EasyBiz Team

The Luxembourgish Economy

Luxembourg has the best monthly wages in the world and with its thriving economy it is an attractive place to be, for both locals and expats. Of course salaries vary based on a number of factors, such as the industry someone works in, as we will see below in the article in detail, but nevertheless, Luxembourg has the highest minimum wage in the world. Evidently, the cost of living might vary as well, in countries with such high wages as Luxembourg, but one thing you would need to consider if thinking of relocating for work is also the quality of life you will be receiving by making such a move. It is fairly expensive to live in Luxembourg, but there is an equivalent reward to take into consideration.

Luxembourg City is one of the leading financial centers within the European Union which means that various EU institutions and international corporations as well have a significant effect on Luxembourgish average wages, especially within the capital region. Something to consider though to take into consideration before packing your bags to Luxembourg is the progressive income taxation, which can alter your income significantly.

Factors that define salaries

Much like in any country, there are quite a few factors that can define employee income. These factors are important for employees in order to better navigate the job market and then understand compensation strategies and therefore negotiate salaries. Here are some of the determining factors of salary levels in Luxembourg:

Gender and industry specific wage gaps

Unfortunately to this day there is still a difference between what women earn and what men earn, even in Luxembourg, much like in many other countries in Europe. There are some theories trying to explain the fact which are:&nbsp;Differences in industries men and women are usually employed, and not a gender issue per se.&nbsp;Gap between full-time and part-time, suggesting that women often cover more part-time positions than men, there is therefore a difference in pay and limited professional development.&nbsp;It is a fact that women have a very limited presence in senior positions, which automatically means lower salaries.&nbsp;Childcare responsibilities which come with motherhood can often be a factor due to career breaks and reduced working hours.&nbsp;There is an on-going effort for gender equality, with new policies and regulations but the gap continues to exist so far even though the Luxembourgish government is now monitoring all changes by analyzing data to further improve the situation by developing new strategies. Some new measures though are ambitious, giving hope! Luxembourg has implemented parental leave and childcare support policies, new laws support salary information disclosure and new initiatives for women in leadership are being promoted.

Gender

The difference in salary might also be industry related. This is not just in Luxembourg, but might be a bit more obvious due to the fact that it is very finance and banking oriented. The best paid sectors in Luxembourg, besides finance and banking then, are: Lawyers and more specifically corporate or tax law specialists, IT and tech, healthcare, executive management and engineering.

Industry

Current average salaries and minimum wage in Luxembourg

According to<a href="https://statistiques.public.lu/en/publications/series/regards/2024/regards-09-24.html"> the Luxembourgish government</a>, as of September 2024, the average salary in Luxembourg amounts up to 81,000 euros per year, a significant increase since 2022. The median gross salary is of course quite lower, which in practice results in half the employees earning less than average, which is still quite high though based on worldwide standards.<b>&nbsp;</b>

The amount discussed is concerning a full-time worker who has worked a full year and it represents gross earnings, which means including all payments received such as potential bonuses, overtime pay and the 13th month salary.&nbsp;

To mention here that, besides high salaries also<a href="https://statistiques.public.lu/fr.html"> the unemployment and inflation rates</a> are considerably low, 5,8% and 0,8% respectively, and mainly due to that the wage growth is stable. Of course, the competitive environment due to the presence of international corporations and financial institutions causes wages to grow.

Elaborating further though, this is just an overview of the average salary in Luxembourg, which gets calculated and paid based on the factors we explained earlier. The minimum wage on the other hand is the lowest of salaries that can be legally offered in the country, depending on some specific requirements and rules. Those would be:

Employer’s contributions

The total labor cost is influenced also by the employee compensation costs which goes further than their gross salary. The employer, besides the salary, must pay for social security which covers pension and illness, benefits such as health insurance, holiday pay, bonuses and potential company equipment (car, phone, computer etc), payroll taxes and other potential fiscal duties when hiring employees, training for professional development and some administration costs such as HR and payroll management, legal and accounting fees and other emergency costs.

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Comparison with other countries: Average salary in the EU

Considering all the factors mentioned in this article, it quite makes sense why there are differences, sometimes considerable, between countries, even with the EU itself, since it all depends on cost of living and social security costs. We are not considering different country taxes at the moment, as the salaries we are looking into are gross, hence before tax. But it is important to mention here that Luxembourg has a very strong social security system which of course ensures higher salaries.

Let’s see how average salaries look like for neighboring countries:

Of course, those numbers are subject to fluctuations based on exchange rates, economic conditions, and other factors. Also, to note here, that a higher cost of living doesn’t always mean a ‘better living standard’, regardless of high salaries. It depends on what the state offers and if it is truly worth it, for example free healthcare, or other resident benefits.

Luxembourg’s cost of living and quality of life

The cost of living in Luxembourg is considerably high, but higher average wages can cover this and translate it into great quality of life. Accommodation, transportation and daily expenses can take up a notable part of an individual’s salary, which makes competitive salaries in Luxembourg the norm, not the exception, promoting an outstanding quality lifestyle. But in the end, Luxembourg does offer the highest salaries in the world, but this also means substantial taxes as well. Nevertheless, Luxembourg provides a favorable balance for its residents, due to its strong economy and competitive welfare state, which distinguishes it internationally.

