International Trade in Luxembourg

News Related to International Trade in Luxembourg

• Luxembourg Abandons 'Unrealistic' Withholding Tax Model - May 14, 2013

  Luxembourg's Finance Minister Luc Frieden has made clear that the withholding tax model "has no future," as an instrument under the Savings Tax Directive with which to combat tax evasion and ensure tax compliance.

  Source: Tax-News.com

• Luxembourg VAT increase confirmation - May 09, 2013

  The new Luxembourg 2013-6 stability package has confirmed plans to raise the Luxembourg VAT rate in 2015. The news of a potential Luxembourg Value Added Tax rate rise first came out on 10 April 2013.  Whilst no VAT rate rise has yet been announced, it is anticipated to be 1% to take the existing VAT...The post Luxembourg VAT increase confirmation appeared first on VAT Live.

  Source: VAT Live

• Riyadh pact to promote KSA-Luxembourg trade - May 09, 2013

  (MENAFN - Arab News) Saudi Arabia and Luxembourg signed an agreement on avoidance of double taxation in Riyadh yesterday. The agreement was signed on the sidelines of the eighth Euromoney ...

  Source: Menafn.com

• Strengthening social cohesion in Luxembourg: making efficiency and equity go hand in hand - May 02, 2013

  Luxembourg is a rich and fast-growing country. However, inequality of disposable incomes has trended up modestly over the past decades and relative poverty has risen reflecting mainly the rapid growth of high incomes.

  Source: OECD

• Luxembourg Eyes Further Fiscal Consolidation In 2014 - Apr 30, 2013

  Luxembourg's Finance Minister Luc Frieden and Economy Minister Etienne Schneider have unveiled details of the country's 2013-2016 stability program and national reform program, highlighting the fact that further fiscal consolidation measures will need to be implemented after the upcoming legislative elections in May 2014.

  Source: Tax News

• Europe ups ante on tax transparency as Luxembourg succumbs; Austria may follow - Apr 29, 2013

  After a joint statement from the finance ministers of France, Germany, Italy, Spain and the UK (the G5) that they will push for greater exchange of bank information, other countries have signalled their willingness to join the effort.

  Source: International Tax Review

• Luxembourg's Juncker reshuffles government - Apr 28, 2013

  BRUSSELS (Reuters) - Luxembourg Prime Minister Jean-Claude Juncker on Saturday reshuffled his government following the resignation of his justice minister earlier this month.Related StoriesEgypt president invites judges to discuss judicial reform crisisAlgerian President Bouteflika hospitalised - reportAnalysis - No good military options for U.S. in SyriaThirteen dead, dozens hurt during Mexican prison riotIceland centre-right opposition takes big early election lead

  Source: Reuters

• Luxembourg - Apr 25, 2013

  Increase of standard VAT rate from 2015 announced

  Source: ibfd.org

• Luxembourg Backs UK FTT Opposition - Apr 25, 2013

  During a visit to London, Luxembourg's Finance Minister Luc Frieden underlined his support for the UK's decision to challenge the authorization of "enhanced cooperation" for the introduction of a tax on financial transactions.

  Source: Tax-News.com

• Luxembourg Eyes Global Information Exchange Standard - Apr 24, 2013

  During a recent meeting with OECD General Secretary Jos Angel Gurria, Luxembourg’s Finance Minister Luc Frieden talked about the Government's decision to introduce from January 1, 2015, an automatic exchange of information provision, for interest payments made to individuals resident in European Union countries, other than Luxembourg.

  Source: Tax-News.com

• Luxembourg shows 'bigger is not always better' - Apr 20, 2013

  Sometimes good things come in small packages and this is indeed true of Luxembourg when it comes to information and communication technologies (ICT). Take the example of broadband rollout. Being a small country means there is less territory to cover, so ultra-fast fixed-line internet connections are widely available and mobile broadband penetration is one of the highest in the EU at 64.8 %, and growing.

