Property Rights
  7. 6. Financial Sector
    1. Capital Markets and Portfolio Investment
    2. Money and Banking System
    3. Foreign Exchange and Remittances
      1. Foreign Exchange
      2. Remittance Policies
    4. Sovereign Wealth Funds
  8. 7. State-Owned Enterprises
    1. Privatization Program
  9. 8. Responsible Business Conduct
    1. Additional Resources
    2. Climate Issues
  10. 9. Corruption
  11. 10. Political and Security Environment
  12. 11. Labor Policies and Practices
  13. 12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs
  14. 13. Foreign Direct Investment Statistics
  15. 14. Contact for More Information
2023 Investment Climate Statements: Luxembourg
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