According to <a href="https://statistiques.public.lu/en/publications/series/regards/2024/regards-09-24.html">the Luxembourgish government</a>, as of September 2024, the average salary in Luxembourg amounts up to 81,000 euros per year, a significant increase since 2022.&nbsp;The minimum wages in Luxembourg in 2024 go as follows:&nbsp;Unskilled Adult Workers: €2,256.95.&nbsp;Skilled Adult Workers: €2,707.56, approximately.

It is true that Luxembourg has the highest salaries in the world, although if you would like to relocate you would need to take into consideration the cost of living and of course the local taxation. It also depends on the industry you are in, with finance and banking, legal, IT and engineering being the best paid options, but generally speaking, Luxembourg is definitely a country where most residents can live a decent life comfortably.

There are various factors to take into consideration, starting from industry and role, to skills and experience and to company size and budgeting.

What is the average salary and minimum wage in Luxembourg in 2024, description of the current financial situation in comparison with previous years and other European countries, and factors that influence salaries 

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L'économie luxembourgeoise

Le Luxembourg a les meilleurs salaires mensuels au monde et avec son économie florissante, c'est un endroit attrayant pour les locaux et les expatriés. Bien entendu, les salaires varient en fonction d'un certain nombre de facteurs, tels que le secteur d'activité, comme nous le verrons plus loin dans l'article, mais le Luxembourg dispose néanmoins du salaire minimum le plus élevé au monde. Évidemment, le coût de la vie peut également varier dans des pays où les salaires sont aussi élevés qu'au Luxembourg, mais une chose que vous devez prendre en considération si vous envisagez de déménager pour le travail est également la qualité de vie que vous obtiendrez en faisant un tel déménagement. La vie au Luxembourg est assez chère, mais il y a une récompense équivalente à prendre en considération.

La ville de Luxembourg est l'un des principaux centres financiers de l'Union européenne, ce qui signifie que diverses institutions de l'UE et sociétés internationales ont un effet significatif sur les salaires moyens luxembourgeois, en particulier dans la région de la capitale. Il convient toutefois de prendre en considération, avant de faire ses valises pour le Luxembourg, la progressivité de l'impôt sur le revenu, qui peut modifier votre revenu de manière significative.

Les facteurs qui déterminent les salaires

Comme dans n'importe quel pays, il existe un certain nombre de facteurs qui peuvent déterminer le revenu d'un employé. Ces facteurs sont importants pour les employés afin de mieux naviguer sur le marché du travail, de comprendre les stratégies de rémunération et donc de négocier les salaires. Voici quelques-uns des facteurs qui déterminent les niveaux de salaires au Luxembourg :

Écarts salariaux selon le sexe et le secteur d'activité

Salaires moyens actuels et salaire minimum au Luxembourg

Selon le<a href="https://statistiques.public.lu/en/publications/series/regards/2024/regards-09-24.html"> gouvernement luxembourgeois</a>, en septembre 2024, le salaire moyen au Luxembourg s'élève à 81,000 euros par an, une augmentation significative depuis 2022. Le salaire brut médian est bien sûr beaucoup plus bas, ce qui dans la pratique fait que la moitié des salariés gagnent moins que la moyenne, qui reste tout de même assez élevée par rapport aux standards mondiaux.

Le montant indiqué concerne un travailleur à temps plein ayant travaillé une année entière et représente le salaire brut, c'est-à-dire incluant tous les paiements reçus tels que les primes potentielles, la rémunération des heures supplémentaires et le 13e mois de salaire.

Outre les salaires élevés,<a href="https://statistiques.public.lu/fr.html"> les taux de chômage et d'inflation</a> sont considérablement bas (5,8 % et 0,8 % respectivement), ce qui explique en grande partie la stabilité de la croissance des salaires. Bien entendu, l'environnement concurrentiel dû à la présence de sociétés internationales et d'institutions financières entraîne une augmentation des salaires.

Il ne s'agit là que d'un aperçu du salaire moyen au Luxembourg, qui est calculé et payé sur la base des facteurs que nous avons expliqués plus haut. Le smic est le plus bas des salaires qui peuvent être légalement offerts dans le pays, en fonction de certaines exigences et règles spécifiques. Ces conditions et règles sont les suivantes :&nbsp;

Cotisations patronales

Le coût total du travail est également influencé par les coûts de rémunération des employés, qui vont au-delà de leur salaire brut. L'employeur, outre le salaire, doit payer la sécurité sociale qui couvre la retraite et la maladie, les avantages sociaux tels que l'assurance maladie, les congés payés, les primes et l'équipement éventuel de l'entreprise (voiture, téléphone, ordinateur, etc.), les charges sociales et autres obligations fiscales éventuelles lors de l'embauche des salariés, la formation pour le développement professionnel et certains frais administratifs tels que la gestion des ressources humaines et des salaires, les frais juridiques et comptables et d'autres frais d'urgence.

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Comparaison avec d'autres pays : Salaire moyen dans l'UE

Compte tenu de tous les facteurs mentionnés dans cet article, il est assez logique qu'il y ait des différences, parfois considérables, entre les pays, voire avec l'UE elle-même, puisque tout dépend du coût de la vie et des coûts de la sécurité sociale. Nous ne prenons pas en considération les impôts des différents pays pour l'instant, car les salaires que nous étudions sont bruts, c'est-à-dire avant impôts. Il est toutefois important de mentionner que le Luxembourg dispose d'un système de sécurité sociale très solide, qui garantit bien entendu des salaires plus élevés.

