ABOUT LUXEMBOURG

Amongst all the countries in Europe, Luxembourg, officially the Grand Duchy of Luxembourg, is a small, landlocked country located in Western Europe. It is known for its role as a major financial hub, particularly in investment funds and private banking, as well as its strategic location at the heart of Europe. Despite its small size, Luxembourg is one of the wealthiest countries globally. The capital of Luxembourg is Luxembourg City, which is also its largest and most populous city, serving as the country’s primary economic, administrative, and cultural center, home to numerous EU institutions. According to the World Bank, Luxembourg is classified as a High-Income Economy, boasting one of the highest GDP per capita figures in the world, driven by its sophisticated financial services sector and diverse economy. The currency of Luxembourg is the Euro (EUR), which it adopted from its inception. The value of 1 Euro is approximately 89.85 Indian Rupees as of today’s exchange rates (June 2025). The population of Luxembourg is estimated to be around 670,000 in 2024. Its neighbouring countries are Belgium to the west, France to the south, and Germany to the east. The official languages of the country are Luxembourgish, French, and German, with English also widely spoken, especially in the business and financial sectors. The majority of the Luxembourgish population identifies as Roman Catholic, with growing communities of other Christian denominations, Muslims, and non-religious individuals. Currently, Luxembourg has one major international airport, Luxembourg Airport (LUX), which is well-connected to major European cities and serves as a significant cargo hub. As a landlocked country, Luxembourg utilizes its highly efficient multimodal transport network, including river ports on the Moselle (e.g., Mertert) and excellent rail/road connections, to access major seaports in Belgium (Antwerp) and the Netherlands (Rotterdam) for its international trade.

The corporate income tax rate in Luxembourg varies based on profit levels. For companies with taxable income exceeding EUR 100,000, the combined corporate income tax (CIT) rate is approximately 24.94% (including municipal business tax and contribution to the employment fund). For companies with taxable income up to EUR 100,000, the combined rate is around 17.76%. Luxembourg offers various attractive incentives for foreign investors, particularly in sectors like R&D, innovation, sustainable finance, and the space industry. These can include state aid for new investments, R&D tax credits, and specific regimes for intellectual property. Opesh Group of companies will be helping you in completing the Due Diligence process which includes financial planning, registration process, business options, and if required, even helping you find a rental property for your office.

Establishing a business in Luxembourg is highly efficient, transparent, and benefits from its robust legal framework and strong regulatory environment, aligned with EU standards. The Ministry of the Economy and its affiliated agencies (e.g., Luxinnovation, Luxembourg for Finance) are keen to attract foreign direct investment. A foreign investor who is planning to start his business in Luxembourg can form various company types, such as a Société à Responsabilité Limitée (S.à r.l. – Private Limited Company), a Société Anonyme (S.A. – Public Limited Company), or a Branch Office. A Société à Responsabilité Limitée (S.à r.l.) is the most common and flexible form, allowing 100% foreign ownership and requiring a minimum share capital of EUR 12,000. Luxembourg’s sophisticated legal framework supports complex cross-border structures, making it highly attractive for international holding companies and investment vehicles.

In case an investor is planning to establish an S.à r.l. in Luxembourg or a corporate business setup, Opesh Group will be helping you in taking the right decision for setting up your business in Luxembourg and we will also guide you about how to follow the procedure while formulating your company in Luxembourg.

Types of Business which can be started in Luxembourg:

• Financial Services: The dominant sector. Opportunities are immense in investment funds (Luxembourg is the second-largest fund domicile globally), private banking, wealth management, corporate finance, insurance, and highly specialized financial technology (FinTech) services.
• Information & Communication Technologies (ICT) & Data Centers: Luxembourg boasts world-class connectivity, high cybersecurity standards, and abundant green energy. Opportunities exist in data centers, cloud computing, cybersecurity, digital trust services, satellite communication, and FinTech infrastructure.
• Logistics & Supply Chain Management: Leveraging its central location, multi-modal transport infrastructure, and strong cargo airport, opportunities are in specialized logistics, e-commerce fulfillment, cold chain logistics, and supply chain optimization.
• Space Industry: Luxembourg has a pioneering role and active government support for the commercial space sector. Opportunities include satellite services, space mining, space data analysis, and the development of space technologies.
• Research & Development (R&D) & Innovation: Strong emphasis on R&D, particularly in materials science, automotive components, health tech, and sustainable technologies. Opportunities in setting up R&D centers, startups, and innovation hubs.
• Clean Technologies & Sustainable Finance: Given its commitment to sustainability, opportunities exist in green finance, cleantech solutions, renewable energy project financing, and environmental technology development.
• E-commerce & Digital Economy: A highly digitized population and robust digital infrastructure support opportunities in e-commerce platforms, digital marketing, and online services.

