Doing business in Luxembourg: the most important strengths and weaknesses

Small but mighty. Luxembourg is a stable, prosperous country. It is the smallest of all the 27 EU member states. The country has only 645,000 inhabitants who also speak three different languages ​​(Luxembourgish, French and German). Most Luxembourgers also speak English in light of the country's strong international orientation. This is due mainly to Luxembourg's status as an important international financial centre, with a large number of banks and other financial institutions.

Luxembourg has built up a strong competitive advantage in the field of financial services in recent decades. As a result, it is now the world's second largest hub for investment funds after the United States. It is the most important hub for private banking in the eurozone.

But Luxembourg is more than just banking. The country has a long tradition in the mining and steel industries. ArcelorMittal, one of the largest steel companies in the world, is headquartered in Luxembourg. The ICT sector is also growing rapidly. The country has a number of data centres and is a hub for e-commerce. Due to its central location in Europe, Luxembourg is also an important logistics centre. Finally, we must also mention tourism as an important source of income. Luxembourg is a popular tourist destination because of its beautiful nature, rich culture and historic cities.

The Benelux agreement makes it easy for Dutch and Belgian companies to establish relationships in Luxembourg. It is close by and the country's positive image inspires confidence. Luxembourg has a stable political environment, highly educated workers and a favourable tax environment.

With just 645,000 inhabitants, Luxembourg is the image of tranquillity. Vandalism, hooliganism, murder and manslaughter are virtually unknown in the mini-state. Things are calm, neat and tidy. Upon first meeting, the Luxembourger seems somewhat sullen and distant. Just like in Belgium, the so-called Dutch assertiveness is not appreciated.

Thorough approach

Companies looking for a quick deal have a difficult time. Luxembourgers are known for their thorough, almost suspicious approach. They want to fully understand the advantages, disadvantages and effects in the short and long term before they do business with a trading partner. You should give up on the idea of a quick process. This is due in part to the strict application of the law by local authorities (heavy fines).

Make sure you know the rules

Foreign companies entering the market must pay close attention to the specific legal rules that Luxembourg has. This is where the natural suspicion of Luxembourgers comes into play. Local authorities ensure strict application of the law. If this is not done, a stiff fine will follow. So, don't think that Luxembourg is an extension of Belgium. Luxembourgers appreciate it when you show respect for their nationality and culture. In the business world - in line with the national character - extreme accuracy is required.

The official languages ​​are French, German and Luxembourgish. Although most publications are in French or German, Luxembourgish remains the national language. This local language can be of great benefit to you in building an important relationship in Luxembourg.