Is Luxembourg a good place to live? Pros and cons, prices and more

Life in Luxembourg in the "melting pot" of Europe

Nestled in the heart of Europe, Luxembourg is a small yet remarkable country known for its rich history, strategic location, and vibrant multicultural environment. As one of the founding members of the European Union and a participant in key international organizations like NATO, Luxembourg plays a pivotal role on the global stage. Despite its modest size, this landlocked nation boasts a robust economy, exceptional quality of life, and a unique blend of cultural influences, making it an attractive destination for expatriates and locals alike.

Luxembourg’s charm lies not only in its picturesque landscapes and historic architecture but also in its dynamic and inclusive society. The country is home to a diverse population, with 313,407 foreign inhabitants, representing about half of the population. This multicultural tapestry is reflected in Luxembourg's everyday life, where multiple languages are spoken, and various cultural traditions are celebrated.

But not everything is gold, Luxembourg also has problems such as the high cost of living, the high cost of accommodation and even aspects that are not so negative but a little less attractive for some, such as its climate, which is generally quite cold. Below we will go into detail on some of the main positive and negative aspects of living in Luxembourg.

Benefits of living in Luxembourg

The benefits of living in Luxembourg are many. The country is renowned for its safety, it ranks 15th in the index of personal security in the Global Residence Index, ensuring peace of mind for its residents. The country also boasts an excellent healthcare system and provides free public transportation, enhancing the convenience and quality of daily life. Strategically located in the heart of Europe, Luxembourg offers easy access to neighboring countries, making it a central hub for travel and business.

Moreover, Luxembourg is known for its high salaries, with the minimum average salary for skilled workers at 3,085.11 euros per month and 2,570.93 euros for unskilled workers. The nation also presents great career opportunities, particularly in the finance, technology, and logistics sectors. Home to a diverse and welcoming expatriate community, Luxembourg’s 313,407 foreign inhabitants make up about half of its population, fostering a multicultural and inclusive environment.

Safety

Wondering if Luxembourg is a good place to live? From a safety perspective, the answer is a resounding yes. Luxembourg consistently ranks among the safest countries globally, securing the 15th position in the Global Residence Index's personal security index. Let's take a closer look at security aspects in various areas:

Political Stability

Luxembourg enjoys political stability, with well-established institutions and a robust rule of law, as per the assessments by the Global Residence Index. This stability ensures a conducive environment for residents and expatriates alike.

Risk of Conflict-related Deaths

With a history of neutrality and being spared from major conflicts since World War II, Luxembourg offers a low risk of death or injury from war, conflicts, or acts of terrorism.

Security Risks

Luxembourg boasts a remarkably low safety risk, as evidenced by its 0.1 risk rate on the Global Residence Index. This indicates a minimal likelihood of harm or danger to individuals' security within the country, reflecting its effective law enforcement and proactive safety measures.

Homicide Rate

Luxembourg maintains a low homicide rate, with only 0.4 intentional killings per 100,000 population, a statistic that has remained consistently low over the past decade according to the Global Residence Index.

Kidnapping and Abduction

Kidnapping risk in Luxembourg is also minimal, with data from the United Nations Office on Drugs and Crime indicating an average of 7.7 kidnappings per 100,000 people from 2006 to 2018. Recent figures show a further decrease to 6 kidnappings per 100,000 people, highlighting the country's commitment to ensuring the safety of its residents.

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For those interested in learning more about security in Luxembourg, we recommend exploring our article dedicated to this topic.

Great healthcare

Luxembourg boasts a robust healthcare system, ranking 12th globally in health pillar score according to the 2023 Legatum Prosperity Index. Singapore, Japan, and South Korea lead the pack in this regard. Additionally, Luxembourg is among the top countries globally in healthcare expenditure, according to the World Health Organization (WHO).

The healthcare system in Luxembourg comprises both private and public sectors. The public sector is divided into three sections: CMFP for public sector employees, CMFEC for communal and government officials, and EMCFL for railway system employees. It operates on principles of universal coverage, accessibility and equality for all. All residents, local or foreign, have access to health services, regardless of their income or employment status.

To uphold these standards, health insurance is mandatory for all residents, who must enroll in the CCSS (Centre Commun de la Sécurité Sociale) to benefit from services provided by the Caisse Nationale de Santé (CNS). Luxembourg's healthcare system covers approximately 80% of healthcare costs, patients are responsible only for the remaining 20%. 

For a better understanding of the Luxembourg health care system, we recommend our guide on this subject.

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Guide

Health care system in Luxembourg

Free transport

Luxembourg offers free public transport nationwide, a pioneering initiative aimed at promoting sustainable mobility and reducing traffic congestion. This means residents and visitors can enjoy unlimited access to buses, trams, and trains across the country without paying fares.

