Luxembourg needs no introduction. It is a founding member of the EU. It has the headquarters of the European Investment Bank, the secretariat of the European Parliament, part of the European Commission, the Court of Auditors and the European Courts of Justice. It is also the headquarters of one of Europe's biggest steel companies, and is well known in satellite communication.

BANKING

Banking is very important to Luxembourg with around 220 banks, for both private banking and international banking, as well as being the headquarters for CEDEL the clearing house. Bank secrecy continues to be important.

INVESTMENT FUNDS

Luxembourg is one of the main administrative centres in Europe for tax free investment funds (UCITS).

INSURANCE, REINSURANCE AND BANCASSURANCE

Luxembourg is attractive for the insurance industry and the figures speak for themselves.

SHIPPING

The Luxembourg flag, in the European context, is interesting not only for merchant shipping but also for mega yachts.

PENSION FUNDS

During May 1999 Luxembourg voted in a transparent Pension Fund Law which it is felt will draw in further international funds to the banking and insurance world. This law fits in with EU objectives.

HOLDING COMPANIES

There are two types of holding company:

  • The 1929 holding company which is virtually tax free and is generally excluded from Luxembourg's tax treaties; and
  • The 1990 soparfi, which is taxable but fits in with the European Directive and benefits from Luxembourg's tax treaties.

In particular there are no taxes on dividends providing there is a holding of more than 10% which is held for more than one year.

Equally there are no capital gains tax when there is a holding of more than 25% held for more than one year.

There are many other advantages as well.

LOCATION

Luxembourg has to be one of the most attractive locations in Europe as well as being one of the most adaptable in regard to languages.

LANGUAGES

The main languages are Luxemburgish, German, French, English and Portuguese. The European Community provide for the other EU languages such as Swedish, Finnish, Greek, Italian, Spanish and Dutch.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article also appears in the 'International Offshore and Financial Centres Handbook 1999/2000'. For further information about this highly informative guide to offshore centres, or to order your copy, please phone +44 (0) 207 820 7733 or send an email to iofch@mondaq.com