Luxembourg: The domicile of choice for financial services - Alfi
Luxembourg: The domicile of choice for financial services - Alfi
Luxembourg: The domicile of choice for financial services - Alfi
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your guide<br />
luxembourg: the <strong>domicile</strong> <strong>of</strong> <strong>choice</strong><br />
<strong>for</strong> <strong>financial</strong> <strong>services</strong>
“<strong>The</strong> <strong>Luxembourg</strong> Government whole-heartedly supports<br />
the <strong>financial</strong> industry in its ef<strong>for</strong>ts to cater <strong>for</strong> the long term saving<br />
needs <strong>of</strong> investors through safe and well regulated products.”<br />
Jean-Claude Juncker<br />
Prime Minister<br />
“Establishing ArcelorMittal’s corporate headquarter in <strong>Luxembourg</strong><br />
after the merger has proven to be an excellent decision. <strong>The</strong> advantages<br />
<strong>of</strong> <strong>Luxembourg</strong> lie not only in the presence <strong>of</strong> its successful <strong>financial</strong><br />
centre and well educated international work<strong>for</strong>ce, but also in the closeness<br />
and reactivity <strong>of</strong> its government and administrations, straight<strong>for</strong>ward<br />
and flexible <strong>financial</strong> and fiscal regulation, multilingual environment,<br />
and high quality <strong>of</strong> life <strong>for</strong> our employees.”<br />
Lakshmi N. Mittal<br />
Chairman and Chief Executive Officer, ArcelorMittal<br />
“BBH has its largest international <strong>of</strong>fice in <strong>Luxembourg</strong> and<br />
it is a center <strong>of</strong> excellence <strong>for</strong> our Investor Services business.<br />
<strong>The</strong> combination <strong>of</strong> language capabilities and favourable business climate<br />
make this central European location ideal <strong>for</strong> growing any franchise.”<br />
Susan Livingston<br />
BBH and Co. Partner, Fund and Asset Management Division, Chairman BBH (<strong>Luxembourg</strong>) SA<br />
and Honorary Consul General to <strong>Luxembourg</strong> <strong>for</strong> Massachusetts.<br />
Cover photo: Mudam <strong>Luxembourg</strong>,<br />
Musée d’Art Moderne Grand-Duc Jean,<br />
I.M. Pei, Architect Design.<br />
Photo: Christian Aschman
table <strong>of</strong> contents<br />
I. Contacts 4<br />
II. Sights on <strong>Luxembourg</strong> 6<br />
III. A Business-Friendly Environment 8<br />
Financial and Political Stability 8<br />
1. Financial and Fiscal Stability 8<br />
2. Political Stability 8<br />
3. Country Risk<br />
Tax 11<br />
1. Personal Income Tax 11<br />
2. Tax on Companies 11<br />
3. Value Added Tax (VAT) – Application <strong>of</strong> the EU VAT Package 11<br />
4. Double Taxation Treaties 11<br />
Business Infrastructure 12<br />
1. <strong>Luxembourg</strong> government access and support 12<br />
2. Office Space 13<br />
3. Transport 13<br />
4. Telecommunications and Internet 14<br />
Immigration 15<br />
1. Entry and residence requirements <strong>for</strong> EU, EEA and Swiss nationals<br />
and their family members 15<br />
2. Entry and residence requirements <strong>for</strong> non-European nationals 15<br />
Labour, Healthcare and Pensions 17<br />
1. Labour Market 17<br />
2. Healthcare 17<br />
3. Pensions 17<br />
IV. High Standard <strong>of</strong> Living 19<br />
A Cosmopolitan Environment 19<br />
Standard <strong>of</strong> Living 19<br />
UNESCO World Heritage 22<br />
V. Focus on the <strong>Luxembourg</strong> Fund Industry 23<br />
<strong>Luxembourg</strong> Financial Sector 23<br />
Investment Funds in <strong>Luxembourg</strong> 23<br />
Association <strong>of</strong> the <strong>Luxembourg</strong> Fund Industry 24<br />
VI. A great place to live and work 27<br />
3
I. contacts<br />
ALFI (Association <strong>of</strong> the<br />
<strong>Luxembourg</strong> Fund Industry)<br />
François Drazdik /<br />
Pierre Oberlé<br />
59, boulevard Royal<br />
L-2449 <strong>Luxembourg</strong><br />
Tel: +352 22 30 26 1<br />
Fax: +352 22 30 93<br />
info@alfi.lu<br />
www.alfi.lu<br />
Ministry <strong>of</strong> Economy and Foreign Trade<br />
(Ministère de l’Economie et du Commerce<br />
Extérieur)<br />
Mr Jean-Claude Knebeler / Mr Loïc Bertoli<br />
19-21, boulevard Royal<br />
L-2449 <strong>Luxembourg</strong><br />
Tel: (+352) 24 78 24 78<br />
Fax: (+352) 46 04 48<br />
info@eco.public.lu<br />
Ministry <strong>of</strong> Foreign Affairs –<br />
Immigration Directorate<br />
(Ministère des Affaires Etrangères –<br />
Direction de l’Immigration)<br />
B.P. 752<br />
L-2017 <strong>Luxembourg</strong><br />
Tel: (+352) 24 78 40 40<br />
Fax: (+352) 22 16 08<br />
www.mae.lu<br />
Financial Sector Supervisory Authority<br />
(Commission de Surveillance du Secteur<br />
Financier – CSSF)<br />
Ms Danièle Berna-Ost<br />
110, route d’Arlon<br />
L-2991 <strong>Luxembourg</strong><br />
Tel: (+352) 26 25 1 1<br />
Fax: (+352) 26 25 1 601<br />
direction@cssf.lu<br />
www.cssf.lu<br />
Insurance Sector Supervisory Authority<br />
(Commissariat aux Assurances)<br />
7, boulevard Royal<br />
L-2449 <strong>Luxembourg</strong><br />
Tel: (+352) 22 69 11 1<br />
Fax: (+352) 22 69 10<br />
commassu@commassu.lu<br />
www.commassu.lu<br />
4
<strong>Luxembourg</strong> Stock Exchange<br />
(Bourse de <strong>Luxembourg</strong>)<br />
Mr Hubert Grignon Dumoulin<br />
11, avenue de la Porte-Neuve<br />
L-2227 <strong>Luxembourg</strong><br />
B.P. 165<br />
Tel: (+352) 47 79 36 1<br />
Fax: (+352) 47 32 98<br />
info@bourse.lu<br />
www.bourse.lu<br />
<strong>Luxembourg</strong> <strong>for</strong> Finance<br />
Mr Jean-Jacques Picard<br />
59, boulevard Royal<br />
L-2019 <strong>Luxembourg</strong><br />
Tel: (+352) 27 20 21 1<br />
Fax: (+352) 27 20 21 399<br />
www.lff.lu<br />
Chamber <strong>of</strong> Commerce<br />
(Chambre de Commerce)<br />
International Department<br />
L-2981 <strong>Luxembourg</strong><br />
Tel: (+352) 42 39 39 1<br />
Fax: (+352) 43 83 26<br />
international@cc.lu<br />
www.cc.lu<br />
Institut de Formation Bancaire <strong>Luxembourg</strong><br />
(IFBL)<br />
Customer Service<br />
L-1615 <strong>Luxembourg</strong><br />
Tel: (+352) 46 50 16 1<br />
Fax: (+352) 46 50 19<br />
customer@ifbl.lu<br />
www.ifbl.lu<br />
Insurance Companies Association<br />
(Association des Compagnies d’Assurances)<br />
B.P. 29<br />
L-8005 Bertrange<br />
75, rue de Mamer<br />
L-8081 Bertrange<br />
Tel: (+352) 44 21 44 1<br />
Fax: (+352) 44 02 89<br />
aca@aca.lu<br />
www.aca.lu<br />
<strong>Luxembourg</strong> <strong>for</strong> Business<br />
19-21, boulevard Royal<br />
L- 2449 <strong>Luxembourg</strong>,<br />
Grand Duchy <strong>of</strong> <strong>Luxembourg</strong><br />
Tel: (+352) 24 78 41 16<br />
Fax: (+352) 22 34 85<br />
info@luxembourg<strong>for</strong>business.lu<br />
<strong>The</strong> <strong>Luxembourg</strong> Bankers’ Association<br />
(Association des Banques et Banquiers<br />
<strong>Luxembourg</strong> – ABBL)<br />
Mr Philippe von Restorff<br />
59, boulevard Royal<br />
L-2449 <strong>Luxembourg</strong><br />
B.P. 13<br />
L-2010 <strong>Luxembourg</strong><br />
Tel: (+352) 46 36 601<br />
Fax: (+352) 46 09 21<br />
mail@abbl.lu<br />
www.abbl.lu<br />
Fondation de <strong>Luxembourg</strong><br />
Mrs. Tonika Hirdman<br />
59, boulevard Royal<br />
L-2449 <strong>Luxembourg</strong><br />
Tel: (+352) 27 47 48 1<br />
Fax: (+352) 47 48 279<br />
secr@fdlux.lu<br />
www.fdlux.lu<br />
5
II. sights on luxembourg<br />
<strong>The</strong> Grand Duchy <strong>of</strong> <strong>Luxembourg</strong> <strong>of</strong>fers a<br />
cosmopolitan, multicultural and international<br />
