Luxembourg vs. Liechtenstein: two countries with high salaries and living standards
Luxembourg is a small country in the heart of Europe, and so is Liechtenstein. But which is smaller, Luxembourg or Liechtenstein? Which has a better quality of life? Where are there more job opportunities? These are common questions when considering relocating for better opportunities and weighing between two alternatives. In this article, we will compare these two countries across multiple aspects to shed light on all these questions.
A crucial detail to note is that Liechtenstein is not part of the European Union, though it is a member of the European Free Trade Association (EFTA) and the European Economic Area (EEA). This means you can travel to the country with a visa or residence permit from any European country.
Luxembourg vs Liechtenstein: briefly about the main things
Luxembourg and Liechtenstein, two of Europe's smallest yet most intriguing nations, offer contrasting opportunities and lifestyles. Luxembourg boasts the highest minimum wages in the EU and a multicultural environment, while Liechtenstein excels in quality of life with its stunning natural landscapes and low pollution levels.
The choice between these two nations can be challenging, in the following section we will explore and compare key aspects of living in Luxembourg and Liechtenstein, helping you make an informed decision on your ideal destination.
Population and territory
We begin our comparative analysis by addressing the question posed at the start of this article: which country is smaller, Luxembourg or Liechtenstein? Luxembourg is one of the smallest countries in Europe, covering an area of 2,590 km². However, Liechtenstein is even smaller, with a surface area of just 160 km². This means Liechtenstein could fit into Luxembourg about 16 times, underscoring just how tiny it is in comparison.
Regarding population, Luxembourg is significantly more populous. As of January 1, 2023, Luxembourg had a population of 660,809, whereas Liechtenstein had only 39,677 residents on the same date. To put it into perspective, Luxembourg has roughly 16 times the population of Liechtenstein, which has fewer inhabitants than many urban neighborhoods.
Additionally, examining the population growth of both nations reveals interesting trends. Since 2012, Luxembourg’s population has increased by 135,956 people, a 25.90% rise. In contrast, Liechtenstein’s population grew by just 3,202 people, representing an 8.78% increase. Luxembourg's population has been growing at a significantly faster rate.
Expat population
Luxembourg had a remarkably high percentage of foreign residents, making up 47.43% of its population, with the majority being Portuguese and French nationals. Interestingly, Liechtenstein surpasses this figure, with 68.61% of its population being foreign nationals in 2022, indicating that more than two-thirds of its residents are from abroad.
General vibe compared
When comparing the cultural and lifestyle differences between Luxembourg and Liechtenstein, there are both notable similarities and distinct differences.
Language is another area where these two countries show both similarities and differences. In Luxembourg, the official languages are Luxembourgish, French, and German. This trilingualism reflects the country's diverse cultural influences and is a key part of its national identity.
Liechtenstein, on the other hand, primarily speaks German, specifically the Alemannic dialect. While English is widely understood and spoken, particularly in business and tourism, German remains the dominant language in everyday life.
The climates of Luxembourg and Liechtenstein are quite similar, with both countries experiencing temperate conditions. Luxembourg has a moderate climate with mild winters and cool summers. Rainfall is evenly distributed throughout the year, making the environment lush and green.
Liechtenstein enjoys a similar temperate climate, though its mountainous terrain brings slightly more variation. Winters can be colder, especially in higher altitudes, making it a good destination for winter sports. Summers are generally mild, providing pleasant conditions for outdoor activities.
The lifestyle in Luxembourg is cosmopolitan, reflecting its status as a major financial hub and the presence of numerous international institutions. The country offers a high standard of living, excellent healthcare, and education systems. Luxembourg City, in particular, has a dynamic urban vibe with numerous dining, shopping, and entertainment options.
Liechtenstein offers a more serene and close-knit community lifestyle. With its small population, the country has a strong sense of community and a slower pace of life. Residents enjoy high living standards, with a focus on outdoor activities and a healthy lifestyle. The natural landscape of Liechtenstein, with its mountains and valleys, provides ample opportunities for hiking, skiing, and other outdoor pursuits.