This initiative is crucial for several reasons. By removing financial barriers to public transport, Luxembourg aims to encourage more people to use eco-friendly modes of transportation, reduce reliance on private vehicles, and alleviate environmental pressures. Moreover, it enhances accessibility, particularly for low-income individuals, while fostering a sense of community and shared responsibility for sustainable living.

Heart of Europe

Luxembourg, often referred to as the "Heart of Europe," holds a pivotal position as the main financial hub of the European Union (EU). This small yet influential country plays a central role in facilitating cross-border financial transactions, investment activities, and corporate operations within the EU and beyond.

The significance of Luxembourg as a financial hub stems from its favorable regulatory framework, political stability, and strategic location at the crossroads of major European markets. Its status as a leading jurisdiction for banking, investment funds, and wealth management services has attracted numerous multinational corporations, financial institutions, and investors to establish a presence in the country.

As a result, Luxembourg contributes significantly to the EU's economic growth and stability, driving innovation, fostering business development, and promoting international cooperation in the financial sector.

High salaries

When wondering how living in Luxembourg is? a large part of the answer lies in its salaries. Despite being one of the smallest countries globally, Luxembourg boasts the continent's highest average monthly wage of $7,418. Alongside Luxembourg, Switzerland, Denmark, Belgium, Norway, and the Netherlands lead with average salaries exceeding $5,000.

Great work-life balance

In Luxembourg, it is possible to achieve a healthy work-life balance thanks to strong employee protection legislation. The Luxembourg labor code includes numerous benefits that promote work-life balance.

Overtime Payment

The standard workday in Luxembourg is 8 hours, totaling 40 hours per week. Workers receive compensation for any hours exceeding this, with a maximum of 2 extra hours per day and 8 per week.

Annual Paid Leave

Luxembourg workers are entitled to a minimum of 26 days of paid annual leave. Employers or collective agreements can grant additional paid vacation days.

Weekend and Holiday Work Compensation

All employees and apprentices are entitled to 11 legal public holidays. Compensation is provided for work done on weekends and holidays.

Sick Leaves

Luxembourg workers are entitled to leave without work obligations in case of illness or accidents, ensuring their health and well-being.

Maternity Leaves

Pregnant women in Luxembourg receive 20 weeks of maternity leave, starting 8 weeks before the expected delivery date and extending 12 weeks after birth.

Paternity Leaves

Fathers are granted 10 days of special leave following the birth or adoption of a child under 16 years old.

Severance Pay in Luxembourg

Employers must provide notice before termination, and if the employee has been with the company for 5 years or more, they are entitled to an extended notice period and severance pay unless dismissed for serious misconduct.

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If you are thinking of going to work in Luxembourg and want to know more about this topic, check out our article on Employee benefits in Luxembourg.

Great career opportunities

Luxembourg offers a wealth of career opportunities, particularly in high-demand sectors such as finance, technology, and logistics. Major international companies, including Amazon, ArcelorMittal, and Deloitte, have established significant operations in Luxembourg, drawn by its strategic location and favorable business environment. This presence of global corporations creates a dynamic job market, making Luxembourg a popular destination for job seekers from around the world.

For those interested in self-employment, Luxembourg presents an attractive landscape. Starting a freelance career is relatively straightforward. Although the initial process may seem complex, understanding the legal requirements and procedures quickly simplifies the journey. One notable advantage is that freelancers in Luxembourg do not need a special independent entrepreneur status, unlike in some neighboring countries. This ease of entry lowers barriers for aspiring freelancers.

Furthermore, the tax system for self-employed individuals is the same as for salaried workers, making the transition from traditional employment to freelance work seamless. There’s no need to navigate new tax systems or face additional tax burdens, simplifying financial planning and management.

Subsidies for drivers

Luxembourg is committed to ecological sustainability, actively promoting the use of electric and hybrid vehicles. The government offers substantial financial incentives to residents who choose eco-friendly transportation options. Those who purchase an electric or hybrid vehicle can apply for a subsidy of up to 8,000 euros, significantly reducing the initial cost. Additionally, the annual circulation tax for these vehicles is reduced, providing ongoing financial benefits.

This initiative not only makes owning an electric or hybrid vehicle more affordable but also contributes to a greener environment by reducing carbon emissions. The increased number of charging stations across the country further supports this transition, making it convenient for residents to maintain their eco-friendly vehicles. Through these subsidies, Luxembourg aims to foster sustainable living and improve the quality of life for its residents.

Whether you are in Luxembourg or plan to live there, if your car is wearing out and you are thinking about getting a new one or if you are thinking about your first car, we suggest you take a look at our guide on how to buy a car in Luxembourg.