business environment in the heart <strong>of</strong> Europe.<br />
Newsweek ranked <strong>Luxembourg</strong> as the 5th best<br />
country in the world in its first-ever ranking, on the<br />
basis <strong>of</strong> education, health, quality <strong>of</strong> life, economic<br />
competitiveness and political environment. 1<br />
Our resident population <strong>of</strong> over 500,000 includes<br />
a large number <strong>of</strong> people from other countries –<br />
a full 40% <strong>of</strong> the total population, representing<br />
no fewer than 173 nationalities. In addition, every<br />
day more than 140,000 people cross the borders<br />
<strong>of</strong> neighbouring France, Germany and Belgium<br />
to work in <strong>Luxembourg</strong>. <strong>Luxembourg</strong> has three<br />
<strong>of</strong>ficial languages – <strong>Luxembourg</strong>ish, French and<br />
German – but English is widely spoken, as are<br />
many other languages such as Portuguese,<br />
Italian and Spanish.<br />
Competitive advantages including our international<br />
reputation, tax efficiency and businessoriented<br />
environment have attracted <strong>financial</strong><br />
institutions and pr<strong>of</strong>essionals from all over the<br />
world. Today, <strong>Luxembourg</strong> hosts nearly<br />
150 banks and is the world’s second largest<br />
investment-fund centre after the United States,<br />
with fund assets under management totalling<br />
over EUR 2 trillion at 30 June 2010. We are<br />
also the leading centre <strong>for</strong> cross-border fund<br />
registrations, with UCITS funds registered <strong>for</strong><br />
distribution in over 50 countries worldwide.<br />
Photo: Olivier Minaire<br />
1<br />
Source: Newsweek, “<strong>The</strong> Best Countries in the World”, August 23 & 30, 2010
<strong>Luxembourg</strong> is conveniently located at the<br />
crossroads <strong>of</strong> European motorway and rail<br />
networks, and our attractive, modern airport<br />
<strong>of</strong>fers easy connections to destinations across<br />
Europe and around the world.<br />
We are a founding member <strong>of</strong> a large number <strong>of</strong><br />
European and international organisations, among<br />
them the European Union, the United Nations,<br />
the Council <strong>of</strong> Europe, the Organisation <strong>for</strong><br />
Economic Cooperation and Development<br />
(OECD) and NATO. <strong>Luxembourg</strong> also hosts<br />
the headquarters <strong>of</strong> European Union institutions<br />
such as the European Court <strong>of</strong> Justice,<br />
the European Parliament and the European<br />
Investment Bank.<br />
Last but not least, <strong>Luxembourg</strong> has a long<br />
history <strong>of</strong> welcoming people from other<br />
countries, with a strong economy ensuring a<br />
high standard <strong>of</strong> living. Following the industrialisation<br />
<strong>of</strong> the mining basin in the early<br />
20th century, which attracted thousands <strong>of</strong><br />
<strong>for</strong>eign workers, the 1980s saw a successful<br />
transition to new areas <strong>of</strong> activity, leading to<br />
the development <strong>of</strong> what is now one <strong>of</strong> the<br />
world’s most important <strong>financial</strong> centres.<br />
Combining innovative flair and pr<strong>of</strong>essional<br />
expertise, <strong>Luxembourg</strong> is the ideal location to<br />
set up or expand your business in the <strong>financial</strong><br />
sector.
III. a business friendly environment<br />
Financial and<br />
Political Stability<br />
3. Country Risk<br />
1. Financial and Fiscal Stability<br />
Indices. 3<br />
<strong>Luxembourg</strong> is a highly stable EU Member<br />
State with sound public finances, relatively<br />
low government debt and low public deficits,<br />
which are the best guarantee <strong>of</strong> fiscal stability.<br />
According to Fitch Ratings, <strong>Luxembourg</strong>’s<br />
current public finances place it among the<br />
strongest <strong>of</strong> all triple-A rated sovereign issuers. 1<br />
Standard & Poor’s summarizes the economic<br />
strengths <strong>of</strong> <strong>Luxembourg</strong> as follows: 2<br />
Pronounced political stability and a consensus<br />
on prudent management <strong>of</strong> public finances.<br />
Strong, albeit gradually weakening public<br />
sector balance sheet, with the general<br />
government in a net asset position.<br />
Very high levels <strong>of</strong> wealth.<br />
2. Political Stability<br />
<strong>Luxembourg</strong> is a parliamentary representative<br />
democracy with a constitutional monarch and<br />
a stable government. It is a founding member<br />
<strong>of</strong> the EU, NATO, the OECD, the United<br />
Nations and the Benelux Union, reflecting<br />
a political consensus in favour <strong>of</strong> economic,<br />
political, and military integration.<br />
According to Fitch Ratings, <strong>Luxembourg</strong> is<br />
among the leaders on measures <strong>of</strong> development<br />
and governance, with the highest per-capita<br />
GDP and one <strong>of</strong> the top rankings in Human<br />
Development and Corruption Perceptions<br />
Country risk (also known as political risk)<br />
refers to the risk <strong>of</strong> investing in a country,<br />
associated with the possibility <strong>of</strong> changes in the<br />
local business environment adversely affecting<br />
operating pr<strong>of</strong>its or the value <strong>of</strong> assets.<br />
Financial factors such as currency controls,<br />
devaluation and regulatory changes entail<br />
operational risks, as do security factors such<br />
as riots, civil war and other disturbances.<br />
In a recent country-risk survey published by<br />
Euromoney, <strong>Luxembourg</strong> topped the list <strong>of</strong> the<br />
world’s least risky countries with a score <strong>of</strong><br />
99.88 out <strong>of</strong> 100. 4<br />
1<br />
Source: Fitch Ratings Ltd., Credit Analysis, <strong>Luxembourg</strong>, 2009.<br />
2<br />
Source: Standard & Poor’s, Ratings Direct, 2009, <strong>Luxembourg</strong>.<br />
3<br />
Source: Fitch Ratings Ltd., Credit Analysis, <strong>Luxembourg</strong>, 2009.<br />
4<br />
Source: Euromoney Online, Country Risk Survey, 2009.<br />
8
EU institutions and agencies headquartered in <strong>Luxembourg</strong> include the EU Court <strong>of</strong> Justice, the<br />
European Investment Bank, the European Parliament and Secretariat <strong>of</strong> the European Commission.<br />
More in<strong>for</strong>mation is available on the homepage <strong>of</strong> the Central Service <strong>for</strong> Statistics and<br />
Economic Studies (STATEC – www.statec.lu).<br />
<strong>Luxembourg</strong>’s gross domestic product (GDP) per capita compared within other eurozone<br />
countries and the United Kingdom. 1<br />
Government Debt and Deficits in the eurozone and the United Kingdom 2<br />
1<br />
Source: European Commission, Eurostat, 2009.<br />
2<br />
Source: European Commission, Eurostat, 2009.<br />
9
Source: Eurostat<br />
Investment Agreements<br />
Within the framework <strong>of</strong> the Economic Union between <strong>Luxembourg</strong> and Belgium<br />
(Union économique Belgo-<strong>Luxembourg</strong>eoise or UEBL), <strong>Luxembourg</strong> has signed agreements<br />
to promote and mutually protect investments in and from a number <strong>of</strong> third countries.<br />
<strong>The</strong> aim is to consolidate investment flows and <strong>of</strong>fer investors maximum protection with<br />
provisions <strong>for</strong> adequate compensation in the event <strong>of</strong> nationalizations, free movement<br />
