Luxembourg, officially known as the Grand Duchy of Luxembourg, is one of the smallest sovereign states in Europe, bordered by BelgiumGermany  and France, and one of the least-populous countries in Europe. And Luxembourg is far more than that …

On the 2020 European Innovation Scoreboard, which assesses the performance of countries in the field of innovation based on 27 indicators, the Grand Duchy came 5th and joins the EU innovation leaders[i]. In the Global Innovation Index 2020 rankings, Luxembourg is 18th and is together with China and Israel the country ranking third in terms of creative outputs (venture capital, research and development, entrepreneurship, or high-tech production)[ii].

Thanks to a purchasing power parity (PPP) of USD 112,875.12[iii] in 2020 Luxembourg ranks first in the world and achieved a GDP per capita, expressed in PPS, of 263% of the EU average in 2018[iv], with a general government net debt of EUR -2.90 billion and an unemployment rate of only 6.47% of its total labour force[v], making it one of the most economically stable countries in the world, if not the most stable.

The four credit rating agencies – DBRS Morningstar, Fitch, Moody’s and Standard & Poor’s – have confirmed Luxembourg’s triple A credit rating despite the coronavirus pandemic. DBRS and Fitch consider that the economy ought to bounce back to pre-crisis levels in 2021 and confirms thereby that, despite the difficult economic context, the foundations of Luxembourg’s economy remain solid. DBRS considers that the Grand Duchy ought to remain an attractive destination for investments and also acknowledges the Government’s sustained effort in the field of fiscal transparency[vi].

One of the direct consequences of the financial crisis of 2008 was a global push towards increased transparency in tax matters. Finance Minister Pierre Gramegna emphasises that Luxembourg did indeed adopt fiscal transparency “The country complies with all OECD and EU standards and guidelines on tax transparency, specifically in the area of exchange of information and administrative cooperation. […] These efforts have been recognised by the OECD Global Forum and the EU”[vii]. Moody’s states moreover Luxembourg’s high degree of transparency as one of the reasons for its triple A rating[viii]. In OECD peer reviews of tax transparency, Luxembourg now enjoys the same ranking as Germany, the UK and the US.

In 1988, Luxembourg was the first member of the then European Communities to implement a new framework for pan-European funds – UCITS (Undertakings for Collective Investments in Transferable Securities). No longer faced with the complexity and costs of having to set up separate local products for each individual market, major fund managers from the US and European countries started to launch cross-border investment funds from Luxembourg. This development nurtured a high level of expertise in asset servicing and a unique ecosystem of service providers, facilitating economies of scale. As a result, Luxembourg has significantly contributed to the creation of a truly global cross-border fund industry over the past three decades[ix].

Today, the financial sector is still the main driving force behind Luxembourg’s economy. The financial centre is one of the top international financial centres (12th worldwide and 1st in the Eurozone[x]) and Luxembourg’s fund industry is the largest in the EU (with EUR 4.97 trillion AuM as of December 2020[xi]) and even second largest in the world. According to PwC’s Fund Distribution 2020[xii],58% of cross-border investment funds are domiciled in Luxembourg. The insurance industry has a strong presence in all relevant European markets and accounted for EUR 27bn of life assurance premiums in 2019 (+12.4% from the previous year) of which more or less 90% are cross-border premiums generated outside of Luxembourg[xiii]. The highly-developed life insurance industry has acquired unique expertise in offering tailor-made insurance products, notably unit-linked insurance plans for internationally mobile clients. Thanks to its history of economic openness and its multicultural and multi-lingual population (Luxembourg’s population speaks on average 3.6 languages and is 7th in the world for English proficiency), Luxembourg is uniquely positioned to offer firms the expertise and talent they need to help them serve clients in multiple markets.

A recent live test for Luxembourg’s attractiveness as an EU hub for financial services was the fact that, in the context of Brexit, more than 60 financial firms decided to either strengthen their existing activities or establish a new EU hub in Luxembourg to ensure continued access to the EU single market.

Luxembourg moreover takes great pride in being a global leader in inclusive finance, with a 61% market share of global assets under management in microfinance investment vehicles and while Luxembourg is still the leading non-Muslim domicile for Sharia-compliant investment funds there has also been significant growth in responsible investment funds, where Luxembourg funds currently represent 31% of all such European funds [xiv]. In fact, with the Luxembourg Green Exchange (LGX), Luxembourg acquired the first stock exchange devoted to green finance in the world in 2016 and following the opening of the national Fintech platform LHoFT in 2017, Luxembourg has continued to successfully position itself as an EU centre for Fintech firms as well as a leading European payment services hub, with the world’s main payment and e-commerce firms now established in Luxembourg[xv].

Seen from the perspective of the financial services’ consumer, Luxembourg’s expertise means a more diversified range of products, in terms of geographic reach and asset classes. Such a diversity is of particular importance in the current low interest rate environment, as the ability to diversify a portfolio allows consumers to choose the most suitable products for their current and future financial needs.

Luxembourg’s ambition is according to Luxembourg for Finance, the agency for the development of the financial centre founded in 2008, “to further expand its role as a cross-border centre of excellence and EU hub, so that by 2025 it will have accomplished the following goals:

  • contributing to job creation and sustainable growth, at home and across the EU
  • playing a key role in developing a sound and competitive EU regulatory framework promoting financial stability, resilience and innovation with new products and services to meet the objectives of the Capital Markets Union
  • expanding the international and geographical spread of the financial institutions which setup here
  • leveraging new and forthcoming pan-European regulations for digital or emerging financial products and services
  • recognised as a key domicile for pan-European pension plan products”[xvi]


Luxembourg – it really is all it says it is.  If you would like more information, please contact us at OneLife and get in touch with our teams 


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[i] European Commission, 2020, retrieved on 02/03/2021,
[ii] The Global Innovation Index 2020, retrieved on 02/03/2021,
[iii] IMF, retrieved 11/02/2021,
[iv] Eurostat, 05/03/2020, retrieved on 11/02/2021,
[v] IMF, retrieved 11/02/2021,,137,&s=NGDP_R,NGDP,PPPGDP,NGDPRPC,NGDPPC,NGDPDPC,PPPPC,PPPSH,PCPI,PCPIE,TXG_RPCH,LUR,GGXWDN,GGXWDG,&sy=2018&ey=2025&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1
[vi] Official website of Luxembourg, 29/09/2010, retrieved on 11/02/2021,
[vii] PaperJam, 09/02/2021, retrieved on 12/02/2021, and 29/01/2021, edited on 01/02/2021 and retrieved on 15/02/2021,
[ix] Luxembourg for finance, retrieved on 03/03/2021,
[x] Wikipedia, retrieved on 15/02/2021,
[xi] Alfi statistics as at 31 December 2020, retrieved on 16/02/2021,
[xii] PWC, retrieved on 15/02/2021,
[xiii] Commissariat aux Assurances, retrieved on 15/02/2021, and
[xiv] Luxembourg for finance, retrieved on 03/03/2021,
[xv] Official website of Luxembourg, 05/12/2019, retrieved on 11/02/2021,
[xvi] Luxembourg for finance, retrieved on 03/03/2021,