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79% of the European Union GDP can be reached from Luxembourg in one day – The vast majority of the European Union’s GDP is within one day’s travel from Luxembourg – 500 miles or less. Luxembourg is at the heart of the European road and rail network: major north-south and east-west arteries provide easy and uncongested access to the main European consumer markets in France, Germany, the Netherlands, Belgium, Italy, Switzerland and even parts of the UK and Scandinavia. The state-of-the-art road and rail infrastructure provides the distribution channels for Europe’s fifth-largest cargo airport, a global hub for cargo giants such as Cargolux and China Airlines, and logistics providers such as Kühne & Nagel, Panalpina and DHL. They link Luxembourg on a daily basis with the world’s main manufacturing centers.

Lowest VAT rate in the EU – Standard Value Added Tax (VAT) rates in the EU vary from 15% to 25%. Luxembourg has consistently had the lowest possible VAT rate across the European Union (15%). This low rate applies to products and services delivered electronically from Luxembourg to the European marketplace. A number of large Internet-based businesses, including Apple iTunes and eBay, have established subsidiaries in Luxembourg to take advantage of this provision.

The only country in the EU that never requires VAT pre-financing – Most countries in the EU require that importers pay Value Added Tax (VAT) upon import of goods into the EU, prior to the sale of the goods to the end customer, a practice referred to as ‘pre-financing of VAT.’ Luxembourg’s advanced VAT regulations have completely eliminated that process. While several other EU countries allow similar processes upon request and under certain conditions, Luxembourg is the only country that never requires VAT pre-financing.

Favorable tax environment and competitive labor cost – The Luxembourg Government pursues a growth-oriented and business friendly tax policy addressing the needs of the employers and employees alike. Lower indirect labor costs for health care and social security contributions provide for a win-win situation, which leads to a lower overhead for the company and a higher net salary for the employee than in the neighboring states.

Dedicated logistics parks – Two dedicated parks (Eurohub Centre and Eurohub South) provide real estate within easy reach of the airport, with direct rail connection, multi-modal facilities, and direct access to two major European highways. Both parks are dedicated to logistics and logistics-related value-added services.

Authorized Economic Operator and Fiscal Representation – Luxembourg has introduced the EU wide recognized Authorized Economic Operator (AEO) and the associated Fiscal Representation to allow for easier, faster, and more secure import/export operations and fast-track customs procedures.

Consistent EU first mover advantage – Luxembourg has consistently reacted very quickly to the developing EU legal and regulatory environment designed to boost the economy. For example, the rapid implementation of the EU framework legislation providing for the cross-border distribution of mutual funds in Europe led to the creation in Luxembourg of the world’s second largest mutual fund industry (after the US), with total net assets under management of more than three trillion US dollars.

Easy access to government and administration – Luxembourg’s small size and the strong focus on economic diversification provides a nimble economic environment.  A very close cooperation between business, government and labor has resulted in a uniquely stable business environment, where disruptive labor action is virtually unknown, and government can address the needs of a business on an individual basis.