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Guide

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How to buy a car in Luxembourg

Good ecology

Luxembourg is renowned for its commitment to preserving its natural environment. The government implements rigorous measures to protect its rich biodiversity and maintain clean air and water. Extensive green spaces and numerous conservation areas reflect the nation's dedication to sustainability. For nature enthusiasts, Luxembourg offers several beautiful places to visit outside the cities:

• Mullerthal Region (Little Switzerland): Known for its unique rock formations and scenic hiking trails.
• Upper Sûre Lake: A stunning reservoir surrounded by forests, perfect for water sports and picnics.
• Haff Réimech Nature Reserve: A haven for birdwatchers, featuring diverse wetland habitats.
• Moselle Valley: Famous for its picturesque vineyards and charming river landscapes.
• Oesling Region: Part of the Ardennes, it offers rolling hills and dense forests ideal for outdoor adventures.

Expat-oriented

Luxembourg is renowned for its multicultural population, making it an attractive destination for expatriates. As of January 1, 2023, the Grand Duchy's population reached 660,809, with foreign nationals constituting 47.4% of the total. This diverse demographic is a testament to Luxembourg's welcoming environment and international appeal.

The top nationalities among foreign residents are:

Portugal

92,101 inhabitants

France

49,104 inhabitants

Italy

24,676 inhabitants

Belgium

19,205 inhabitants

The five-handshake rule

Living in Luxembourg offers a unique and convivial experience due to its small size and tight-knit community. The country is so compact that it’s often said you are only five handshakes away from anyone, including the Prime Minister. This closeness fosters a friendly and approachable atmosphere where residents frequently run into each other in everyday places, such as the local vegetable market.

This sense of familiarity makes living in Luxembourg feel like being part of an extended family. The ease of forming connections and the accessibility of prominent figures contribute to a welcoming and inclusive environment, enhancing the overall quality of life.

The disadvantages of living in Luxembourg

Firstly, the cost of living in Luxembourg is notably high, although it is not the most expensive country in Europe, with Switzerland holding that title. Additionally, rental problems are prevalent, making it extremely challenging to find affordable accommodation. 

In addition, the language barrier can cause difficulties for expatriates, as Luxembourg has three official languages, which complicates integration efforts. Moreover, there are some factors that although not so serious, may be somewhat discouraging, such as the country's peculiar climate characterized by frequent rainfall and relatively low temperatures, which can make it difficult for newcomers to get used to.

Cost of living

Luxembourg is renowned for its high cost of living, which can pose a significant barrier to entry for newcomers to the country. Initially, living in Luxembourg as a foreigner may prove challenging due to the steep expenses. However, once employed in the country, salaries typically compensate for this elevated cost of living.

Rental problems

A significant portion of Luxembourg's high cost of living stems from exorbitant real estate prices, contributing to rental challenges for residents. However, the government is aware of this issue and actively seeks solutions to address it.

To alleviate rental problems, the Luxembourgish government has implemented various initiatives, including expanding social housing programs, incentivizing affordable housing developments, and promoting sustainable urban planning. These efforts aim to create a more inclusive housing market and improve accessibility for all residents.

Language barrier

Luxembourg's three official languages present a challenge to integration. As a foreigner, you'll need to learn at least French or German, and likely some Luxembourgish as well.

For expatriate families, the language barrier can pose difficulties, especially for children entering the education system. Due to the language-learning pace from a young age, expat children may start at lower levels of education. This adjustment period can be frustrating for both parents and students, impacting academic progress and social integration.

Close-knit community

Luxembourgers are known for their strong sense of community and rich cultural traditions. However, becoming part of their circles can sometimes be challenging for newcomers. The price of participation in social life is often the first hurdle to overcome; a casual evening out at a bar can easily set you back 50 euros.

Peculiar climate

Luxembourg's climate is often likened to rainy Britain, characterized by frequent precipitation and relatively low temperatures. The country experiences mild summers and cool winters, with rainfall distributed throughout the year. Due to its inland location and elevation, Luxembourg is subject to continental influences, resulting in moderate temperature variations. 

Complicated taxation system

Navigating Luxembourg's taxation system can initially be daunting, with some individuals struggling to grasp its complexities entirely. Understanding the intricacies of taxation requires diligence and often professional guidance.

Additionally, Luxembourg offers the option of the PACS (Pacte Civil de Solidarité), a civil partnership agreement that some couples utilize to reduce tax liabilities. Opting for joint taxation under PACS in some cases can result in lower overall tax burdens for partners compared to filing separately.

Although the Luxembourg tax system may seem complex, there is a lot of information on the internet and with a little patience and reading it is possible to become familiar with the system. Furthermore, in many cases, the tax incentives and regulations available can help individuals optimize their financial affairs and effectively mitigate tax obligations.

Luxembourg offers an array of advantages alongside some less favorable aspects. Among its notable strengths are its renowned safety, high standard of living, generous healthcare system, vibrant multicultural community, and promising career opportunities.