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In this page: FDI in Figures | Why You Should Choose to Invest in Luxembourg | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), its shares directed to developed economies has reached an historic low. Macroeconomic fragility and policy uncertainties are driving investors to caution.

Luxembourg offers a business climate favorable to foreign investment. Despite the 2008-9 economic crisis and the remaining uncertainties regarding the global economy, Luxembourg shows the highest rate of foreign investment in Europe. In 2013, more than three-fourths of the FDI received by Luxembourg (USD 31 billion) came from the countries of the European Union. In terms of distribution, the banking and insurance sectors get most of the FDI. The government of Luxembourg has established some measures in order to make the country even more attractive to FDI: fiscal benefits, equipment and construction fields.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Luxembourg OECD United States Germany
Index of Transaction Transparency* 6.0 6.0 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 7.0 9.0 5.0
Index of Investor Protection**** 4.3 6.1 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 18,1169,52730,075
FDI Stock (million USD) 180,801124,071141,381
Performance Index*, Ranking on 181 Economies 4--
Potential Index**, Ranking on 177 Economies 102--
Number of Greenfield Investments*** 181323
FDI Inwards (in % of GFCF****) 168.292.3268.5
FDI Stock (in % of GDP) 311.7225.0236.3

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Luxembourg

Strong Points
Incoming foreign investment is made easy by the policy established by the authorities. In effect, Luxembourg is one of the most open economies in the world, and has a very attractive taxation system. Luxembourg is also one of the biggest financial centers of the European Union (155 banking establishments). There are minimal exchange controls and foreign capital circulates freely. Additionally, communication networks are extremely developed and connect the country to the main foreign cities and capitals (highways, plane and train), and the labor force is highly qualified.
Weak Points
The main hindrance to investment in Luxembourg is in the high cost of living and high level of consumer demands.
Government Measures to Motivate or Restrict FDI
The government took a number of measures to attract business establishment:
- Subsidies granted to SMEs (retail, catering or hotels) through the National Society of Investment Credit (SNCI);
- Up to 25% exemptions from Corporate Income Tax and Commercial Tax, for 8 years, for start-ups.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Yes
Acquisition of Holdings
A majority holding interest in the capital of a local company is legal in Luxembourg.
Obligation to Declare
Whatever may be the form of investments chosen (momentary commercial association, Economic Interest Grouping - EIG, an independent agent's activity or a branch), access to an economic profit-making activity on the Luxembourg territory is subject to:

1) the same formalities (registration/enrollment at the Companies' Trade Register, application for a VTA number, initial declaration at the Direct Taxes Administration, etc.)

2) the same obligations (obtaining an establishment authorization for commercial activities, crafts, industrial activities and liberal professions) as in the case of a creation of an enterprise in Luxembourg.

Competent Organization For the Declaration
Companies' and Trade Register
Direct Taxes Administration

Learn more about Foreign Investment in Luxembourg on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Economic Development Agency (DELUX)
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Luxembourg
Globaltenders, Tenders & Projects from Luxembourg
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide
Other Useful Resources
Doing business in Luxembourg
 
 

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Learn more about Investing in Luxembourg on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: January 2015