Advantages of Starting Business in Luxembourg:

• Political & Economic Stability: A highly stable democratic grand duchy with a strong AAA-rated economy.
• Strategic Central Location in Europe: Easy access to major European markets, making it an ideal base for regional operations.
• Highly Developed Financial Sector: A global leader in investment funds and private banking, offering a robust ecosystem for financial businesses.
• Multilingual & Highly Skilled Workforce: A diverse and highly educated talent pool fluent in multiple languages.
• Favorable Tax & Regulatory Environment: Competitive corporate tax rates for certain activities and a supportive, transparent regulatory framework.
• Excellent Infrastructure: World-class digital, transport, and logistics infrastructure, including a leading cargo airport.
• EU & Eurozone Membership: Provides seamless access to the EU single market and eliminates currency risk within the Eurozone.

Business Opportunities for Indians in Luxembourg:

There are excellent business opportunities in Luxembourg for new investors who are planning to start their business abroad. Luxembourg’s highly specialized and sophisticated economy offers unique avenues for Indian investors, particularly in high-value sectors. Indian companies with strengths in IT services (especially FinTech, cybersecurity, and cloud solutions), asset management, fund administration, and specialized manufacturing, can find significant opportunities. Luxembourg’s focus on innovation, space technology, and sustainable finance also presents potential for collaboration and investment.

Imports & Exports:

Luxembourg’s trade is highly integrated with its European neighbours and specialized due to its economic structure. It is a significant importer of industrial machinery and consumer goods and an exporter of financial services and steel products.

Major items which are exported from Luxembourg to India:

• Machinery and mechanical appliances
• Iron and steel products (especially flat-rolled products)
• Chemical products
• Optical, photographic, cinematographic, measuring instruments
• Plastics and articles thereof
• Pharmaceutical products

Major items which are imported in Luxembourg from India:

• Pharmaceutical products
• Organic chemicals
• Articles of apparel and clothing accessories
• Textile yarns and fabrics
• Machinery and mechanical appliances
• Iron and steel products
• Footwear

Manufacturing:

Opportunities in manufacturing in Luxembourg are concentrated in specialized, high-tech sectors, often involving automation and R&D. This includes automotive components, machinery, specialized materials (e.g., steel, tires), and potentially advanced manufacturing related to the space industry or health tech, leveraging its skilled workforce and strong innovation ecosystem.

Mining:

Luxembourg has very limited mining activity today. Historically, it had an iron ore mining industry, which ceased decades ago. Currently, there are no significant mining opportunities in the country. Its economic focus is on services and high-tech industries.

Major Indian companies which are currently working in Luxembourg:

Several prominent Indian companies, particularly in the IT and financial services sectors, have a presence in Luxembourg, often leveraging its status as a European financial hub:

• Tata Consultancy Services (TCS): Has a significant presence, providing IT services and solutions, particularly to the financial sector.

• Infosys: Another major Indian IT services company with operations serving clients in Luxembourg.

• Wipro: Also present in the IT and consulting space.

• Indian Banks: Some Indian public and private sector banks (e.g., State Bank of India, ICICI Bank) have representative offices or branches to facilitate business and financial transactions.

• Investment Funds: Many Indian asset managers or fund houses might set up Luxembourg-domiciled funds to cater to international investors, leveraging Luxembourg’s fund expertise.

• GDP = $89.04 billion (2024 est.)

• GDP Growth = 1.8% (2024 est.)

• Ease of doing business rank = Not directly ranked by the World Bank’s ‘Doing Business’ report; generally recognized for high ease of doing business by other indices.

• GDP per Capita = $131,349 (2024 est.)

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