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Luxembourg vs. Netherlands: two best tax countries of Europe for expats
The article will help future expats to make a choice between the Netherlands and Luxembourg. Here you will find a comparison of population, quality and cost of life, work opportunities, average wages and tax systems.
The Netherlands and Luxembourg are small countries located in the North West of Europe. They are both members of the politico-economic union of Benelux, and have almost similar flags. Besides, the highest in the world Quality of life index, favorable tax systems and a significant share of expats in their population. Does one country have any advantage over the other?
Luxembourg vs Netherlands: briefly about the main things
Luxembourg and Netherlands are two European powerhouses, each offering unique advantages to residents and visitors. With rich history and big role in the past of the Europe, they are quite alike in some things. Starting with the flags.
In the next few sections, we'll look at the main things that affect this decision, from the cost of living to job opportunities. We'll also give you some tips to help you decide between Luxembourg and the Netherlands. First, we'll take a look at the countries and their populations.
Grand Duchy of Luxembourg
One of the world's smallest countries landlocked in northwestern Europe.
Kingdom of the Netherlands
Land of tulips, wooden shoes and windmills, bounded by the North Sea.
Population and territory
Luxembourg and the Netherlands are small countries in the north west of Europe. Both are also part of the EU. Luxembourg with a total area of just 2,586 square kilometers is the smallest, and fits neatly more than 16 times within the territory of the Netherlands.
2,590
square kilometers – territory of Luxembourg
41,865
square kilometers – territory of Netherlands
Luxembourg is bordered by 3 countries: Germany on the east side, Belgium on the west and north, France on the south. The population of Luxembourg is close to 700,000 people. Luxembourg has mountains and beautiful nature. People are sociable and sincere.
On the East side the Netherlands borders Germany, and in the south, between the Netherlands and Luxembourg, you will find Belgium, the third country of the Benelux. The Netherlands has a population of just over 18 million people. Most of the Netherlands is flat, only in the south there are some hills. The beaches are popular to visit in the summer. People are friendly, open and direct.
Graphics by Luxtoday
672,000
population of Luxembourg in 2024
18,093,900
population of Netherlands in 2024
The number of citizens of Amsterdam, the capital of the Netherlands, is 921,402, exceeding the population of the whole country of Luxembourg. Though the growth of the population of the Netherlands since 2012 is only 6% while the growth of the Grand Duchy is 25.9%.
Expat population
In terms of the composition of population, Luxembourg had a considerable proportion of its population born in other countries, amounting to 43%. The majority of these individuals were of Portuguese and French nationality. In comparison, Netherlands have a relatively smaller but still notable percentage of expats, and mostly European too, at 26%.
General vibe compared
When comparing the general vibe of Luxembourg and Netherlands, several cultural and lifestyle differences stand out, alongside some notable similarities.
Languages
Language will also not be a problem for foreigners living in one of those two countries. In both countries most people speak at least English. Although a lot of people in the Netherlands also speak German and French, it is not so common as in Luxembourg where German, French and Luxembourgish are the official languages
Climate
The climate in Luxembourg is temperate, characterised by mild winters and cool summers. Where one country has mountains and overall a beautiful and great nature, the Netherlands has beaches and sea to relax. As both countries are located close to each other, the weather is quite similar. The winters are moderate with temperatures between +3°C to -6°C, and the summers are warm and pleasant.
Lifestyle
If you have a family, Luxembourg can be more interesting as child care is cheaper there. Another factor which could be interesting is the work/life balance, which is very good in both countries too. If you are younger and want to live your life to the fullest, Amsterdam can be more attractive as some people think that Luxembourg is quieter. In Luxembourg on Sunday shops are not open, in the Netherlands shops are open all week including Sunday, and in the evening.
Living in Luxembourg can be very satisfying. It is not difficult to find an outstanding job with high wages and feel happy in a relaxing city. The Netherlands can grant you an interesting, well paid job and more possibilities to enjoy life when you are young.
What are the similarities?
Warm
Mild winters and pleasant climate will create a good mood at any time of the year. No need for a fur coat.
Great for travelers
A well-developed structure for traveling, hostels and hotels, and a large flow of tourists who come to visit.
One language
English is widely used language in business and day-to-day communication, so it will be easy to blend in, knowing it.
Welcoming for expats
Both countries provide a great environment for those, who decided to create a new life in a foreign country.
Quality and cost of life
The next two aspects we'll analyse are the quality of life and the cost of living in both countries, two extremely important elements that often go hand in hand.
Quality index
Assessing the well-being trends of European citizens is quite complex due to the subjective nature of this aspect. However, European Union statistics provide some insights. One such metric is the Global Life Satisfaction Index, where Europeans rate their life satisfaction on a scale from 0 (very dissatisfied) to 10 (very satisfied).