Voyons à quoi ressemblent les salaires moyens dans les pays voisins :

Bien entendu, ces chiffres sont sujets à des fluctuations en fonction des taux de change, des conditions économiques et d'autres facteurs. Il convient également de noter qu'un coût de la vie plus élevé ne signifie pas toujours un « meilleur niveau de vie », même si les salaires sont élevés. Cela dépend de ce que l'État offre et si cela en vaut vraiment la peine, par exemple des soins de santé gratuits ou d'autres avantages pour les résidents.

Coût de la vie et qualité de vie au Luxembourg

Le coût de la vie au Luxembourg est considérablement élevé, mais les salaires moyens plus élevés peuvent couvrir ce coût et se traduire par une excellente qualité de vie. Le logement, le transport et les dépenses quotidiennes peuvent absorber une part importante du salaire d'un individu, ce qui fait des salaires compétitifs au Luxembourg la norme, et non l'exception, et favorise un mode de vie d'une qualité exceptionnelle. En fin de compte, le Luxembourg offre les salaires les plus élevés au monde, mais cela signifie aussi des impôts substantiels. Néanmoins, le Luxembourg offre un équilibre favorable à ses résidents, grâce à son économie forte et à son État-providence compétitif, qui le distingue au niveau international.

Quel est le salaire moyen et le smic au Luxembourg en 2024, description de la situation financière actuelle en comparaison avec les années précédentes et les autres pays européens, et les facteurs qui influencent les salaires.

Quel est le salaire moyen au Luxembourg en 2024 et tout ce qu'il faut savoir sur les salaires au Luxembourg.

What is the Luxembourg average salary in 2024

Hire employees in Luxembourg in 2024 - Where to start

Congratulations on the expansion of your business!

Before proceeding in hiring employees, make sure you followed all necessary steps for establishing your business:

Your business is evolving and it is not a sole entrepreneurship anymore, therefore you need to hire employees in Luxembourg in 2024. This means you would need to take into consideration local laws and regulations as well as demographics. Luxembourg might be one of the richest countries in the world, with the highest minimum wage in Europe, but it is still a small country of less than 700,000 residents, therefore the workforce market is also small.

We will look into the Luxembourgish labor law, for some basics, but the main plan regarding hiring employees in Luxembourg, will be as follows:

Hiring employees in Luxembourg - The basics of Luxembourgish labor law and costs involved

Starting with some small details about Luxembourg, besides the population and minimum wage we mentioned earlier. Luxembourg’s capital is Luxembourg City, where the biggest part of the workforce is concentrated, and the national currency is the euro, much like in most EU countries by now. The official languages of Luxembourg are Luxembourgish, French and German. You can find more statistics regarding employment and inflation&nbsp;<a href="https://statistiques.public.lu/en.html">here</a>.&nbsp;

In order to hire employees in Luxembourg, you would need to be familiar with local employment laws. Here is a list of the main labor laws in Luxembourg, based heavily in French law, some of which we will explain more in the hiring steps later on:



Cost for hiring employees in Luxembourg in 2024

Something very important to consider though before starting the process of finding and hiring the right candidates, is the cost of the whole procedure. It is not only the salaries of your new employees that you would have to pay as a business owner, but a number of things before and after hiring. Here is a comprehensive but non-exhaustive list of those costs, so you don’t get caught by surprise:

Steps for hiring employees in Luxembourg in 2024

The very first thing you would need to do is think about the position carefully, write -you or an HR partner- a detailed and yet comprehensive job description, and find places to post the job ad, potentially at a cost. Besides the international job boards such as<a href="https://www.linkedin.com/"> LinkedIn</a> and&nbsp;<a href="https://www.glassdoor.com/index.htm">Glassdoor</a>, there are some specific ones for Luxembourg that are worth taking a look:&nbsp;-&nbsp;<a href="https://www.jobsinluxembourg.eu/?query=python%20software%20engineer&amp;ppc_keyword=&amp;gad_source=1&amp;gclid=Cj0KCQiAo5u6BhDJARIsAAVoDWtx1fMsUmu04DUL7VPUMxhEzGqI3hWELrzC9uweVYO8X2oHZjUxdTEaAvdZEALw_wcB">Jobs in Luxembourg</a>&nbsp;-&nbsp;<a href="https://en.jobs.lu/">Jobs.lu</a>&nbsp;-&nbsp;<a href="https://work-in-luxembourg.lu/home">Work in Luxembourg</a>&nbsp;-&nbsp;<a href="https://www.jobfinder.lu/en/jobs">JobFinder.lu</a>&nbsp;Important to mention here that any vacancy needs to be registered with the National Employment Agency (<a href="https://guichet.public.lu/en/citoyens/organismes/organismes_citoyens/administration-emploi.html">ADEM</a>).

Advertise a new vacancy - Job description

The recruitment process includes screening CVs, conducting interviews and getting down to your candidate of choice. You might need some help with that so you would have to either set up an HR team in advance, or hire a recruitment agency or an independent recruiter, to help you with the process. Headhunting companies also help finding talent, especially for very specific fields, so you might want to consider hiring one as well. At this phase, before choosing your top candidate, you may ask for a background check, such as criminal record and references.

