The Grand Duchy of Luxembourg, is a landlocked country in Western Europe. The country shares international borders with Belgium to the west and north, Germany to the east, and France to the south. Luxembourg’s geography offers two principal regions: the Oesling, a part of the Ardennes massif, a hilly region with large deciduous forests in the north, and the Gutland (“good country”), the relatively urbanized region in the south.
Luxembourg is a Constitutional Monarchy, a Parliamentary Democracy and a prominent financial centre. The country is a member of the Benelux Economic Union and was one of the founding members of the European Union.
With an area of 2586 km² (999 sqm), Luxembourg is more than 10 times smaller than neighboring Belgium, or slightly smaller than the U.S. state of Rhode Island.
The Grand Duchy has a population of 530.000 inhabitants (in 2015), capital and largest city is Luxembourg-City (Lëtzebuerg), with about 100.000 citizens. Spoken language is Luxembourgish, administrative languages are French, German, and Luxembourgish.
The currency is the euro (EUR).
Luxembourg’s reputation is as a trustworthy political and economic partner. The economic policy of Luxembourg is characterised by the highly professional and dynamic spirit of the country.
Historically, the economy has been largely influenced by the steel industry. In the early 1970s the government made significant efforts to diversify the economy in order to avoid the risk of over-reliance on this one industrial sector and diversify and attract foreign multinationals. As a result of this reform, the economy of the country has been growing rapidly and nowadays relies on a much broader broad range of industries such as chemistry, plastics and synthetic materials, mechanics, machine construction, processing of ferrous, nonferrous metals, supplying parts to the automotive industry, precision instruments, as well as a burgeoning glass industry. All these industries improve the competitiveness of Luxembourg on the international market.
The most significant part of the Grand Duchy’s economy is its flourishing financial sector which comprise of more than 200 banks, 1,900 investment funds and 20,000 holding companies. The largest banks are Dexia-Bil, Fortis BGL, Kredietbank Luxembourg and a subsidiary of Belgian KBC. Luxembourg is considered to be one of the most important financial centres in Europe that offers the entire spectrum of financial services in both corporate and private banking. It is the third largest investment fund centre in the world.
A highly competitive tax regime, strict banking secrecy laws and international business environment have also made Luxembourg one of the leading locations for corporate headquarters and a highly suitable jurisdiction for holding companies. These holding companies are often very advantageous from a structural, administrative, financial and fiscal point of view. Insurance, private pension funds, securitisation and venture capital investment vehicles also represent a large part of the financial sector and as a result have increasingly become a main source of employment.
As a result of its continuous economic growth, Luxembourg residents have very favourable standards of living, with the one of the highest GDP (Gross Domestic Product) per inhabitant (approximately EUR 50 800 per inhabitant) and the highest social welfare per head. There is low inflation, low unemployment and a balanced budget.
The country is a representative democracy in the form of a constitutional monarchy headed by the Grand Duke Henri. The role of the Duke, however, is largely ceremonial. In practice the country is governed by the Cabinet of Ministers who exercise the executive power and by the Parliament which represents the legislative power in Luxembourg. The Cabinet of Ministers includes the Prime Minister, who serves as head of government. The Prime Minister is the leader of the political party or coalition of parties having the most seats in Parliament, known as the Chamber of Deputies. The members of the Chamber of Deputies are elected to a 5-year term. A second body, the Council of State (Conseil d’Etat), is composed of 21 ordinary citizens appointed by the Grand Duke, which advises the Chamber of Deputies in the drafting of legislation. However, the Council’s opinions have no binding effect.
The Grand Duchy is administratively divided into three districts, which are in turn divided into Cantons, Communes and Municipalities. Communes are administrative authorities possessing legal personality and administrating their patrimony. A Communal Council (Conseil Communal) is directly elected by the inhabitants. A Commune is administered by the mayor and the alderman (Collège des bourgmestres et échevins) chosen from the Communal councillors.
Laws, Regulations and Standards
The legal system of the Grand Duchy is mainly based on the Roman law. The Luxembourg Constitution provides with the constitutional provisions of the Grand Duchy, the fundamental rights of individual citizens and the organization of public bodies. It is superior to the ordinary law and to executive regulations, which have to be conformed to the Constitution.
The Luxembourg legislation consists of laws, codes and regulations. Many laws are based on French or Belgian legislation. An increasing amount of legislation has its source in European Union regulations, directives and decisions.
The main individually compiled codes are the Civil Code, Commercial Code, Penal Code, Criminal Procedure and Civil Procedure Codes. Current legislation for Luxembourg is first published in the official gazette – Mémorial.
The population of the Grand Duchy is of approximately 449,000. The Luxembourgers are generally fluent in French, German and English in addition to their mother tongue, Luxembourgish. French is frequently used as the administrative and business language, although German and English are also quite common in business circles.
This multilingualism is also a direct result of the relative small size of the country as well as its association with both France and Germany. When going abroad (which literally is not very far) the Luxembourgers have to speak other languages, simply because their own is not understood elsewhere. It is hardly surprising therefore that many Luxembourgers speak several languages. For those wishing to work in the business areas of Luxembourg it is an essential to speak at least one foreign language.
The Luxembourgers are known for their politeness and intelligence. In addition to their multilingual skills the Luxembourg people have other professional qualities such as punctuality, perseverance, practical approach to business and a capacity for work. Cosmopolitism and diversity of cultures may also be considered to be the main characteristics of the Luxembourgers.
On other hand, Luxembourgers are careful and prudent. They take time before they trust people and approach getting to know you in a deliberate, measured manner, which cannot be rushed.