<strong>of</strong> capital and most-favoured nation status to ensure equal treatment <strong>of</strong> investors.<br />
<strong>The</strong> agreements also provide an extensive legal framework <strong>for</strong> the settlement <strong>of</strong> disputes<br />
relating to investments.<br />
To date, UEBL has signed agreements with more than 50 countries.<br />
10
Tax<br />
1. Personal Income Tax<br />
Personal taxation and social-security regimes<br />
<strong>for</strong> people working in <strong>Luxembourg</strong> are very<br />
competitive compared with those in other<br />
European countries. <strong>The</strong> marginal tax rate at<br />
30 June 2010 was 38.95% and social-security<br />
contributions are largely capped.<br />
For further in<strong>for</strong>mation, visit the website<br />
<strong>of</strong> the <strong>Luxembourg</strong> Direct Tax Authorities<br />
www.impotsdirects.public.lu<br />
<strong>Luxembourg</strong> paying agents withhold tax on<br />
interest income at a flat rate <strong>of</strong> 10%.<br />
2. Tax on Companies<br />
Over recent years <strong>Luxembourg</strong> has attracted<br />
a number <strong>of</strong> large international companies<br />
and <strong>financial</strong> institutions, reflecting the appeal<br />
<strong>of</strong> its infrastructure, its multicultural work<strong>for</strong>ce,<br />
competitive taxation and business-friendly<br />
environment. Company taxation includes<br />
corporate pr<strong>of</strong>it tax, valued added (sales) tax<br />
and social security contributions <strong>for</strong> employees.<br />
3. Value Added Tax (VAT) –<br />
Application <strong>of</strong> the EU VAT Package<br />
<strong>Luxembourg</strong> VAT rates are currently the<br />
lowest in the EU, which has encouraged<br />
e-businesses to move their European operations<br />
to <strong>Luxembourg</strong> to gain an edge in pricing.<br />
For further in<strong>for</strong>mation, please consult the<br />
website <strong>of</strong> the <strong>Luxembourg</strong> Indirect Tax<br />
Authorities: www.aed.public.lu<br />
4. Double Taxation Treaties<br />
<strong>Luxembourg</strong> has signed, and continues to sign<br />
and apply, a large number <strong>of</strong> treaties with EU<br />
and non-EU countries to avoid double taxation<br />
<strong>of</strong> individuals and companies resident <strong>for</strong> tax<br />
in another country.<br />
<strong>The</strong> complete list <strong>of</strong> the double taxation<br />
treaties signed by the <strong>Luxembourg</strong> government<br />
is available at www.impotsdirects.public.lu<br />
<strong>Luxembourg</strong> tax authorities are also available<br />
<strong>for</strong> consultations on demand with investors.<br />
Labour Costs<br />
2008 annual gross salary <strong>of</strong> €100,000 – Married / 2 children<br />
Switzerland <strong>Luxembourg</strong> Ireland UK Germany Netherlands France Belgium<br />
Total cost <strong>for</strong><br />
employers<br />
106 111 111 110 111 107 149 132<br />
Minus tax/social<br />
security employers<br />
6 11 11 10 11 7 49 32<br />
Gross salary (t=100) 100 100 100 100 100 100 100 100<br />
Minus tax/social<br />
security employees<br />
25 28 30 33 35 43 29 48<br />
Net employees 75 72 70 67 65 57 71 52<br />
Ratio Net Cost (%) 71 64 63 61 59 53 48 39<br />
Source: ALFI, <strong>Luxembourg</strong> Where Else, 2010<br />
11
Business Infrastructure 1. <strong>Luxembourg</strong> government access<br />
and support<br />
<strong>The</strong> <strong>Luxembourg</strong> government has consistently<br />
pursued pro-active economic development<br />
policies. Easy access to decision-makers such as<br />
cabinet members and senior civil servants is a key<br />
pillar <strong>of</strong> growth in the <strong>Luxembourg</strong> economy.<br />
<strong>Luxembourg</strong>’s international network <strong>of</strong> trade<br />
and investment <strong>of</strong>fices promotes its place as a<br />
premium location <strong>for</strong> companies and <strong>financial</strong><br />
institutions eager to expand into Europe. Its<br />
business-friendly environment has attracted the<br />
European headquarters <strong>of</strong> many global companies,<br />
among them Amazon, eBay, DuPont<br />
Teijin Films, Fanuc (robotics and CNC),<br />
Goodyear, Guardian and Rakuten. <strong>The</strong>re are also<br />
a number <strong>of</strong> multinational companies with global<br />
headquarters in <strong>Luxembourg</strong>, among them<br />
ArcelorMittal, SES, Delphi (powertrain systems)<br />
and Cargolux. Legislation is in many cases drawn<br />
up in consultation with the industries concerned.<br />
This applies in particular to the <strong>financial</strong> sector in<br />
areas such as investor protection and prevention<br />
<strong>of</strong> money laundering.<br />
Photo: Olivier Minaire<br />
12
2. Office Space<br />
Steady growth in demand <strong>for</strong> <strong>of</strong>fice space has<br />
spurred construction and many high-quality<br />
buildings are now available, including new<br />
<strong>of</strong>fices featuring state-<strong>of</strong>-the-art equipment and<br />
energy-efficient, environment-friendly design.<br />
3. Transport<br />
<strong>Luxembourg</strong> has efficient road, rail and air<br />
transport facilities and <strong>services</strong>. <strong>The</strong> road<br />
network has been significantly upgraded in<br />
recent years with 147 km <strong>of</strong> motorways<br />
connecting the capital to three major European<br />
cities: Paris, Brussels and Frankfurt. With the<br />
advent <strong>of</strong> high-speed rail (TGV) <strong>services</strong> in 2007,<br />
<strong>Luxembourg</strong> is only 2 hours and 15 minutes<br />
from Paris.<br />
<strong>Luxembourg</strong> city airport <strong>of</strong>fers flights to over<br />
50 European cities. Several flights a day serve<br />
Europe’s major business centres and cities<br />
such as London, Frankfurt, Paris, Zurich,<br />
Amsterdam and Berlin.<br />
13
III. a business friendly environment<br />
4. Telecommunications and Internet<br />
<strong>The</strong> telecommunications industry in<br />
<strong>Luxembourg</strong> is deregulated and extensive<br />
deployment <strong>of</strong> electronic networks has allowed<br />
healthy competition between operators,<br />
with modern fibre optic and cable connections<br />
available throughout the country.<br />
A central position in Europe, a stable<br />
economy and low taxes make <strong>Luxembourg</strong><br />
the ideal gateway to European telecommunications<br />
markets. Several providers connect<br />
<strong>Luxembourg</strong> to major European data hubs<br />
and over 10 regulated data centre operators<br />
are based in <strong>Luxembourg</strong>.<br />
Internet Data Interchange – Top Ten<br />
<strong>Luxembourg</strong> ranks 2nd worldwide in the<br />
International Telecommunications Union ICT<br />
Development Index and 8th in the Global<br />
Broadband Quality Study 2009 by the<br />
University <strong>of</strong> Ox<strong>for</strong>d and the University<br />
<strong>of</strong> Oviedo. 1<br />
1<br />
Source: ITU, Global Report, 2009<br />
14
Immigration<br />
<strong>The</strong> new immigration law that came into<br />
<strong>for</strong>ce in 2008 significantly simplified procedures<br />
with regard to entry, residence and<br />
working requirements <strong>for</strong> non-nationals in<br />
<strong>Luxembourg</strong>.<br />
Entry and residence requirements <strong>for</strong> citizens<br />
<strong>of</strong> the European Union (EU), the European<br />
Economic Area (EEA) and Switzerland (1)<br />