Source: Numbeo
The overall Global Life Satisfaction index in both countries is quite comparable, with a 7.2 for Luxembourg and a 7.6 for the Netherlands. Luxembourg claims the first place, closely followed by the Netherlands in a 2024 Quality of Life Index report by Numbeo.
Although the Netherlands is in the second place for the quality of life, other indexes are higher ranked than Luxembourg, like the safety index, healthcare index, the traffic commute time and the climate, whereas Luxembourg performs better on the cost of living, and property price per income ratio. On the pollution index they are equally good.
Cost of living
Now, let's examine the cost of living in Luxembourg vs Netherlands. Both countries have a high cost of living, but to understand the extent, it is useful to use reference indexes. Numbeo provides the world's largest database on the cost of living, and its data and indexes give us a clearer picture.
It's a bit more complicated to compare the cost of living because the Netherlands is bigger and has more cities than Luxembourg. So, we're going to compare two Dutch cities to Luxembourg. First, we'll look at Amsterdam, the capital of the Netherlands, and Luxembourg, the capital of the Grand Duchy.
The cost of living in Luxembourg is about 10.6% lower than in Amsterdam. A big part of this difference is due to lower rent for accommodations. Another thing to note is that restaurant prices are 4.3% lower in Luxembourg. Luxembourg has 7.4% higher prices for groceries, but locals have a whopping 52.3% higher purchasing power than in Amsterdam.
Eindhoven is home to the high-tech campus, and ASML is right nearby. If you're looking to work in tech, Eindhoven is definitely worth a look. When you compare Luxembourg to Eindhoven, you'll find that life in Luxembourg, including rent, is 9.6% more expensive. Restaurants and groceries are both 19.5% and 10.1% cheaper in Eindhoven. On the plus side, though, local purchasing power is 24.6% higher in Luxembourg.
If you're thinking about living in one of these countries with a family, the cost of childcare is something to consider. It's much cheaper in Luxembourg than in the Netherlands. The average price in Luxembourg is 43.5% less per month for one child.
Both countries have free basic education through high school. You can also choose to enroll in international schools, which charge a yearly fee. Luxembourg has one university, while the Netherlands has several.
Source: Cost of Living Comparison by Numbeo
Public transport is in both countries well organized and safe, but in Luxembourg for free, and in the Netherlands it is quite expensive. In the Netherlands, Schiphol airport is a big hub in international air traffic. This means that it is very easy to fly anywhere on the globe. Although Luxembourg airport is a major regional airport, it has less international connections than Schiphol.
Public transport in Luxembourg is completely free, learn why in our article
Read the articleEmployment and job opportunities
We have reached a crucial point: employment and work opportunities. Both Luxembourg and Netherlands offer extensive opportunities, but each excels in different areas.
BYOB (Bring Your Own Business)
Luxembourg and the Netherlands are both great countries to relocate your own company or start your own business. You can find more information about this topic on the dedicated websites for businesses in Luxembourg and in the Netherlands.
Top industries
In both the Grand Duchy and the Netherlands you can easily find jobs in construction, tech, healthcare and finance, currently there is a big demand for employees and many job openings. Another sector that is searching for employees in every country is logistics.
How to get a job in Luxembourg: application, interview, contract
Professions in-demand in Luxembourg vs. Netherlands
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 ThinkEurope website.
Top demanded jobs in both countries in 2024
| 🇱🇺 Luxembourg | 🇳🇱 Netherlands |
| Analysis of loans and banking risks | Software developers and data scientists |
| Bank customer management | Project managers and Human Resources |
| Office and middle management in the financial | Cybersecurity experts |
| Paving and restoration of pavements | Legal advisors and financial and business analysts |
| Management and engineering industrial researchers | Machine operators and Automotive Technicians |
| Production management and engineering | Electricians and plumbers |
| Installation and maintenance of industrial equipment | HVAC Technicians |
| Caregiver Assistant / Nurse | Truck and lorry drivers |
| Psychologist | Warehouse workers |
Minimum wages and salaries
As the European Union has so many countries with different economies, wages are also very much differentiated across the EU. Bulgaria has the lowest minimum wage, where Luxembourg has the highest. There are two minimum wages: one for unskilled workers and another for skilled workers in Luxembourg. 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.
In Luxembourg, a person's wage is based on a few key factors, like which industry you're in, your level of education, your skill level, and your age. In a developed country like Luxembourg, equality and fairness are important, but they can't affect a person's wage. The average wage in Luxembourg is 68,151 euro, the salaries are automatically adjusted, which is called salary indexation.
