Luxembourg

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Investing in Luxembourg

FDI in figures | Why you should choose to invest in Luxembourg | Procedures relative to foreign investment | Finding assistance for further information

FDI in figures

Foreign Direct Investment	2005	2006	2007
FDI inward flow (millions USD)	5,828	28,645	-36,483
FDI stock (millions USD)	43,721	66,658	30,176
Performance Index*, ranking on 141 economies	5	1	138
Potential Index**, ranking on 141 economies	5	5	-
Number of Greenfield investments***	4	9	26
FDI inwards (in % of GFCF****)	75.0	369.5	-398.8
FDI stock (in % of GDP)	119.6	164.5	60.2

Source:

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.

Why you should choose to invest in Luxembourg

Strong points: Luxembourg lies on the crossroads of Europe, in-between the European Union's three richest countries (France, Belgium and Germany), which facilitates its trade exchanges. On the other hand, the economic environment is fostered by the authorities' open attitude and their practices of dialogue and negotiation. Luxembourg is one of the biggest financial centers of the European Union (155 banking establishments by January 1, 2008). There are only few exchange controls and foreign capital circulates freely. Also, communication network is extremely developed and connects the country to main cities and foreign capital cities (highways, plane and train) and labor is highly qualified.
Weak points: 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 incite business establishment:
Subsidies granted to SMEs (retail, restauration or hotels) through the National Society of Investment Credit (SNCI)
Exemptions from Corporate Income Tax and Commercial Tax up to 25% during 8 years for start-ups.

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 authorisation for commercial activities, crafts, industrial activities and liberal professions) as in the case of a creation of an entreprise in Luxembourg.
Competent organization for the declaration: Companies' and Trade Register
Direct Taxes Administration

Finding assistance for further information

Investment aid agency: Economic Development Agency (DELUX)
Other useful resources: Doing business in Luxembourg

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