differ from those <strong>for</strong> citizens <strong>of</strong> other countries<br />
(2).<br />
1. Entry and residence requirements <strong>for</strong><br />
EU, EEA and Swiss nationals and their<br />
family members<br />
EU, EEA and Swiss nationals are allowed to<br />
enter and stay in <strong>Luxembourg</strong> <strong>for</strong> a period<br />
<strong>of</strong> up to three months on simple presentation<br />
<strong>of</strong> a national identity card or valid passport.<br />
Any <strong>of</strong> their family members who are not EU<br />
nationals have the right to enter and stay <strong>for</strong><br />
a period <strong>of</strong> up to three months on presentation<br />
<strong>of</strong> a valid passport and visa where required.<br />
EU, EEA and Swiss nationals can stay <strong>for</strong><br />
more than three months if they can show that<br />
they are self-employed or employed, students,<br />
or provide evidence <strong>of</strong> sufficient resources <strong>for</strong><br />
themselves and their family members as well<br />
as <strong>of</strong> adequate health insurance. <strong>The</strong>y must<br />
register at the local town hall within three<br />
months <strong>of</strong> their arrival in <strong>Luxembourg</strong> and are<br />
immediately issued with a document confirming<br />
registration.<br />
Family members <strong>of</strong> EU, EEA and Swiss nationals<br />
who are not EU nationals must apply <strong>for</strong> a<br />
residence card at the local town hall. <strong>The</strong> card<br />
is issued by the Immigration Directorate <strong>of</strong> the<br />
Ministry <strong>of</strong> Foreign Affairs.<br />
EU, EEA and Swiss nationals as well as any <strong>of</strong><br />
their family members who are non-EU nationals<br />
have free access to the labour market.<br />
However, the restrictions provided <strong>for</strong> in the<br />
Accession Treaty mean that nationals <strong>of</strong><br />
Bulgaria and Romania, as well as any family<br />
members who are third-country nationals, still<br />
need to obtain a work permit during the first<br />
year after accessing labour market.<br />
2. Entry and residence requirements <strong>for</strong><br />
non-European nationals<br />
2.1. Entry<br />
Non-EU nationals entering <strong>Luxembourg</strong><br />
must meet the conditions defined in the rules<br />
governing the Schengen Area.<br />
<strong>The</strong> Schengen Area comprises 25 EU Member<br />
States, 1 Switzerland, Norway and Iceland. Ireland<br />
and the United Kingdom are currently the only<br />
EU Member States to have negotiated an opt-out.<br />
<strong>The</strong> Schengen Area operates very much like a<br />
single country <strong>for</strong> international travel purposes,<br />
with border controls <strong>for</strong> people coming<br />
in and out, but no internal border controls.<br />
Non-EU nationals must have a valid passport<br />
and, in some cases, a visa. A complete list <strong>of</strong><br />
the countries whose citizens need a visa may<br />
be found on the website <strong>of</strong> the Ministry <strong>of</strong><br />
Foreign Affairs (www.mae.lu), together with<br />
in<strong>for</strong>mation about required documents.<br />
Non-EU nationals may be refused entry on the<br />
grounds <strong>of</strong> records in the Schengen In<strong>for</strong>mation<br />
System (SIS), if they have previously been<br />
refused entry or if they are a threat to public<br />
security or health. <strong>The</strong>y must show the reasons<br />
<strong>for</strong> their visit and evidence <strong>of</strong> sufficient<br />
resources <strong>for</strong> their stay and return, as well as<br />
<strong>of</strong> adequate health insurance.<br />
<strong>The</strong>se conditions apply regardless <strong>of</strong> the length<br />
<strong>of</strong> their stay.<br />
1<br />
Bulgaria, Cyprus, and Romania have not yet implemented the Schengen Agreement into national law, but are required<br />
to do so.<br />
15
2.2. Staying <strong>for</strong> less than three months<br />
Non-EU nationals staying in <strong>Luxembourg</strong> <strong>for</strong><br />
less than three months must meet the entry<br />
conditions outlined above. Within three days<br />
<strong>of</strong> their arrival in <strong>Luxembourg</strong>, they must<br />
declare themselves at the town hall <strong>of</strong> the place<br />
they plan to live or at the hotel where they are<br />
staying.<br />
Non-EU nationals staying in <strong>Luxembourg</strong> <strong>for</strong><br />
less than three months are in general not<br />
entitled to work unless they have a permit.<br />
However, this is not required <strong>for</strong> periods<br />
<strong>of</strong> less than three months in some cases,<br />
such as where the purpose is to visit business<br />
partners, develop contacts, negotiate contracts<br />
or to attend trade fairs or board meetings.<br />
2.3 Staying <strong>for</strong> more than three months<br />
Non-EU nationals wishing to stay in <strong>Luxembourg</strong><br />
<strong>for</strong> more than three months must apply to the<br />
Immigration Directorate <strong>of</strong> the Ministry <strong>of</strong><br />
Foreign Affairs <strong>for</strong> an authorisation to stay<br />
(be<strong>for</strong>e entering the country) and fulfil conditions<br />
<strong>for</strong> one <strong>of</strong> the types <strong>of</strong> authorisation<br />
provided <strong>for</strong> by law. <strong>The</strong>se concern salaried<br />
employees (including sub-categories such<br />
as transferred and highly skilled workers),<br />
independent/self-employed pr<strong>of</strong>essionals,<br />
sports people, school and university students,<br />
trainees and volunteers, researchers and family<br />
members, with provision also made <strong>for</strong><br />
personal and exceptional reasons as well<br />
as long-term residence.<br />
On receiving authorisation to stay, applicants<br />
who do not need a visa must enter <strong>Luxembourg</strong><br />
within 90 days and those that do require a visa<br />
must apply <strong>for</strong> one within 90 days.<br />
When they arrive in <strong>Luxembourg</strong>, they must<br />
apply <strong>for</strong> a residence permit, a procedure<br />
involving in particular registration at the town<br />
hall and a medical examination.<br />
Recent changes to immigration law did away<br />
with the separate work permit previously<br />
required <strong>for</strong> non-European nationals wishing<br />
to work in <strong>Luxembourg</strong>. Non-EU nationals<br />
with a residence permit can travel inside the<br />
Schengen Area <strong>for</strong> three months out <strong>of</strong> every<br />
six, but do not have free access to the labour<br />
markets <strong>of</strong> other Schengen member states.<br />
<strong>The</strong> family members <strong>of</strong> a resident may also<br />
apply <strong>for</strong> residence permits (family reunification)<br />
provided that the resident previously<br />
obtained a residence permit valid <strong>for</strong> at least<br />
one year, has resided in <strong>Luxembourg</strong> <strong>for</strong> at<br />
least 12 months and will be eligible to apply<br />
<strong>for</strong> a permanent residence permit in the near<br />
future.<br />
<strong>The</strong>se conditions do not apply to residents<br />
who have obtained residence permits as highly<br />
skilled workers, which require a minimum<br />
<strong>of</strong> five years <strong>of</strong> higher education or specialised<br />
pr<strong>of</strong>essional experience, as researchers<br />
or as transferred employees. If the resident<br />
is a single parent, his or her children are also<br />