Recruitment process - Hiring and recruitment agencies

When the recruitment phase is over, and you have chosen your top candidate, you should be able to offer them an employment contract, regarding which you can negotiate the terms and starting date with the future new employee. For this, you would need a lawyer, as you need to comply with the local labor law. Ideally, it should be in English and French or German. In order to choose which contract you need though, let’s look into the different types of employment contracts offered in Luxembourg:&nbsp;Indefinite or open-ended (CDI) → Contract used to hire permanent employees, both full-time and part-time&nbsp;Definite or fixed-term (CDD) → This one cannot exceed 24 months in total and it can only be renewed twice&nbsp;Seasonal → Part of the year employment, for example in tourism, and it cannot exceed 10 months within a year&nbsp;Collective agreements → Those depend on specific conditions of employment in specified sectors and often temporary appointments

Employment contracts

You would have to declare the entry of the employee to the Social Security Center (<a href="https://ccss.public.lu/fr/employeurs.html">CCSS</a>) within 8 days of hiring. That applies to all employees, including interns, students, temporary appointments and even volunteers. You can find all the forms needed&nbsp;<a href="https://ccss.public.lu/en/employeurs/secteur-prive/engager-personnel.html">here</a>. This happens because both employees and employers must pay social contributions for health insurance, pension and taxes.

Register new employee for social security

Both employers and employees must comply with all requirements of Luxembourgish tax authorities and both are contributing.Luxembourg’s corporate tax rate is at 17%, from companies with taxable income more than 175,000, as well as the standard VAT rate. The main ones to be covered by the employer are health and pension contributions, which include workplace accidents as well. Since the tax system of Luxembourg though, much like in most countries, is quite complicated, it is highly recommended to hire an accountant for this purpose. The elements that make the system a tad more difficult are the various citizenships of the employee force as well as marital statuses and dependents.&nbsp;Also, for cross-border employees, a different rule applies, according to which they only need to declare income obtained within Luxembourg, but not elsewhere, such as their home country. Only residents - technically meaning lived and worked in the country for at least 182 days in a full year - need to declare their global income in Luxembourg. Keep in mind that there are various tax treaties between Luxembourg and many countries in order to prevent double taxation.For more clarity regarding taxes you can check the<a href="https://guichet.public.lu/en/citoyens/fiscalite.html#localnav"> Corporate taxation overview of guichet.lu</a> or ask the&nbsp;<a href="https://impotsdirects.public.lu/fr.html">Luxembourg Tax Administration</a>.

Compliance with tax regulations

The day has come that your new employee is finally on the right track to join your company. At this point, you would need to double-check that it is all in order with social security and taxes, before enrolling the new employee to payroll. Also, you need to ensure the right equipment is ready for him/her and that everything has been signed and understood from their side. An orientation presentation including the necessary training would be a good idea as well as to present the new employee to the team.

Onboarding

The payroll cycle is monthly, as in most EU countries, and the tax year coincides with the calendar year, 1st of January to 31st of December. Payments include salaries, bonuses and vacation allowances, as well as all deductions. There has to be a specific payday and pay schedule shared with the employees. Your company can have set up internal payroll (in-house HR), remote from a parent company, local payroll outsourced to a local payroll provider or an Employer of Record (see below in FAQs for more details on EoRs).

Payroll

After the employee is on payroll, one last thing to do is to notify the<a href="https://itm.gouvernement.lu/en/support/contact.html"> Labor Inspectorate</a> of Luxembourg. See<a href="https://guichet.public.lu/en/citoyens/organismes/organismes_entreprises/itm.html"> here</a> for more information.

Notify the Labor Inspectorate

Hiring non-EU employees and independent contractors can be a bit more complicated but still relatively simple. The main consideration for non-EU is the residence and work permits, for which they would need to apply&nbsp;<a href="https://guichet.public.lu/en/citoyens/immigration.html">here</a>.

Specifics when hiring non-EU citizens, cross-border workers and independent contractors

In all cases of non-EU employees, cross-border workers and independent contractors, the employer needs to take into consideration potential visa requirements, tax conditions, legal compliance and in the case of the contractors alone, the different classifications and the various ways of payment. Some other factors to be taken into account would be cultural, religious and linguistic differences, in order to make your business the most inclusive possible.

Employee benefits

Those are the main employee benefits, based on local labor law, you would need to keep in mind:

The main rights highlighted here are equal treatment, working in safety and free of discrimination, a signed, valid employment contract, paid overtime, minimum wage at the least, and acceptable working hours with an accurate leave allowance. Also, in case of termination, a severance package is mandatory.

The precise amount depends on the number of employees and of the company size. Hiring costs though include: recruiting and pre-hiring costs, legal and accounting costs, social contributions and taxes, benefits and bonuses, potential visa, travel and relocation expenses as well as accommodation in some cases, and various administrative fees.

An employer of record is an HR company that acts as employer in your place so you don’t have to handle the administrative and HR part of your business. Some of them are really well-known and reliable, and for a fee they can take that burden off you, so it is definitely worth checking, especially if your company is small and doesn’t really have an HR department. One of the most popular ones are <a href="https://www.deel.com/paid-lp/eor/?utm_medium=paid-listicle&amp;utm_source=recruiterslineup&amp;utm_campaign=ww_acq_prosp_reclineup_paidlist_all-bestfiteor-article_gheor_all&amp;utm_content=acq_gheor_paidlist_bestfiteor-article-reclineup_en">Deel</a>, <a href="http://Multiplier">Multiplier</a> and <a href="https://lp.papayaglobal.com/">Papaya Global</a> and they also assist with payroll, which is the most important HR part of running a business: your employees’ payments!

