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Economy and Banking Sector of Luxembourg

Western Europe
Population  (2017)
590 667  (+0.02%)
EU Status
member since 1952
EUR (Euro)
Nominal GDP (2016)
54.2 bln EUR  (+0.04%)
Credit Ratings (as of Sep 2016)
Consolidated Banking Assets (2016)
845.77 bln EUR  (+4.26%)
Deposit Guarantee
100 000 EUR
Number of Banks

Luxembourg, a country in Western Europe, is bordered by Belgium, Germany, and France. It's a founding member of the European Union.

Luxembourg has stable, high-income, highly diversified market economy. Main industries of Luxembourg are banking and financial services (accounting for a quarter of GDP),production of steel and chemicals, information technology and telecommunications, and tourism.

Banking sector is the largest sector in the Luxembourg economy. Luxembourg is the most important private banking centre of the Eurozone.

List of Banks in Luxembourg
Banks in Luxembourg

National Currency

Euro (EUR)

Luxembourg joined the Euro Area on 1 January 1999.


Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
54.2 bln EUR  (+0.04%)92 900 EUR  (+0.01%)4.2 %  (2015: 4.8 %)

According to Eurostat, nominal GDP of Luxembourg in 2016 was 54.2 bln EUR.

Luxembourg outperforms the European Union in terms of real GDP growth with the average annual differential coming to 2.0% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 4.2% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Luxembourg. Chart 1. Real GDP Growth in Luxembourg. Source: Eurostat, International Monetary Fund.

In 2016, nominal GDP per capita in Luxembourg was 92 900 EUR.

Luxembourg has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 168.4% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Luxembourg; European Union = 100. Chart 2. GDP Per Capita at Purchasing Power Parity in Luxembourg; European Union = 100.

Inflation Rate

CPI, MoM (Jun 2017)CPI, YoY (Jun 2017)CPI, Year Average (2016)
0.0 %  (May 2017: -0.1 %)1.5 %  (May 2017: 1.9 %)0.0 %  (2015: 0.1 %)

According to Eurostat, inflation rate in Luxembourg in 2016 expressed as annual percentages of average consumer prices was 0.0% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Luxembourg. Chart 3. Inflation Rate in Luxembourg. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
6.3 %  (2015: 6.4 %)

Government Bond Yield

Government Bond Yield (Jun 2017)
0.52 %  (May 2017: 0.57 %)
According to Eurostat, government bond yield in Luxembourg in Jun 2017 was 0.52%, compared to 0.57% in May 2017.
Government bond yield of Luxembourg. Chart 4. Government bond yield of Luxembourg. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
AAA (highest credit quality), outlook stable Aaa (prime), outlook stable

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Luxembourg: 0.0 - 15.0%

Withholding tax rates applied on payments of interest and dividends in Luxembourg are shown in Table 1.

Dividends Interest
Natural person, resident 0.0 %10.0 %
Natural person, non-resident 15.0 %0.0 %
Table 1. Withholding tax rates in Luxembourg.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Luxembourg: 79 Signed Agreements

Luxembourg signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Czech Republic
 Germany (Sep 2013)
 Guernsey (Aug 2014)
 Hong Kong
 Kazakhstan (Dec 2013)
 Korea, Republic of
 Lao People's Democratic Republic (Mar 2014)
 Macedonia (Jul 2013)
 Moldova, Republic of
 Russian Federation
 San Marino
 Seychelles (Aug 2013)
 South Africa
 Sri Lanka (Apr 2014)
 Tajikistan (Jul 2013)
 Trinidad and Tobago
 United Arab Emirates
 United Kingdom
 United States

There are also several agreements between Luxembourg and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Czech Republic (Mar 2013)
 Isle of Man (Apr 2013)
 Jersey (Apr 2013)
 Saudi Arabia (May 2013)
 Sierra Leone (Oct 2013)

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Automatic Exchange: Starts in September 2017

Luxembourg signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information


Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Luxembourg
IGA in effect since 28 March 2014, Model 1

Luxembourg has FATCA agreement with the U.S. in effect since 28 March 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Luxembourg are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Luxembourg financial accounts hold in U.S. financial institutions will be reported to Luxembourg authorities.

Further Information

Financial Market Development

Financial Market Development
5.0 (max 7.0), 14th out of 138 countries
Banks' Soundness
6.1 (max 7.0), 12th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Luxembourg is scored 5.0 out of maximum 7.0 and ranked 14th out of 138 analysed economies. Soundness of banks is scored 6.1 bringing Luxembourg into the 12th place, trustworthiness and confidence of financial market is scored 4.9 (34th place).

Financial Market Development in Luxembourg. Chart 5. Financial Market Development in Luxembourg. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Luxembourg are summarised in Table 2.

Scheme Participantsall credit institutions operating in Luxembourg, branches of non-EU banks, branches of Luxembourg banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Eligible Depositorsnatural persons, small businesses with headquarters in EU
Covered Accountsall cash deposits
Covered Currenciesall
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Luxembourg.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
Aaa (prime) Aaa (prime)

Local currency (Euro) deposit ceiling for Luxembourg is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

Deposit Rates

Average Deposit Rate (May 2017, EUR)
0.12 %  (Apr 2017: 0.23 %)
In May 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.12% which was below the Euro Area average (0.40%).
Deposit Rates in Luxembourg. Chart 6. Deposit Rates in Luxembourg. Source: ECB.

Banking Sector Structure

Number of Banks
Consolidated Assets (2016)
845.77 bln EUR  (+4.26%)
Recent Changes (2016)
new banks: 3, closed banks: 6

Currently there are 146 credit institutions operating in Luxembourg.

In 2016 consolidated banking assets in Luxembourg were 845.77 bln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.

Consolidated banking assets in Luxembourg. Chart 7. Consolidated banking assets in Luxembourg.

Recent structural changes (2013 - 2016) of the banking sector of Luxembourg are summarised in Table 3.

Number of Opened Banks7923
Number of Closed Banks1966

Table 3. Recent structural changes in the banking sector of Luxembourg.

The list of the most recently opened banks in Luxembourg is provided in Table 4.

All the credit institutions operating in Luxembourg can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks46
Central banks1

Table 5. Number of banks by category in Luxembourg.

There are 46 branches of foreign banks from 14 different countries in Luxembourg. Table 6 shows 10 countries having the biggest number of branches in Luxembourg.

Country of OriginNumber of Branches
 United Kingdom5

Table 6. Number of branches of foreign banks in Luxembourg grouped by country of origin.

Credit Cards

Minimal Annual Costs
0.00 EUR
Maximum Annual Costs
0.00 EUR
3 offers from 1 banks