exempted.<br />
Family members who may apply <strong>for</strong> an<br />
authorisation to stay include, among others,<br />
spouses, civil partners (in cases where such<br />
partnerships are legally recognized) and<br />
unmarried children under 18 years <strong>of</strong> age.<br />
For further in<strong>for</strong>mation, please visit the<br />
following websites:<br />
Ministry <strong>of</strong> Foreign Affairs (www.mae.lu)<br />
Citizens Advice Bureau in <strong>Luxembourg</strong><br />
City – Bierger Center (www.vdl.lu)<br />
Citizens Advice Bureau in Esch-sur-Alzette –<br />
Bierger Center (www.esch.lu)<br />
<strong>The</strong> Law <strong>of</strong> 29 August 2008 on Freedom<br />
<strong>of</strong> Movement and Immigration, available<br />
at www.legilux.lu<br />
<strong>The</strong> online portal De Guichet <strong>of</strong>fers a<br />
one-stop service <strong>for</strong> citizens and companies to<br />
carry out administrative <strong>for</strong>malities (procedures,<br />
online <strong>for</strong>ms, downloadable <strong>for</strong>ms and<br />
advice). Accessible at www.guichet.lu<br />
16
Labour, Healthcare<br />
and Pensions<br />
1. Labour Market<br />
<strong>The</strong> Grand Duchy’s demographics are reflected<br />
in labour-market structures, with people from<br />
other countries accounting <strong>for</strong> more than<br />
70% <strong>of</strong> the working population. Immigrants<br />
(<strong>for</strong>eign residents) make up part <strong>of</strong> this total,<br />
while commuters from neighbouring countries<br />
also represent a large proportion. Benefiting<br />
from its central geographical position,<br />
<strong>Luxembourg</strong> has been able to round out its<br />
multilingual work<strong>for</strong>ce with personnel from<br />
the UK, Ireland, Belgium, France, Germany<br />
and other countries, who together make up a<br />
dynamic expatriate community.<br />
<strong>The</strong> <strong>financial</strong> sector employs over 42,000 people,<br />
not counting the employees <strong>of</strong> service providers<br />
such as auditors and lawyers.<br />
2. Healthcare<br />
In <strong>Luxembourg</strong>, all workers are automatically<br />
covered by one <strong>of</strong> the country’s health insurance<br />
funds. Depending on the nature <strong>of</strong> the<br />
treatment, this covers between 80 and 100%<br />
<strong>of</strong> the fees charged by doctors and dentists.<br />
All doctors operate within the framework <strong>of</strong><br />
the national healthcare system and must charge<br />
regulated fees to patients holding a European<br />
health insurance card or an equivalent certificate<br />
<strong>of</strong> insurance.<br />
Patients generally pay medical fees and then<br />
apply <strong>for</strong> reimbursement at a health insurance<br />
centre, presenting the doctor’s bill and pro<strong>of</strong><br />
<strong>of</strong> payment.<br />
Health insurance also covers children and<br />
spouses / partners.<br />
3. Pensions<br />
<strong>Luxembourg</strong> has a three-pillar pension system:<br />
<strong>The</strong> state pension system applies to all persons<br />
working in <strong>Luxembourg</strong>. In addition, there<br />
are several types <strong>of</strong> occupational retirement<br />
vehicles, such as complementary pension<br />
schemes set up by an employer. Finally,<br />
individual pension vehicles are available and<br />
benefit from a special tax regime.<br />
<strong>The</strong> legal retirement age in <strong>Luxembourg</strong> is 65,<br />
although employees can – subject to certain<br />
conditions – qualify <strong>for</strong> an early pension at the<br />
age <strong>of</strong> 57. In principle, an employee must have<br />
been registered with the <strong>Luxembourg</strong> social<br />
security authority <strong>for</strong> at least 120 months to<br />
receive his or her full old-age pension.<br />
For employees who are citizens <strong>of</strong> EU and<br />
EEA member countries (the latter including<br />
Liechtenstein, Iceland, and Norway), as well<br />
as <strong>for</strong> Swiss nationals, the <strong>Luxembourg</strong> social<br />
security authority in principle accepts the<br />
insurance periods to which an employee is<br />
entitled under <strong>for</strong>eign legal provisions. Note<br />
that this is not applicable to non EU-nationals<br />
unless <strong>Luxembourg</strong> has signed bilateral conventions<br />
with a third country (“treaty country”)<br />
providing <strong>for</strong> specific provisions in this respect.<br />
Both employers and employees contribute 8%<br />
into the state pension fund. <strong>The</strong> employee’s<br />
share is deducted from his or her monthly gross<br />
salary.<br />
<strong>Luxembourg</strong> pensions are calculated on the basis<br />
<strong>of</strong> a 40-year pay-in period. For each year beneath<br />
this 40-year minimum, 1/40 <strong>of</strong> the minimum<br />
pension is deducted. Employees can also choose<br />
to participate in an optional state pension fund.<br />
<strong>Luxembourg</strong> will also pay out the <strong>Luxembourg</strong><br />
state pension to a retiree residing in another<br />
country without any reduction, modification<br />
or suspension <strong>of</strong> the amount <strong>of</strong> the pension,<br />
depending on the individual case.<br />
For further in<strong>for</strong>mation, please contact<br />
www.cnap.lu, the national pension insurance<br />
administration.<br />
17
Current social security contribution rates (as at 1st July 2010)<br />
Insurance<br />
Max. liable <strong>for</strong> contribution<br />
Categories per year per month Employee’s part Employer’s part<br />
Health Insurance – Rate CNS<br />
Health (rate on salary) € 102,226.98 € 8,624.04 2.95% 2.95%<br />
Health (rate on bonus) 2.70% 2.70%<br />
Health Care – Contribution<br />
Rate Mutual Insurance 1 € 102,226.98 € 8,624.04 2.1% 2 0.88% to 2.01% 1<br />
Pension € 102,226.98 € 8,624.04 8.00% 8.00%<br />
Care insurance / / 1.40% /<br />
Health at work € 102,226.98 € 8,624.04 / 0.11%<br />
Accidents:<br />
rates ranging from ... to ...<br />
€ 102,226.98 € 8,624.04 / 0.45% to 6.00%<br />
Total (without costs <strong>for</strong> sickness insurance on gratification) 12.35% to 14.45% 12.39% to 19.07%<br />
1<br />
<strong>The</strong> contribution rate <strong>for</strong> Mutual Insurance depends on the risk class to which the employer belongs to and which<br />
depends on the rate <strong>of</strong> <strong>financial</strong> absenteeism <strong>of</strong> wage-earners in the company:<br />
rate <strong>of</strong> <strong>financial</strong><br />
absenteeism<br />
0% to <<br />
0.75%<br />
0.75% to <<br />
1.75%<br />
1.75% to <<br />
2.75%<br />
>_ 2.75%<br />
contribution rate 0.88% 1.36% 1.77% 2.01%<br />
<strong>The</strong> contribution rate in the amount <strong>of</strong> 2.1%<br />
which is to be paid by “blue collar” workers, is<br />
an extra premium.<br />
It will be deducted from the salaries <strong>of</strong><br />
“blue collar” workers.<br />
2<br />
This percentage is not applicable to “white collar” workers.<br />
18
IV. high standard <strong>of</strong> living<br />
A Cosmopolitan<br />
Environment<br />
A defining characteristic <strong>of</strong> the Grand-Duchy<br />
<strong>of</strong> <strong>Luxembourg</strong> is the diversity <strong>of</strong> its people<br />
and the ease <strong>of</strong> integration into the community.<br />
<strong>Luxembourg</strong> has witnessed strong population<br />
growth since the end <strong>of</strong> the 19th century, with a<br />
steady inflow <strong>of</strong> immigrants boosting the number<br />