Of course. They offer the advantages of more flexibility, independence and in most cases less costs. As long as they are eligible and follow local rules and regulations, there is absolutely no issue in hiring foreigners, for temporary or also permanent positions in Luxembourg.

Hire employees in Luxembourg in 2024: How to hire employees for your new business in Luxembourg, requirements and all things you need to know in a simple step-by-step guide.

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Embaucher des salariés au Luxembourg en 2024 - Par où commencer ?

Félicitations pour l'expansion de votre entreprise !

Avant de procéder à l'embauche de salariés, assurez-vous d'avoir suivi toutes les étapes nécessaires à la création de votre entreprise :

Votre entreprise évolue et n'est plus une entreprise individuelle. Vous devez donc embaucher des salariés au Luxembourg en 2024. Cela signifie que vous devrez prendre en considération les lois et réglementations locales ainsi que la démographie. Le Luxembourg est peut-être l'un des pays les plus riches du monde, avec le salaire minimum le plus élevé d'Europe, mais il reste un petit pays de moins de 700,000 habitants, et le marché de la main-d'œuvre y est donc également restreint.

Nous nous pencherons sur le droit du travail luxembourgeois pour en connaître les fondements, mais le plan principal concernant l'embauche de salariés au Luxembourg sera le suivant :

Embaucher des salariés au Luxembourg - Les bases du droit du travail luxembourgeois et les coûts pertinents

Commençons par quelques détails sur le Luxembourg, outre la population et le salaire minimum que nous avons mentionnés plus haut. La capitale du Luxembourg est la ville de Luxembourg, où se concentre la majeure partie de la main-d'œuvre. La monnaie nationale est l'euro, comme dans la plupart des pays de l'Union européenne. Les langues officielles du Luxembourg sont le luxembourgeois, le français et l'allemand. Vous trouverez plus de statistiques sur l'emploi et l'inflation<a href="https://statistiques.public.lu/en.html"> ici</a>.

Pour embaucher des salariés au Luxembourg, vous devez vous familiariser avec la législation locale en matière d'emploi. Voici une liste des principales lois du travail au Luxembourg, fortement inspirées du droit français, dont certaines seront expliquées plus en détail dans les étapes de l'embauche :

Coût de l'embauche de salariés au Luxembourg en 2024

Avant d'entamer le processus de recherche et d'embauche des bons candidats, il est très important de prendre en compte le coût de l'ensemble de la procédure. Ce n'est pas seulement le salaire de vos nouveaux employés que vous devrez payer en tant que propriétaire d'entreprise, mais un certain nombre de choses avant et après l'embauche. Voici une liste complète mais non exhaustive de ces coûts, afin que vous ne soyez pas pris au dépourvu :

Étapes de l'embauche de salariés au Luxembourg en 2024

Dans tous les cas d'employés, de travailleurs transfrontaliers et d'entrepreneurs indépendants non ressortissants de l'UE, l'employeur doit tenir compte des exigences potentielles en matière de visa, des conditions fiscales, de la conformité juridique et, dans le cas des entrepreneurs uniquement, des différentes classifications et des divers modes de paiement. D'autres facteurs à prendre en compte sont les différences culturelles, religieuses et linguistiques, afin de rendre votre entreprise la plus inclusive possible.

Avantages pour les salariés

Voici les principaux avantages sociaux que vous devez garder à l'esprit, conformément au droit du travail local :

Embaucher des employés au Luxembourg en 2024 : Comment embaucher des employés pour votre nouvelle entreprise au Luxembourg, les exigences et tout ce que vous devez savoir dans un guide simple étape par étape.

Un guide simple sur l'embauche de salariés au Luxembourg en 2024

A simple guide on hiring employees in Luxembourg in 2024 

Liquidation operations step-by-step

The process for liquidating a company in Luxembourg is relatively simple to understand, however, the complexity of carrying out this procedure varies greatly. This generally depends on the size of the company as well as its multiple interactions and commitments with other stakeholders. The procedure to be carried out includes five steps which we will see below in detail:

Step 1: Establish a liquidation basis

The first step in proceeding with liquidation, before even making a decision on whether or not to liquidate the company, is to establish financial statements on a liquidation basis that will allow a sound and informed decision to be made.

A financial statement on a liquidation basis is a financial report prepared under the assumption that the company will cease operations and proceed to liquidate its assets. This type of statement realistically reflects the company's ability to meet its obligations and distribute residuals to shareholders in a closing context and usually includes the following elements:

This accounting situation will serve as a basis of information for the partners or shareholders and the liquidator to evaluate the convenience and possibility of proceeding with a liquidation.

Step 2: Convene an extraordinary general meeting to decide on the liquidation

The next step to follow once there is an accounting basis for liquidation on which to make decisions is the convening by the managers or the members of the Board of Directors of an extraordinary General Meeting to decide whether or not to proceed with the liquidation of the company. This general meeting must be held before a notary.

For a decision on the liquidation of the company to be valid, there is a minimum amount of the company's capital that must be represented and a minimum number of votes, both values depending on the structure of the company. The following are the standard minimum values, however, the articles of association may establish more restrictive conditions.

If the liquidation of the company is approved, the general meeting must appoint one or more liquidators and determine the method of liquidation. Although the current administrators of the company are often chosen, a qualified third party such as a lawyer, accountant or a company specialized in liquidations may also be appointed.

