Economic Overview & Business Opportunities – Luxembourg
Luxembourg is a landlocked country at the heart of Western Europe, bordering France, Germany, and Belgium. Luxembourg gains its tractions as the gateway to the European markets and its consumers due to its geo-strategic location at the heart of Western Europe. Luxembourg’s location significance has attracted foreign investors to do business in the country.
An Overview of Luxembourg’s Economy
On top of being a strategically positioned investment destination, Luxembourg’s pro-business government and vibrant business environment are the key winning factors behind its thriving economic growth. Over the years, the Luxembourg government has been supporting economic diversification with its policies and programs. The Luxembourg government aims to create a descent investment climate with high growth potential, balanced macroeconomic foundations, diversified industry, excellent market connectivity, as well as attractive institutional, legislative, and fiscal framework. Besides, the country’s active economic policy, political and social stability, as well as business incentives have been encouraging international businesses.
Why Invest in Luxembourg
1. Strategic Location
As mentioned above, Luxembourg is strategically located at the heart of Europe. It connects the rest of Europe with its excellent transportation network, where people can move around easily and freely within EU from Luxembourg.
2. Pro-business Environment
Foreign investors know Luxembourg as the preferred investment destination due to its pro-business environment. Luxembourg government welcomes foreign investment into the country. The effort solidified when the government mapped out strategies to attract Foreign Direct investments (FDI) in the services sector with incentives, capital investment subsidies, deferred corporate tax payment schedules, financing of equipment and financial assistance.
3. Incentives for Investment
Luxembourg government offers investment incentives via its low and attractive tax regime, as well as various grants and loans. As from 2019, the corporate tax rate where taxable revenue does not exceed 175000€ is 15% whereas for taxable revenue exceeding 175000€ is 17%. An additional charge of 7% is levied on corporate income tax as a contribution to the employment funds. Meaning that the corporate tax rate explained here above may falls between 16.05% and 18.09%. Additionally, its VAT rates stands at 17% since 2016. On top of that, Luxembourg provides different incentives to investors, ranging from government guarantee on loans, loan at low or reduced rates, assistance in development of real estate for setting up industrial sites and buildings, cash grants for investments in high technology sector, research, and development of innovative products, industries involved in manufacturing processes and services.
4. Well-educated workforce
One of the factors that attract foreign investors to do business in the country is its well-educated and skilled workforce. The well-educated workforce has been the reason behind Luxembourg’s high productivity.
To conclude, Luxembourg has been positioned as an important financial hub at the heart of Europe a diversified economy across different sectors. The manufacturing sector and the services sector (which mainly includes banking and other financial exports) are the major pillars that drive economic growth. In addition to that, Luxembourg economic performance showcases a promising investment return to foreign investors. If you are looking for an opportunity to expand into Western Europe, Luxembourg has a lot to offer!
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