Both Luxembourg and Liechtenstein are characterized by their rich cultural heritage, influenced by their European neighbors. Luxembourg, with its strategic location bordered by Belgium, France, and Germany, has a diverse cultural tapestry. The country celebrates numerous cultural events and festivals, reflecting its multicultural population. The capital, Luxembourg City, is known for its vibrant arts scene, including theaters, museums, and music festivals.
Liechtenstein, though smaller, also boasts a rich cultural scene. The country has a strong tradition in classical music, and its capital, Vaduz, is home to several museums and art galleries. The cultural life in Liechtenstein is heavily influenced by its close ties to Switzerland and Austria, offering a unique blend of Germanic culture.
Despite their similarities and proximity, these countries are different in many ways. However, it could be similarly easy to fit in, as the welcoming nature of the countries lends itself to intercultural living.
Quality and cost of life
The next two aspects we will analyze are the quality of life and the cost of living in both countries, which are crucial and often interrelated elements. Assessing the quality of life for European citizens can be quite challenging due to the subjective nature of this aspect.
Although there are statistics from the European Union that shed some light on this matter, Liechtenstein is not included as it is not a part of the EU, making comparative analysis more difficult. Therefore, we will rely on data from Numbeo, which offers a Quality-of-Life Index.
Index used | Luxembourg | Points | Liechtenstein | Points |
Purchasing Power Index | Very High | 181.37 | Very High | 161.07 |
Safety Index | High | 65.42 | Very High | 85.02 |
Health Care Index | High | 76.68 | High | 70.37 |
Climate Index | Very High | 82.62 | N/A | 0 |
Cost of Living Index | Moderate | 62.48 | Very High | 98.47 |
Property Price to Income Ratio | Moderate | 8.71 | Very Low | 4.97 |
Traffic Commute Time Index | Very Low | 26.1 | Very Low | 0 |
Pollution Index | Low | 21.79 | Very Low | 6.47 |
Quality of Life (total index) | 193.4 | 215.96 |
We must adjust this index slightly as it is based on eight sub-indices, one of which, related to climate, is not available for Liechtenstein. By recalculating the Quality-of-Life Index excluding the climate factor, Luxembourg scores 193.4, while Liechtenstein surpasses it with a score of 215.96. Although Liechtenstein loses points due to its high cost of living and is slightly lower in the health index, it outperforms Luxembourg in all other areas.
Cost of living
Now, let's examine the cost of living in Luxembourg versus Liechtenstein. The cost of living is relatively high in both countries, but to understand the extent, it's useful to use reference indexes. Numbeo provides the world's largest database on the cost of living, and its data and indexes offer a clearer picture.
Numbeo provides several indexes, all based on comparisons with costs in New York City. Their most comprehensive index, the “Cost of Living Plus Rent Index” estimates the prices of consumer goods, including rent, relative to New York City.
In the “Cost of Living Plus Rent Index,” comparing data from 260 major cities in Europe, we find that Vaduz, the capital of Liechtenstein, is one of the most expensive cities in the world, only surpassed by major Swiss cities and significantly more expensive than Luxembourg.
The only area where Luxembourg is more costly than Liechtenstein is housing costs, although not by much, as Liechtenstein closely follows. In other indexes, such as the Groceries Index, Restaurant Price Index, and Local Purchasing Power Index, Luxembourg is better positioned.
Employment and job opportunities
We have arrived at a crucial point: employment and work opportunities. Both countries offer ample opportunities, but each excels in different areas.
Top industries
Luxembourg's economy is one of the most dynamic in Europe and among the most open in the world. It regularly ranks in the top 10 globally for competitiveness, digitalization, and innovation. The most developed industrial areas in Luxembourg include the steel industry and financial services.