The decision to appoint an external liquidator will depend on multiple factors related to the company's situation such as the complexity of the liquidation process and the confidence in the abilities of the existing directors.

It is common to appoint existing directors as liquidators when the company has a simple structure and few assets or debts, the shareholders have full confidence in their ability to manage the process, there are no significant internal or external conflicts, and the costs associated with an external liquidator are not justified in relation to the size of the liquidation. In contrast, it is common and advisable to appoint external liquidators in the following cases:

Step 3 - Proceed with the necessary operations for liquidation

Once the liquidator has been appointed, whether it is the company's manager or an external person, he must begin the liquidation process. This process includes, broadly speaking, four main stages:

Step 4 - Convene a second general meeting to approve the liquidation report

Once the liquidator has finished preparing the final liquidation report, a second general meeting must be called to approve the accounts and the liquidation report.

At this meeting, the shareholders or associates must read the liquidation report and appoint one or more auditors to verify the accuracy of the liquidation report and the accounts prepared by the liquidator. In addition, large public limited companies and limited liability companies with more than 25 shareholders must use the services of a statutory auditor. His role is to examine whether the liquidation accounts and the liquidator's report are consistent with the company's documents and the measures taken by the liquidator.

Finally, the date of a third and final general meeting must be set, in order to review the statutory auditor's report and declare the liquidation closed.

Step 5 - Convene a final general meeting and conclude the liquidation proceedings

At the last general meeting, which does not necessarily have to be held before a notary, the shareholders or associates must approve the liquidation accounts and the auditor's accounts, approve the liquidator's management, decide where the company's books and documents will be kept as these must be kept for 5 years and decide on the distribution of any liquidation surplus.

After this, the liquidator may publish the closing of the liquidation in the commercial register and proceed, if the situation allows it, to the reimbursement of the capital and the payment of the liquidation surplus.

Voluntary liquidation is initiated by the shareholders of the company when they decide to cease its operations, typically due to strategic or financial reasons, and involves a structured process to settle debts and distribute remaining assets. In contrast, other types of liquidation, such as judicial liquidation, are usually initiated by a court when the company is insolvent and unable to meet its financial obligations. Voluntary liquidation allows shareholders to maintain greater control over the process, while judicial liquidation is overseen by a court-appointed administrator.

An external liquidator is necessary when there is a need for impartiality or specialized expertise. This is common in cases where the company has complex assets, significant debts, or disputes among shareholders. An external liquidator can also be required if creditors or stakeholders demand a neutral party to oversee the process. Alternatively, in simple cases with trusted management, internal parties can be appointed.

A liquidation-based accounting statement is a financial report prepared on the assumption that the company will cease operations. It adjusts the valuation of assets to their expected liquidation value and provides a clear picture of the company’s ability to settle its liabilities. This statement is crucial for determining whether the liquidation is feasible and ensuring transparency for stakeholders.

If the company's debts exceed its assets, the liquidation transitions into insolvency proceedings. The liquidator must inform the court, which may initiate judicial liquidation. In this scenario, creditors may receive partial payments based on the available funds, and shareholders typically receive nothing.

The dissolution and liquidation of a company entails the disappearance of the company and its legal personality. The procedure to follow is different depending on whether it is a voluntary liquidation or a judicial liquidation in Luxembourg. In this guide, we will detail the step-by-step process to follow in the first case, when it is a voluntary liquidation.

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Les opérations de liquidation étape par étape

Le processus de liquidation d'une société au Luxembourg est relativement simple à comprendre, mais la complexité de l'exécution de cette procédure est très variable. Cela dépend généralement de la taille de la société ainsi que de ses multiples interactions et engagements avec d'autres parties prenantes. La procédure à mener comprend cinq étapes que nous verrons ci-dessous en détail :

Étape 1 : Établir une base de liquidation

La première étape pour procéder à la liquidation, avant même de prendre la décision de liquider ou non l'entreprise, est d'établir des états financiers sur une base de liquidation qui permettront de prendre une décision saine et éclairée.

Un état financier sur base de liquidation est un rapport financier préparé dans l'hypothèse où l'entreprise cessera ses activités et procédera à la liquidation de ses actifs. Ce type d'état reflète de manière réaliste la capacité de l'entreprise à faire face à ses obligations et à distribuer les bénéfices résiduels aux actionnaires dans un contexte de clôture et comprend généralement les éléments suivants :

Cette situation comptable servira de base d'information aux associés ou actionnaires et au liquidateur pour évaluer l'opportunité et la possibilité de procéder à une liquidation.

Étape 2 : Convocation d'une assemblée générale extraordinaire pour décider sur la liquidation

L'étape suivante, une fois que l'on dispose d'une base comptable pour la liquidation sur laquelle prendre des décisions, est la convocation par les gérants ou les membres du conseil d'administration d'une assemblée générale extraordinaire pour décider s'il y a lieu ou non de procéder à la liquidation de la société. Cette assemblée générale doit se tenir devant un notaire.

Pour qu'une décision sur la liquidation de la société soit valable, il faut qu'un montant minimum du capital de la société soit représenté et qu'un nombre minimum de voix soit atteint, ces deux valeurs dépendant de la structure de la société. Les valeurs minimales standard sont les suivantes, mais les statuts peuvent fixer des conditions plus restrictives.

Si la liquidation de la société est approuvée, l'assemblée générale doit nommer un ou plusieurs liquidateurs et déterminer le mode de liquidation. Bien que les administrateurs actuels de la société soient souvent choisis, un tiers qualifié, tel qu'un avocat, un comptable ou une société spécialisée dans les liquidations, peut également être désigné.