<strong>of</strong> inhabitants from around 200,000 in 1900 to<br />
502,066 today. 1<br />
With nearly 43% <strong>of</strong> the population born in<br />
other countries, there are 200,000 <strong>for</strong>eign<br />
residents out <strong>of</strong> a total population <strong>of</strong> half a<br />
million. In <strong>Luxembourg</strong> City, the percentage<br />
<strong>of</strong> <strong>for</strong>eign residents is nearly 64%. People from<br />
more than 170 countries live together in<br />
<strong>Luxembourg</strong>; main <strong>for</strong>eign communities are<br />
the Portuguese and French, followed by<br />
Italians, Belgians and Germans.<br />
<strong>The</strong> high proportion <strong>of</strong> <strong>for</strong>eign residents has not<br />
led to any intercultural tension, testifying to the<br />
success <strong>of</strong> <strong>Luxembourg</strong>’s model <strong>for</strong> integration.<br />
<strong>Luxembourg</strong> is a trilingual country with German,<br />
French and <strong>Luxembourg</strong>ish all <strong>of</strong>ficial languages.<br />
English is also widely spoken and is taught in<br />
<strong>Luxembourg</strong> schools from an early age.<br />
Standard <strong>of</strong> Living<br />
<strong>The</strong> Grand Duchy <strong>of</strong> <strong>Luxembourg</strong> enjoys one<br />
<strong>of</strong> the highest standards <strong>of</strong> living in the world.<br />
1. Schools and Childcare<br />
Primary and Secondary Schools<br />
<strong>Luxembourg</strong> <strong>of</strong>fers free education and requires<br />
two years <strong>of</strong> preschool, six years <strong>of</strong> primary<br />
school and seven years <strong>of</strong> secondary school. Any<br />
child reaching the age <strong>of</strong> six be<strong>for</strong>e 1 September<br />
must begin primary school that year.<br />
<strong>Luxembourg</strong>’s state secondary schools teach<br />
traditional subjects that prepare students <strong>for</strong><br />
higher education. Secondary school lasts seven<br />
years and includes three years <strong>of</strong> specialisation.<br />
International Schools in <strong>Luxembourg</strong><br />
<strong>The</strong> International School <strong>of</strong> <strong>Luxembourg</strong> (ISL)<br />
provides teaching in English <strong>for</strong> students ranging<br />
in age from 3 to 18 (www.islux.lu).<br />
<strong>The</strong> European School is primarily <strong>for</strong> families <strong>of</strong><br />
European Community employees and has classes<br />
in most EU languages (www.euroschool.lu).<br />
Saint George International School caters to<br />
children <strong>of</strong> all nationalities aged 2 to 11 who<br />
want a comprehensive curriculum in English.<br />
Ecole Française de <strong>Luxembourg</strong> (EFL) <strong>of</strong>fers<br />
teaching in French <strong>for</strong> children <strong>of</strong> all nationalities<br />
from the age <strong>of</strong> 3.<br />
Lycée Français Vauban provides a Frenchlanguage<br />
education <strong>for</strong> students aged 12 to 18.<br />
EFL and Lycée Vauban are both recognised by<br />
the French Education Ministry.<br />
<strong>Luxembourg</strong> University<br />
<strong>Luxembourg</strong> University (www.uni.lu) was<br />
created in 2003 and has three faculties.<br />
Highly rated degree programmes include a<br />
Master’s in Business and Finance awarded by<br />
the <strong>Luxembourg</strong> School <strong>of</strong> Finance (LSF), part<br />
<strong>of</strong> the Finance Department <strong>of</strong> the Faculty <strong>of</strong><br />
Law, Economics and Finance.<br />
Childcare<br />
<strong>Luxembourg</strong> <strong>of</strong>fers a large number <strong>of</strong> public and<br />
private day-care centres <strong>for</strong> babies and children.<br />
1<br />
Source: Statec, January 2010<br />
19
Photo: Christian Aschman<br />
2. Culture<br />
Museums<br />
<strong>The</strong> National Art and History Museum houses<br />
archaeological collections (prehistory, protohistory,<br />
the Gallo-Roman period and the Middle<br />
Ages), art collections (ancient, modern, contemporary<br />
and <strong>Luxembourg</strong>ish) and is dedicated to<br />
the decorative arts and folk art and traditions.<br />
<strong>The</strong> National Museum <strong>of</strong> Natural History<br />
<strong>of</strong>fers visitors new insights into human beings<br />
and their environment, science, natural history<br />
and the wonders <strong>of</strong> our planet.<br />
<strong>The</strong> <strong>Luxembourg</strong> City History Museum’s<br />
permanent collections and temporary exhibitions<br />
illustrate the capital’s history over more<br />
than a thousand years.<br />
<strong>The</strong> <strong>Luxembourg</strong> Casino holds contemporary art<br />
exhibitions throughout the year, with a focus on<br />
the diversity and complexity <strong>of</strong> current trends.<br />
<strong>The</strong> Grand Duke Jean Modern Art Museum,<br />
designed by the renowned architect I. M. Pei,<br />
hosts all genres <strong>of</strong> contemporary art.<br />
Music<br />
<strong>The</strong> <strong>Luxembourg</strong> Philharmonic Orchestra has<br />
been a pillar <strong>of</strong> the cultural life <strong>of</strong> <strong>Luxembourg</strong><br />
since its creation in 1933. It is now <strong>Luxembourg</strong>’s<br />
national orchestra and has its own season at the<br />
Philharmonie <strong>Luxembourg</strong> concert hall.<br />
Another important venue is the Grand Théâtre<br />
de la Ville de <strong>Luxembourg</strong>, which welcomes<br />
and co-produces operas, musical theatre, dance<br />
shows and plays from around the world.<br />
<strong>The</strong> Philharmonie <strong>Luxembourg</strong>’s bold design –<br />
the work <strong>of</strong> French architect Christian de<br />
Portzamparc – provides an outstanding setting<br />
<strong>for</strong> concerts. Seating 1,500, it plays a vital role in<br />
stimulating <strong>Luxembourg</strong>’s already rich musical<br />
life and involving the community at large.<br />
<strong>The</strong> Rockhal, a complex managed by the publicsector<br />
Centre <strong>for</strong> Amplified Music, is increasingly<br />
a focus <strong>of</strong> pop-rock music <strong>for</strong> <strong>Luxembourg</strong><br />
and neighbouring areas, with room <strong>for</strong> over<br />
7,000 people. Concert halls with seating <strong>for</strong> 5,400<br />
<strong>of</strong>fer a full programme <strong>of</strong> jazz, rock and pop.<br />
Regular musical events also include the Blues<br />
& Jazz Rallye and the <strong>Luxembourg</strong> festival.<br />
Cinemas<br />
<strong>Luxembourg</strong> has a large number <strong>of</strong> cinemas. Film<br />
buffs can choose between small traditional cinemas<br />
and a multiplex in <strong>Luxembourg</strong>-Kirchberg.<br />
Contrary to the practice in countries such as France<br />
and Germany, where most films are shown in<br />
dubbed versions, almost all films in <strong>Luxembourg</strong><br />
are shown in their original language with<br />
subtitles, reflecting the multilingual environment.<br />
Sports<br />
Outstanding sports facilities in <strong>Luxembourg</strong><br />
include the Coque centre located in the heart <strong>of</strong><br />
the Kirchberg distinct, which has several swimming<br />
pools, one <strong>of</strong> them Olympic-sized (50 m). It<br />
also has a spa and fitness and personal care area.<br />
A recent addition in this area is the Les <strong>The</strong>rmes<br />
spa and fitness centre, which opened its doors in<br />
Strassen near <strong>Luxembourg</strong> City in 2009 and<br />
features the latest premium equipment.<br />