The steel industry has long been a major source of employment and wealth in Luxembourg, contributing significantly to the national GDP. In the mid-20th century, Luxembourg became the world’s largest steel producer. The success of this sector greatly contributed to the country's economic development for many years. However, following the first steel crisis in the 1970s, the government made considerable efforts to diversify the economy by creating a favorable fiscal environment, which soon turned Luxembourg into one of the world's leading financial centers.
Today, the financial sector is one of the most important in the country, representing 25% of Luxembourg's GDP. As of the end of April 2024, there were a total of 117 banks in the Grand Duchy, with private banking playing a significant role. Additionally, over the past fifteen years, Luxembourg has become the main European center for investment funds. Luxembourg serves as an operational hub for many international financial institutions.
Many of the world's largest multinational companies, such as Pepsi, Ikea, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan, FedEx, Amazon, and Deutsche Bank, have established operations in Luxembourg
Liechtenstein's economy is characterized by its diversification, with a notable balance between the secondary (industry) and tertiary (services) sectors.
In the tertiary sector, which accounts for approximately 55% of GDP, financial services are crucial, representing around 24% of the total GDP and nearly half of the tertiary sector. Liechtenstein excels in banking and a wide range of asset and wealth management services, benefiting from attractive fiscal policies and political stability. Additionally, the country has invested in technology and innovation, particularly in advanced research, high technology, and the medical and health technology sectors.
In the secondary sector, which represents about 40% of GDP, Liechtenstein excels in manufacturing, specializing in the production of precision tools, machinery, and equipment, led by companies like Hilti. The country is especially strong in the chemical, pharmaceutical, IT, and dental sectors (it is the world's leading exporter of dental crowns).
Despite the dominance of industry and financial services, the primary sector (agriculture) also plays a role, accounting for approximately 8% of GDP, though to a lesser extent than the other two sectors.
How to get a job in Luxembourg: application, interview, contract
Working as a foreigner
Both countries continuously attract professionals from around the world. However, Luxembourg, being larger, experiences higher immigration for work purposes. In 2022, Luxembourg welcomed 3,204 people, while Liechtenstein only welcomed 124. Moreover, the trend in work-related immigration shows a growing increase in Luxembourg, while in Liechtenstein, it has remained practically stable over the past decade.
BYOB (Bring Your Own Business)
Both Luxembourg and Liechtenstein are ideal countries to take your business there or to start one, if you want more information on this subject we recommend a couple of sites with information on it, one for Luxembourg and one for Liechtenstein.
Professions in-demand in Luxembourg vs. Switzerland
The following table shows the most in-demand professions in both countries, with data sourced from Luxembourg's ADEM (Agence pour le Développement de l’Emploi) and Visit World Today website.
🇱🇺 Luxembourg | 🇱🇮 Liechtenstein |
Analysis of loans and banking risks | Engineers |
Bank customer management | Metallurgists and machine tool builders |
Front office, back office and middle management in the financial markets sector | IT-specialists |
Paving and restoration of pavements | Marketing specialists |
Management and engineering research and industrial development | Interpreters |
Production Management and Engineering | Teachers at institutions of higher education |
Installation and maintenance of industrial and operating equipment | |
Caregiver Assistant / Nurse | |
Psychologist |
Minimum wages and salaries
In Luxembourg, there are two minimum wages: one for unskilled workers and another for skilled workers. The minimum wage for an unskilled worker aged 18 or older is 2,570.93 euros, while for a skilled worker, it is 3,085.11 euros.
According to the International Labour Organization (ILO), in 2022, the average salary in Luxembourg was 7,044 euros per month, amounting to about 84,500 euros per year. But Liechtenstein does not have a minimum wage, with wages being determined through negotiation. The latest data from the ILO on average wages dates back to 2018, indicating an average salary of 6,675 Swiss francs, or about 83,000 euros per year.
The average salaries are different from minimal, and represent the usual payment one can count on on skilled positions in both countries
Taxation of the income
Comparing taxes is complex due to the variety of tax types in each country. Therefore, a starting point for clarity is to compare income tax rates and maximum rates. The highest tax bracket in Luxembourg is 45.80%, much higher than in Liechtenstein, which stands at 22.4%.
