In accordance with its European Union membership, Luxembourg applies the European Union (EU) rules that are in force in all European Union countries. While the EU has a rather liberal foreign trade policy, there is a certain number of restrictions, especially on farm products, following the implementation of the CAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favoring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory. Moreover, for sanitary reasons, regarding Genetically Modified Organisms (after being allowed in the European territory), their presence should be systematically specified on packaging. Beef cattle bred on hormones is also forbidden to import. The BSE crisis (often called the "mad cow disease") urged the European Authorities to strengthen the phytosanitary measures to make sure of the quality of meats entering and circulating in the EU territory. The principle of precaution is now widespread : in case of doubt, the import is prohibited until proof is made of the non-harmfulness of products. See the conditions of importing fresh meat.
Customs Duties and Taxes on Imports
Customs duty for non-EU member countries is usually rather low (around 4.2% on average). There are however three sectors and product categories which are subjected to a special higher tarification, such as the clothing sector, fabrics and agro alimentary products (around 17.3%).
Customs duty tariffs are calculated Ad Valorem based on their CIF value, in compliance with the Common Customs Tariff (CCT). In order to get exhaustive regulations and customs tariffs rates regarding their products, exporters shall refer to the TARIC code and its database, which includes all applicable customs duties and customs trade policy measures for all the goods.
Since the first of January 1993, the European Union, of which Luxembourg is part, has been a single market, without any customs barriers, which ensures free circulation of the goods. On May, 1st of 2004, ten "candidate countries" became new members of the European Union: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia. Trade within the European Union is totally free from customs duties, provided that the country of origin of the goods is one of the 25 European Union Member States. Nevertheless, when introducing goods into Luxembourg, exporters shall fill in an intrastat declaration. When the country of origin of the goods which are exported to Luxembourg is not part of the European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT).
The duties for non-European countries are relatively low, especially for manufactured goods (4.2% on average for the general rate), however textile, clothing items (high duties and quota system) and food-processing industry sectors (average duties of a 17.3% and numerous tariff quotas, PAC) still know protective measures. In order to get exhaustive regulations and customs tariffs rates regarding their products, exporters shall refer to the Online customs tariff database (TARIC) which includes all applicable customs duties and customs trade policy measures for all the goods.
Moreover, many bilateral and multilateral agreements have been signed by the European Union, in order to define specific customs duties with the following countries:
- The ACP agreements, with 95% of the tariff lines with a rate of a 0% for developing countries in Africa, the Caribbean Islands and Pacific. The Cotonou Agreement, signed in the year 2000, defines the new EU-ACP partnership.
- The Generalized System of Preferences (GSP): 54% of the tariff lines are at 0% for developing countries outside the ACP framework.
>> To get further information on customs policies in the European Union, please check the exhaustive report by the European Commission.
As part of the "SAFE" standards advocated by the World Customs Organization (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Program eCustomer, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.
Quality is the main purchase criterion of the Luxembourgers, followed by the quality of the vendor's service, the variety of the offer, as well as the price. On the other hand, customers attach importance to reputation and to the comfort of durable consumer goods and they are willing to pay more for a product that fits this description. Concerning products of daily consumption, they are sensitive to promotional offers.
Consumer Profile and Purchasing Power
The buying power of the Luxembourg households is one of the highest in the world. Consumer spending of Luxembourg households represents EUR 8.7bn, that is on average 19,300 EUR per capita. Still, since the aggravation of the financial crisis, its spreading into the labor market (increasing unemployment), consumers have adopted slightly more careful purchasing habits.
ULC, The Luxembourg Consumers Union GIE, The European Consumers Centre of Luxembourg
The importance of general trade (retail, wholesale, automobile sales and repair ) has been on the decline since 1985. Trade represented 12.2% of the total value-added economy of the country in 1985, as against only 9.5% in 2001. The distribution market in Luxembourg is concentrated around 3 big groups: - the national group Cactus, leader in the distribution sector in Luxembourg and owns 12 stores throughout the country. - the group Louis Delhaize, which is the 2nd largest player in the country’s distribution system. It has stores such as Cora, Match and Smatch. The group Louis Delhaize is not to be confused with the Delhaize le Lion group which is of Belgian origin and has been in Luxembourg under the eponymous name Delhaize. This company achieved a turnover of 18.8 billion Euros worldwide in 2005. - the Auchan group, with 1 hypermarket employing 650 people in 2004.
These 3 groups share together this market of 455,000 inhabitants. The purchasing power of the people of Luxembourg being the highest in the world (source: Report-2000 of the Union of Swiss Banks), the distribution sector benefits from high per capita spending which is 70% higher than those of the neighboring Belgians and Dutch. Distributors are trying to meet the demanding needs of the people of Luxembourg; for example by selling high-end perfumes in supermarkets.
Luxembourg has an excellent road infrastructure. Air transportation is also facilitated by the presence of a specialized airline company, Cargolux, one of the greatest exclusively cargo companies in Europe. Finally, merchandise transportation by rail is in full development. In 2007, the first long distance plain rail highway began to operate, connecting Perpignan (France) and Luxembourg. Conceived as an alternative to road transport, it allows road transporters to transport by train, without neither tractors nor drivers, overnight 40 tractor trailers, which equals cca 30,000 tractor trailers per year.
The plastic/rubber branch represents 13% of the industrial production's added value (fabrication of Good Year Tires). Chemical industry has increased its part in the sector's total production (7%) since the arrival of the TDK Recording Media Europe S.A. company. The steel industry still represents a large share, thanks to the presence of the world giant, Arcelor-Mittal. Finally, Luxembourg also produces numerous non-metal mineral products (glass industry, porcelain production and cement production, concrete and concrete parts production...) which represent around 8% of the industrial production's added value.
ABC Luxembourg - B2B information in Luxembourg. Annuaire du Luxembourg - Companies directory in Luxembourg. Fedil Members' Directory - This directory of the companies affiliated to FEDIL (Business Federation Luxembourg) is an index of the national industry as well as one of the measures to promote Luxembourg products in and outside of the Grand Duchy. All the information about the companies are permanently updated. Sireh.com - Directory of companies in Luxembourg.
Manufacturers Associations of the Main Industries
7 professional associations listed for Luxembourg.