Special mention should also be made <strong>of</strong> the<br />
renowned thermal baths at Mondorf-les-Bains,<br />
which have the most modern facilities in Europe<br />
and <strong>of</strong>fer a wide range <strong>of</strong> made-to-measure<br />
programmes.<br />
Leisure activities available throughout the year<br />
include tennis tournaments, archery, lawn<br />
bowling and more.<br />
Almost all towns in <strong>Luxembourg</strong> have both<br />
indoor and outdoor tennis courts, and horse<br />
riders enjoy access to high-quality facilities and<br />
many riding clubs.<br />
<strong>The</strong> country has a large number <strong>of</strong> wonderful<br />
golf courses, including the Grand-Ducal Golf<br />
21
Club, the Kikuoka Country Club, the Golf de<br />
Clervaux, the Christnach Golf and Country Club,<br />
the Golf de <strong>Luxembourg</strong> and the Gaichel Golf Club.<br />
Cyclists benefit from an extensive network <strong>of</strong><br />
bicycle paths and hiking is a popular activity,<br />
reflecting the large number <strong>of</strong> attractive, wellmaintained<br />
trails across <strong>Luxembourg</strong>. <strong>The</strong><br />
Grand Duchy also <strong>of</strong>fers prime sites <strong>for</strong> rock<br />
climbing near Berdorf in the Müllerthal area.<br />
<strong>The</strong> Haute-Sûre and the Echternach Lakes are<br />
important leisure destinations with scope <strong>for</strong><br />
activities that include swimming, sailing,<br />
canoeing, pedal boating, surfboarding and<br />
fishing.<br />
A number <strong>of</strong> skating rinks are available and<br />
snowfalls <strong>of</strong>fer opportunities to take advantage<br />
<strong>of</strong> cross-country skiing trails in the Ardennes in<br />
the northern part <strong>of</strong> the country.<br />
UNESCO World Heritage<br />
UNESCO has placed more than 860 sites<br />
<strong>of</strong> outstanding universal value on the world<br />
heritage list. Three are in <strong>Luxembourg</strong>:<br />
the <strong>for</strong>tress <strong>of</strong> <strong>Luxembourg</strong> and the<br />
old city <strong>of</strong> <strong>Luxembourg</strong>, dating from the<br />
10th century AD<br />
the photographic exhibition “<strong>The</strong> Family <strong>of</strong><br />
Man” curated by Edward Steichen<br />
the Dancing Procession <strong>of</strong> Echternach, the<br />
last traditional dancing procession in Europe<br />
and a candidate <strong>for</strong> UNESCO recognition<br />
as Intangible Cultural Heritage.<br />
Mercer Quality <strong>of</strong> Living Surveys<br />
Recent Mercer surveys place the city <strong>of</strong><br />
<strong>Luxembourg</strong> among the top five cities<br />
in the world. <strong>The</strong> table below compares<br />
<strong>Luxembourg</strong> with its European competitors.<br />
Rankings are based on a point scoring index<br />
and cities are compared to New York as the base<br />
city, with an index score <strong>of</strong> 100. <strong>The</strong> quality <strong>of</strong><br />
living survey covers 215 cities and is conducted<br />
to help governments and major companies place<br />
employees on international assignments.<br />
<strong>The</strong> Quality <strong>of</strong> Living Survey <strong>of</strong> Mercer<br />
Human Resource Consulting ranks 50 cities<br />
around the world <strong>for</strong> personal safety, placing<br />
<strong>Luxembourg</strong> ahead <strong>of</strong> Geneva, Zurich,<br />
Helsinki and Bern, which together share<br />
second place. <strong>The</strong> survey identified cities<br />
with the highest personal safety ranking<br />
compared with other countries, internal<br />
stability, crime and effectiveness<br />
<strong>of</strong> law en<strong>for</strong>cement. 1<br />
Switzerland Germany Netherlands Ireland France UK <strong>Luxembourg</strong> Ranking<br />
Quality <strong>of</strong> Living 107.47 105.58 105.70 103.60 102.40 101.60 104.60 4th<br />
Cost <strong>of</strong> Living 107.20 80.97 85.70 87.40 95.10 92.70 82.10 2nd<br />
Infrastructure 101.37 103.58 101.00 N/A 103.10 100.13 N/A N/A<br />
1<br />
Source: Mercer Studies, 2009<br />
22
V. focus on the luxembourg fund industry<br />
<strong>Luxembourg</strong> Financial<br />
Sector<br />
Rapid development since 1980 has made<br />
the <strong>financial</strong> sector the key driver <strong>for</strong><br />
<strong>Luxembourg</strong>’s economy. An attractive legal<br />
framework and a favourable tax regime<br />
encouraged the arrival <strong>of</strong> holding companies,<br />
followed by international banks and investment<br />
funds, also known as undertakings <strong>for</strong><br />
collective investment (UCIs).<br />
<strong>Luxembourg</strong>’s status as an international<br />
<strong>financial</strong> centre has been the main factor behind<br />
its impressive growth over the past three<br />
decades. <strong>The</strong> country hosts nearly 150 banks,<br />
mainly subsidiaries <strong>of</strong> European banks, and is<br />
the world’s second-largest investment fund<br />
centre and largest global distribution centre<br />
<strong>for</strong> investment funds (75% <strong>of</strong> the world’s<br />
cross-border funds, distributed in at least three<br />
countries, are based in <strong>Luxembourg</strong>).<br />
<strong>The</strong> main compartments <strong>of</strong> the <strong>financial</strong> sector<br />
today are the management and distribution <strong>of</strong><br />
investment funds, private wealth management<br />
and the interbank market. More recently, life<br />
insurance and reinsurance industries have also<br />
seen strong growth.<br />
Investment Funds<br />
in <strong>Luxembourg</strong><br />
Over the years, <strong>Luxembourg</strong> has grown to<br />
become the second largest fund centre in the<br />
world after the United States, with over<br />
€ 2 trillion in assets under management at<br />
30 June 2010.<br />
<strong>Luxembourg</strong> has established a competitive<br />
legal framework <strong>for</strong> UCITS (Undertakings<br />
<strong>for</strong> Collective Investment in Transferable<br />
Securities), funds “passported” within the EU,<br />
and non-UCITS funds, to become the largest<br />
global distribution centre <strong>for</strong> investment funds<br />
in Europe and the world.<br />
In 2007, new legislation introduced<br />
Specialised Investment Funds (SIF), a<br />
flexible non-UCITS vehicle that is subject<br />
to lighter supervision by <strong>Luxembourg</strong>’s<br />
Commission de Surveillance du Secteur<br />
Financier (CSSF). To date, more than<br />
1,000 SIFs have been set up.<br />
<strong>Luxembourg</strong> law provides a framework <strong>for</strong><br />
so-called umbrella funds, with one or more<br />
individual compartments under a single legal<br />
structure. Each compartment invests in a<br />
different asset class.<br />
particular abolished the subscription tax<br />
on Exchange Traded Funds (ETFs) and<br />
Micr<strong>of</strong>inance Investment Funds.<br />
Funds qualify as taxable persons <strong>for</strong> VAT<br />
purposes; case-by-case analysis is needed to<br />
decide whether VAT registration is necessary.<br />
Related <strong>services</strong> have grown along with the<br />
fund industry. Today, more than 70 depositary<br />
banks and approximately 200 management<br />
companies have registered with the CSSF.<br />
Auditors, law firms, tax advisors and other<br />
pr<strong>of</strong>essionals specialised in the field <strong>of</strong> investment<br />
funds are well established in <strong>Luxembourg</strong><br />
and are constantly evolving to keep step with<br />
new products.<br />
<strong>Luxembourg</strong> funds are exempt from income<br />