La décision de nommer un liquidateur externe dépend de multiples facteurs liés à la situation de l'entreprise, tels que la complexité de la procédure de liquidation et la confiance dans les capacités des administrateurs en place.

Il est commun de nommer les administrateurs en place comme liquidateurs lorsque la société a une structure simple et peu d'actifs ou de dettes, que les actionnaires ont pleinement confiance en leur capacité à gérer le processus, qu'il n'y a pas de conflits internes ou externes importants et que les coûts associés à un liquidateur externe ne sont pas justifiés par rapport à l'ampleur de la liquidation. En revanche, il est commun et conseillé de nommer des liquidateurs externes dans les cas suivants :

Étape 3 - Procéder aux opérations nécessaires à la liquidation

Une fois le liquidateur nommé, qu'il s'agisse du dirigeant de l'entreprise ou d'une personne extérieure, il doit commencer le processus de liquidation. Ce processus comprend, schématiquement, quatre étapes principales :

Étape 4 - Convoquer une deuxième assemblée générale pour approuver le rapport de liquidation

Une fois que le liquidateur a terminé la préparation du rapport final de liquidation, une deuxième assemblée générale doit être convoquée pour approuver les comptes et le rapport de liquidation.

Lors de cette assemblée, les actionnaires ou associés doivent prendre connaissance du rapport de liquidation et désigner un ou plusieurs commissaires chargés de vérifier l'exactitude du rapport de liquidation et des comptes préparés par le liquidateur. En outre, les grandes sociétés anonymes et les sociétés à responsabilité limitée comptant plus de 25 actionnaires doivent faire appel à un commissaire aux comptes. Son rôle est d'examiner si les comptes de liquidation et le rapport du liquidateur sont conformes aux documents de la société et aux mesures prises par le liquidateur.

Enfin, la date d'une troisième et dernière assemblée générale doit être fixée, afin d'examiner le rapport du commissaire aux comptes et de prononcer la clôture de la liquidation.

Étape 5 - Convocation d'une dernière assemblée générale et clôture de la procédure de liquidation

Lors de la dernière assemblée générale, qui ne doit pas nécessairement se tenir devant un notaire, les actionnaires ou associés doivent approuver les comptes de liquidation et les comptes du commissaire aux comptes, approuver la gestion du liquidateur, décider du lieu de conservation des livres et documents de la société, qui doivent être conservés pendant 5 ans, et décider de la répartition du boni de liquidation.

Ensuite, le liquidateur peut publier la clôture de la liquidation au registre du commerce et procéder, si la situation le permet, au remboursement du capital et au paiement du boni de liquidation.

La dissolution et la liquidation d'une société entraînent la disparition de la société et de sa personnalité juridique. La procédure à suivre est différente selon qu'il s'agit d'une liquidation volontaire ou d'une liquidation judiciaire au Luxembourg. Dans ce guide, nous allons décrire la procédure à suivre étape par étape dans le premier cas, lorsqu'il s'agit d'une liquidation volontaire.

Liquidation volontaire d'une société au Luxembourg

Voluntary liquidation of a company in Luxembourg

An introduction to the Luxembourgish economy

As Carlo Thelen, the Chamber of Commerce’s CEO, said, “An open and dynamic country, Luxembourg has made its mark internationally as a reliable and innovative partner, providing an ideal environment for businesses and investors to thrive”. This couldn’t be more true, as Luxembourg, even though a really small country, due to its solid economy, constant growth and strategic position in the very center of Europe, attracts interest, investors and partners from all over the world. It is not by chance that year after year, more and more foreign entrepreneurs choose Luxembourg to open a new business or to move their business from somewhere else. It is because Luxembourg's economy has proven very stable and resilient and that is how Luxembourg became an international financial center, ranking among the top 10 of the best performing countries worldwide.&nbsp;

Luxembourg undeniably has a great quality of life, not just in Europe but statistically speaking, compared with other countries globally. It is proven that Luxembourg has the best monthly wages in the world and with its thriving economy makes it an attractive place to be, for both locals and expats. Of course salaries vary based on a number of factors, such as the industry someone works in, but nevertheless, Luxembourg has the highest minimum wage in the world. Subsequently, the cost of living obviously varies as well, in countries with such high wages as Luxembourg, but one thing you would need to take into consideration when thinking of relocating for work is also the quality of life you will be receiving by making such a move. It is quite expensive to live in Luxembourg, but the reward is to be taken into consideration.

Luxembourg City is at the very top of leading financial centers within the European Union. That means that many EU institutions and international organizations have a significant effect on Luxembourgish average wages, especially within the capital region.