  Source: Phys.Org

Business outline for Luxembourg

Main Industry Sectors

The agricultural sector is not well developed. It contributes only 0.4% to the GDP and employs less than 1.5% of the active population. The country's main crops are wine, wood, cereals and potatoes.
The industrial sector (15% of the GDP), has historically been dominated by the production of iron and steel. In these recent years, this trend was diversified, thus chemical factories, plastic products and light engineering have been added. The steel industry contributes around 10% to the GDP. Arcelor (recently acquired by the Mittal Steel group, this merger has converted it into the world's biggest steel producer), has its headquarters in Luxembourg.
Like all developed countries, a large part of the GDP is attributed to the tertiary sector. This sector represents almost 84% of the national wealth, and more than half of it, is attributed exclusively to financial and real estate services. Luxembourg is one of the world's largest money markets and the second largest investment fund manager in the world.

Economic Overview

Luxembourg's economy is characterized by an attractive taxation system and a high degree of international openness. It is a country where the level of the service sector is highly expanded (almost 85% of the GDP). The financial sector alone represents almost half of Luxembourg's total GDP, which made it very vulnerable to the crisis. During the last recent years, the country was obtaining an average growth rate of around 5% per year; however in 2008, Luxembourg went into recession right after the financial crisis. In 2009, its growth was stabilized. Unemployment started rising again after a drop in 2007, and in 2009, the rate was over 6% of the active population. In addition to this, the public debt climbed to 15% of the GDP. Lastly, after an increase of 3.4% in 2008, inflation has slightly slowed down in 2009.  Luxembourg has the highest GDP per capita in the European Union. The competitiveness of Luxembourg's companies is also one of the highest in the world.

In 2011, the country expects a growth of around 3% and its budget remains on a very rigorous policy which controls public expenditures.  This budget should allow the country to rapidly recover its economy, which, in spite of all, is still very dependent of the global economy.

FDI in Figures

Despite the current economic crisis, Luxembourg shows the highest rate of foreign investment in Europe. More than three-fourths of the FDI received by Luxembourg comes from the countries of the European Union. In terms of distribution, the banking and insurance sectors get most of the FDI.

The government of Luxembourg has established some measures in order to make the country even more attractive to FDI.  These measures present fiscal benefits and also include advantages in the equipment and construction fields.

FDI Government Measures

The government took a number of measures to attract business establishment:
- Subsidies granted to SMEs (retail, restauration or hotels) through the National Society of Investment Credit (SNCI);
- Up to 25% exemptions from Corporate Income Tax and Commercial Tax, for 8 years, for start-ups.

Country Strong Points

Incoming foreign investment is made easy by the policy established by the authorities. In effect, Luxembourg is one of the most open economies in the world, and has a very attractive taxation system.  Luxembourg is also one of the biggest financial centers of the European Union (155 banking establishments by January 1, 2008). There are minimal exchange controls and foreign capital circulates freely. Additionally, communication networks are extremely developed and connect the country to the main foreign cities and capitals (highways, plane and train), and the labor force is highly qualified.

Country Weak Points

The main hindrance to investment in Luxembourg is in the high cost of living and high level of consumer demands.

Foreign Trade Overview

Luxembourg performs almost 90% of its foreign trade with the EU countries. Luxembourg offers a favorable climate to foreign investment. The share of foreign trade in the country's GDP is around 300%. The trade deficit remains constant in Luxembourg's current economy.  The country's three main trade partners (both for imports & exports) are: Germany, France and Belgium. Luxembourg mainly exports iron & steel, electric and electronic equipment, machinery and plastics. The country's main imports are mineral fuels & oil, vehicles, electric & electronic equipment, machinery, iron and steel.

Luxembourg has accomplished a diversification of its exports outside the European Union and the country currently has trade relations with Asian and Middle Eastern countries.  The country has a trade balance surplus and this comes from its high value-added exports.