tax and net wealth tax, and do not levy<br />
withholding tax on distributions unless the<br />
EU Savings Tax Directive applies. Funds are<br />
subject only to subscription tax <strong>of</strong> 0.01% to<br />
0.05% <strong>of</strong> their net asset value, unless exempt<br />
under special conditions. <strong>Luxembourg</strong> has in<br />
23
ALFI<br />
ALFI (Association <strong>of</strong> the <strong>Luxembourg</strong> Fund<br />
Industry) is the <strong>of</strong>ficial representative body <strong>for</strong><br />
the <strong>Luxembourg</strong> investment fund industry.<br />
<strong>The</strong> association’s mission is to “lead industry<br />
ef<strong>for</strong>ts to make <strong>Luxembourg</strong> the most attractive<br />
international centre”. To that end, ALFI brings<br />
together the interests <strong>of</strong> over a thousand<br />
<strong>Luxembourg</strong>-<strong>domicile</strong>d investment funds and<br />
nearly 200 companies active in the <strong>Luxembourg</strong><br />
fund industry. <strong>The</strong>se represent a wide variety <strong>of</strong><br />
service providers, including depositary banks,<br />
fund administrators, transfer agents, distributors,<br />
law firms, consultants, tax advisers,<br />
auditors and accountants, specialist IT providers<br />
and communications agencies.<br />
ALFI recently launched a virtual Investor Centre<br />
to provide investors with basic in<strong>for</strong>mation<br />
on investing, with particular reference to the<br />
investment fund sector. <strong>The</strong> Investor Centre<br />
<strong>of</strong>fers in<strong>for</strong>mation on a broad range <strong>of</strong> topics in<br />
areas such as the different types <strong>of</strong> investment<br />
available through funds and the rules and<br />
safeguards covering the industry. <strong>The</strong> Investor<br />
Centre is accessible via ALFI’s website www.alfi.lu<br />
ALFI’s Mission Statement<br />
Help members capitalise on industry trends<br />
ALFI’s numerous Technical Committees<br />
and Working Groups continuously analyse<br />
global industry developments as well as legal<br />
and regulatory changes in <strong>Luxembourg</strong>,<br />
in the EU and beyond, and the threats and<br />
opportunities these may constitute <strong>for</strong> the<br />
<strong>Luxembourg</strong> fund sector.<br />
Shape regulation<br />
A modern and innovative legal and fiscal<br />
environment is <strong>of</strong> key importance to defend and<br />
improve the competitive position <strong>of</strong> <strong>Luxembourg</strong><br />
as a centre <strong>for</strong> the domiciliation, administration<br />
and distribution <strong>of</strong> investment funds. Its<br />
close contacts with the regulatory authority, the<br />
government and the legislative body allow ALFI<br />
to help shape regulation by bringing valuable<br />
input when there is a need to adapt the<br />
regulatory framework, to adopt a new European<br />
Directive or to create a specific regulatory<br />
framework <strong>for</strong> new products or <strong>services</strong>.<br />
Encourage pr<strong>of</strong>essionalism, integrity<br />
and quality<br />
Investor trust is key to successfully developing the<br />
collective investment business. ALFI there<strong>for</strong>e<br />
strives to encourage pr<strong>of</strong>essional behaviour,<br />
quality products and <strong>services</strong>, and the integrity<br />
<strong>of</strong> all players involved by <strong>of</strong>fering training<br />
courses designed <strong>for</strong> novices and experts, by<br />
developing codes <strong>of</strong> conduct, transparency and<br />
good corporate governance, and by supporting<br />
ef<strong>for</strong>ts to fight money laundering.<br />
Promote the <strong>Luxembourg</strong> investment<br />
fund industry<br />
ALFI actively promotes the <strong>Luxembourg</strong><br />
investment fund centre, its products and<br />
<strong>services</strong> by representing the sector in<br />
economic and <strong>financial</strong> missions organised<br />
by the <strong>Luxembourg</strong> government around<br />
the world and by taking active part in<br />
the principal meetings <strong>of</strong> the global fund<br />
industry.<br />
1<br />
Source: MicroRate, Aug. 09<br />
24
Ranking <strong>of</strong> Major Fund Promoters in <strong>Luxembourg</strong> by Cross-Border Registrations<br />
Rank Promoter Domicile Countries <strong>of</strong> Sale<br />
1 Franklin Templeton LU 50<br />
2 HSBC Holdings LU 42<br />
3 BlackRock LU 40<br />
4 Schroder LU 38<br />
5 BNP Paribas LU 33<br />
6 Fil International LU 33<br />
7 Société Générale LU 32<br />
8 Barclays IE 30<br />
9 JPMorgan Chase &Co LU 30<br />
10 Invesco Ltd LU 29<br />
11 Allianz Group LU 28<br />
12 Deutsche Bank LU 28<br />
13 Swiss & Global AM LU 28<br />
14 UBS LU 28<br />
15 Fortis Investments LU 27<br />
16 Legg Mason IE 27<br />
17 Pioneer Investments LU 26<br />
18 BNY Mellon / WESTLB Mellon IE 25<br />
19 Aberdeen Asset Management LU 24<br />
20 Credit Agricole LU 24<br />
21 Credit Suisse LU 24<br />
22 ING GROEP LU 24<br />
23 Henderson Group PLC LU 23<br />
24 Lloyds TSB Group JE 23<br />
25 Morgan Stanley LU 23<br />
Source: Lipper Hindsight, 2009<br />
Cross-Border Funds in <strong>Luxembourg</strong> since 2002<br />
# x-border registrations<br />
# x-border funds<br />
70,000<br />
60,000<br />
50,000<br />
40,000<br />
30,000<br />
20,000<br />
26,966 3,750<br />
26,030<br />
4,529<br />
28,427<br />
4,875<br />
5,170<br />
36,411<br />
5,907<br />
43,304<br />
6,625<br />
49,266<br />
7,366<br />
56,492<br />
7,219<br />
56,076<br />
7,165<br />
56,175<br />
7,346<br />
57,136<br />
7,441<br />
58,553<br />
8,000<br />
7,000<br />
6,000<br />
5,000<br />
4,000<br />
3,000<br />
2,000<br />
10,000<br />
1,000<br />
0<br />
2002 2003 2004 2005 2006 2007 2008 Q1-09 Q2-09 Q3-09 Q4-09<br />
0<br />
<strong>Luxembourg</strong> Ireland Other number <strong>of</strong> true x-border funds<br />
Source: Lipper Hindsight, 2009<br />
25
Authorisations by <strong>domicile</strong><br />
2.1%<br />
2.5%<br />
12.9%<br />
0.9%<br />
1.3%<br />
4.1%<br />
Situation<br />
in 2008<br />
Situation<br />
in 2009<br />
76.2%<br />
Source: Lipper Hindsight, 2009<br />
Cross-border fund groups 2003-2009<br />
Source: Lipper Hindsight, 2009<br />
Market shares <strong>of</strong> promoters by country <strong>of</strong> origin at 31 December 2009<br />
others<br />
Sources: CSSF / ALFI<br />
26
VI. a great place to live and work<br />
A prime location in the centre <strong>of</strong> Europe and<br />
a dedicated work<strong>for</strong>ce that is multilingual and<br />
multicultural, with nearly 40% <strong>of</strong> the population<br />
born abroad, have enabled <strong>Luxembourg</strong><br />
to win its place as a leading international<br />
<strong>financial</strong> centre despite its small size.<br />
Hospitable and open to the world,<br />
<strong>Luxembourg</strong> enjoys a stable political and<br />
economic environment, a vibrant mix <strong>of</strong><br />
cultures from around the world and high<br />
standards <strong>of</strong> living.<br />
For all <strong>of</strong> these reasons and more, we invite<br />
you to discover <strong>Luxembourg</strong> and hope to share<br />
with you, your business and your family all the<br />
attractions that our uniquely dynamic country<br />
has to <strong>of</strong>fer.<br />
We look <strong>for</strong>ward to seeing you soon.
October 2010<br />
alfi | association <strong>of</strong> the<br />
luxembourg fund industry<br />
B.P. 206<br />
L - 2012 <strong>Luxembourg</strong><br />
Tel: +352 22 30 26 - 1<br />
Fax: +352 22 30 93<br />
info@alfi.lu<br />
www.alfi.lu