Main economic sectors in Luxembourg and trading

So how does Luxembourg actually make money?&nbsp;

The biggest and strongest economic sector of Luxembourg is, and highly likely will remain for a while, the financial sector, covering almost 27% of the country’s GDP. It is not a surprise since Luxembourg is home to 136 banks including private banking, insurances and all kinds of investments. The Luxembourgish banking sector managed to maintain a stable growth while adapting to digitalization and diversity. But, it hasn’t always been the case, as up to the 1970s the leading economic sector was the steel industry, which does remain on the list. Other sectors are construction, energy, water and agriculture.&nbsp;

More in detail regarding the financial sector, we can mention that it includes investment companies, meaning brokers and agents, specialized services such as professional custodians of financial instruments, currency exchange agents and regulated market operators, and also communication and administration agents, IT system operators and other support staff of the sector. It is remarkable to mention here that non-banking operations are currently growing in Luxembourg due to the large outsourcing activity within the financial sector.&nbsp;

Besides the economic sectors though, Luxembourg highly relies on trading with other countries as well. The main countries Luxembourg is trading, either exporting or importing are Germany, Belgium, France and the Netherlands, with Italy and the USA lower down on the list. The main exported products of Luxembourg are iron and steel, road vehicles, other industrial machinery, and more manufacturing materials. On the other hand, they also import road vehicles, and then petrol products, medical products and electrical appliances.

GDP per capita in Luxembourg - Predictions for 2025

Why does Luxembourg have a high GDP? Luxembourg’s world ranking according to the World Bank last January, would be 85,5 billion USD, which puts Luxembourg in the 72th place worldwide. The reason behind it is the dynamic and competitive economy of Luxembourg and the labor market and political stability the country has to offer. Luxembourg’s GDP growth is expected to remain limited in 2025 as the country experienced a slowdown due to new government measures which underlined some economic uncertainty and weaker investments as well due to inflation prices. And of course, the recent pandemic still influences Luxembourg’s public finances and the European energy crisis as well.

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Benefits of EU funding to Luxembourg’s economy in 2024

Even though Luxembourg is a wealthy country, of course it also benefits from EU budgets, funding and projects as well. The EU is practically assisting countries with bigger projects that they wouldn’t be able to afford by themselves and the extent of financial help is defined by the size, not of the country itself, but the country’s economy.

There are some basic benefits for all EU members, such as shared vision regarding immigration and environmental matters, as well as the same way of thinking when it comes to digitalisation within medical treatments, public services and road infrastructure. Much like in other EU countries, in Luxembourg, there are a number of on-going projects, funded by the EU, for example road building, which you can see&nbsp;<a href="https://kohesio.ec.europa.eu/en/?mapRegion=Luxembourg,Q9#my-region">here</a>. 



Economic overview - Capabilities and limitations of Luxembourg Economy

While the Luxembourgish economy is very strong, fast-growing, stable and resilient, rendering it very dynamic and competitive, therefore making Luxembourg an attractive place to live and do business, it does have some minuses worth mentioning. Due to the country’s small size and main focus on financial services, Luxembourg’s economy is not very diverse. Also, even though strong and stable, it still does highly depend on the Eurozone.&nbsp;

Even though, generally speaking, Luxembourg advances quite fast, since 2023, a small setback was noticed. Stricter financial conditions and less external demand put Luxembourg’s economy on hold with a decrease in investments. This pause seems that it will continue next year due to inflation and price augmentations within the EU. Still in the echo of the pandemic, Luxembourg’s revenue growth was affected, a fact that was partially regulated by higher income tax and social contributions. 

The foreign talent impact on Luxembourg’s economy

Something very important to keep in mind regarding the Luxembourgish economy is that for the past more than 150 years it was moulded by different cultures and influences. The French, Portuguese, German and Italian communities in Luxembourg are the biggest ones at the moment and this cultural blend helps keep Luxembourg economically stable. Almost half of Luxembourg’s population have different nationalities than the Luxembourgish and there are also the cross-border workers who, even though don’t live in Luxembourg, contribute daily to its growth. On top of that, Luxembourg being trilingual by default, as Luxembourgish, German and French are its three official languages, brings communication to the next level, promoting its economy even more.

Initiatives for a better economy - The Luxembourg economy of tomorrow

Luxembourg’s economy will continue to grow as long as the country is the financial center that it is today. Luxembourg is the second biggest private banking center after the US and the most important one within the EU, which is great, but the government is now promoting and supporting development of other sectors too, such as IT, communication, logistics and biotechnologies.&nbsp;

Luxembourg’s economy is objectively and based on statistics one of the best economies in the world, since it is robust, stable, and offers the highest minimum wages and a high GDP per capita. Luxembourg’s economy ranks at the top 10 of different lists on competitiveness, freedom and innovation.

Luxembourg has a great, stable and resilient economy, the financial sector is the biggest in the country, accounting for 25% of the country’s GDP, and a large part of skilled foreigners are contributing to the country’s growth. Luxembourg being a financial center in Europe and globally, with great quality of life, makes it competitive, so it is pretty normal to bump into a high GDP per capita.

Most definitely! Here are the most popular ones:&nbsp;<a href="https://guichet.public.lu/en/citoyens.html">Guichet.lu</a>,&nbsp;<a href="https://www.luxembourgforfinance.com/en/homepage/">Luxembourg for Finance</a>,&nbsp;<a href="https://luxinnovation.lu/0">Lux Innovation</a>,&nbsp;<a href="https://www.cc.lu/">Chamber of Commerce</a>,&nbsp;<a href="https://www.houseofentrepreneurship.lu/">House of Entrepreneurship</a>,&nbsp;<a href="https://www.host.lu/">House of Startups</a>

Luxembourg economy in 2024 is one of the strongest and fastest growing economies, not only in the EU but also globally. Luxembourg offers high quality of life with an equally high gdp per capita, facts that make it very attractive to live and start your business. In this article we will see a bit of history but also the future of the Luxembourgish economy, economic sectors and sources of Luxembourgish wealth, as well as some limitations and the ties to the EU economy.

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