However, this is only an initial perspective. Many other factors should be considered. This overview provides a starting point for evaluation, but seeking professional advice tailored to individual circumstances is highly recommended.
Before and after taxes
If you would like to get an idea of how much tax you would have to pay in Luxembourg, take a look at our service. We have created an income calculator, that explains a lot.
Relocation procedures and options
Relocating to a new country involves a myriad of questions and considerations. When contemplating a move to Luxembourg or Liechtenstein, one might wonder about the visa requirements, residency permits, and the overall process of settling into a new environment. Here, we explore the most common relocation options and the primary requirements associated with each.
Popular grounds for relocation
Many individuals relocate for educational opportunities. Luxembourg and Liechtenstein boast prestigious universities and research institutions, attracting students from around the globe. To study in these countries, one typically needs to secure a student visa.
Requirements usually include:
- Proof of enrollment at a recognized institution.
- Evidence of sufficient financial resources to cover tuition and living expenses.
- Valid health insurance.
- A valid passport and possibly a background check.
Relocating for employment is another prevalent reason. Both Luxembourg and Switzerland have robust job markets in various sectors. To move for work, the following are generally required.
To move for work, the following are generally required:
- A valid job offer from a company in the destination country.
- A work visa or permit, which the employer often assists in obtaining.
- Proof of qualifications and sometimes proficiency in the local language(s).
- Valid health insurance and a clean criminal record.`
A special option in this area is the European Blue Card, which is available in most European countries, including Luxembourg, but not in Liechtenstein. This card is intended for highly qualified workers, it offers certain advantages but also comes with special conditions for obtaining it, the requirements for this card in Luxembourg are as follows:
- Have an Employment Contract of One Year or More for a Highly Qualified Position.
- Receive a Substantial Remuneration Based on the Sector.
The offered salary must meet specific criteria based on the sector:
- At least 1.2 times the Luxembourg average gross annual salary (67,824 euros) for professions such as mathematicians, systems analysts, software and web designers, programmers, database specialists, and network administrators, where a particular need for third-country workers is identified by the government.
- At least 1.5 times the Luxembourg average gross annual salary (84,780 euros) for all other professions.
- Provide Documentation of High Professional Qualifications.
- Obtain a Certificate Issued by ADEM Authorizing the Employer to Hire a Third-Country National.
Work visa in Luxembourg
If you are interested in working in Luxembourg, we recommend our detailed article on how to obtain a work visa for Luxembourg.
Moving to join family members is a common motivation for relocation. Family reunification visas allow spouses, children, and sometimes extended family members to live together.
Requirements typically include:
- Proof of relationship (marriage certificate, birth certificates).
- Evidence that the family member residing in the destination country can financially support the applicant.
- Accommodation that meets local standards.
- Health insurance coverage.
How to choose where to relocate between Luxembourg and Liechtenstein?
Choosing between Luxembourg and Liechtenstein for relocation can be a challenging decision, as both countries offer unique benefits and drawbacks. Whether you prioritize economic opportunities, quality of life, or lifestyle preferences, understanding the positive and negative aspects of each country can help you make an informed choice.
Frequently Asked Questions (FAQ)
Which country is smaller, Luxembourg or Liechtenstein?
Which country has a higher cost of living, Luxembourg or Liechtenstein?
How do the tax rates compare between Luxembourg and Liechtenstein?
Source: datos.bancomundial.org, ec.europa.eu, ec.europa.eu, www.numbeo.com, www.numbeo.com, www.numbeo.com, www.numbeo.com, ec.europa.eu, www.cssf.lu, es.wikipedia.org, fr.wikipedia.org, courriercadres.com, adem.public.lu, visitworld.today, rshiny.ilo.org, luxembourg.public.lu, frontaliers-grandest.eu, taxfoundation.org, taxsummaries.pwc.com
We took photos from these sources: Ondrej Bocek on Unsplash