We have previously covered the possible salaries in Luxembourg in our article
Read articleFor the Netherlands, mostly the same key factors determine the wage of a worker. Age, which industry, education, and experience. The average wage is 55,842 euro in the Netherlands.
2,300
euros is the minimum wage in Netherlands for both skilled and unskilled workers.
36.97%
of tax is calculated over the first 75,518 euro of the income in Netherlands.
Taxation of the income
Luxembourg has a progressive tax system, whereby taxpayers are required to pay a higher tax rate on their income above a certain threshold. Over the past few years, the Netherlands has implemented significant reforms to its tax system.
3
tax classes with a different tax rate are present in Luxembourg
2
tax classes with a different tax rate are present in Netherlands
45.78%
the highest tax rate possible in Luxembourg
49.50%
of tax rate on the income above 75,518 euros in Netherlands
This provides an initial perspective, but many other factors must be considered. It is advisable to seek professional advice tailored to individual circumstances to get a comprehensive understanding of tax implications.
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 Netherlands, one might wonder about the visa requirements, residency permits, and the overall process of settling into a new environment. These are the common procedures required.
Popular grounds for relocation
Studies
Many individuals relocate for educational opportunities. Luxembourg and Netherlands 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 enrolment at a recognised institution,
- Evidence of sufficient financial resources to cover tuition and living expenses,
- Valid health insurance,
- A valid passport.
Work
Relocating for employment is another prevalent reason. Both Luxembourg and Netherlands have robust job markets in various sectors. To move for work, the following are generally required.
Requirements usually include:
- 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.
Work documents required
If you are interested in working in Luxembourg, we recommend our detailed article on how to obtain a work visa for Luxembourg.
A special option in this area is the European Blue Card, which is available in most European countries, including Luxembourg. This card is intended for highly qualified workers, it offers certain advantages but also comes with special conditions for obtaining it.
Role and qualification
You need to possess an employment contract for a year or more, which assumes a highly-qualified position in the company. Of course, you will also need to proof your qualifications with certification documents.
Great salary
Offered salary must be 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. And at least 1.5 times the Luxembourg average gross annual salary (84,780 euros) for all other professions.
ADEM approval
In case you are coming from a third-country, outside the Schengen area, your employer will need to get a certificate allowing them to hire you from ADEM, local employment agency. They will make sure there is a need and there are no other people who can take the job currently at the labor market. Read more in our special guide.
Family
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 the Netherlands?
Relocating to a new country is a significant decision that involves considering numerous factors. As mentioned before, quality of life, safety, income and even taxes are quite comparable for both of them. So it might be very difficult to make a choice for one.
🇱🇺 Luxembourg's best and not-so sides to see
Luxembourg boasts the highest minimum wages in Europe, providing a strong financial foundation for workers.
The country offers a vibrant, multicultural atmosphere with a large foreign-born population, making it welcoming to newcomers.
Luxembourg provides special visas, such as the European Blue Card, for highly qualified workers, facilitating easier relocation for professionals.
The low corporate tax rates make Luxembourg an attractive destination for entrepreneurs and business owners.
The country has a highly developed healthcare system, ensuring access to quality medical services.
Luxembourg offers free public transportation, making it easy and cost-effective to travel within the country.
While not as high as in netherlands, Luxembourg's cost of living is still considerably high, especially when it comes to renting prices.
The top income tax bracket in Luxembourg is significantly high, and the taxation is progressive.
The cost of housing in Luxembourg is quite steep, and it can be challenging to rent property on a budget, especially in the capital.
Obtaining a student visa requires proving substantial income, which can be difficult for foreign students. Additionally, students are limited to part-time work during their stay.
You might need to be persistent to acquire a permit and the citizenship afterwards. It requires a continuous living in the country and language skills, but not only.
🇳🇱 Netherlands' pros and cons to consider when relocating
Who does not want to live by the shore. The Netherlands have beaches and water close by, where you can enjoy life.
There are no language barriers, as the English language is widely spoken. You still might want to learn Dutch, but it is good for a fresh start.
Second spot in the quality of life index is not a joke. People here choose an eco lifestyle, enjoy art and great life-work balance.
If you work in Finance, IT or have a business, the Netherlands will feel like home. It has a great job market, developed economy and opportunities in startups and more.
Electricians, plumbers, welders and other "Blue Collar" jobs are also in demand here, which makes the labor market well balanced for all.
Clear tax system with only 2 classes will help you navigate your duties, as soon as you get your tax residency. The Netherlands also have double treaties with many countries.
A lot of possibilities to enjoy life for younger people, travelers and families alike, make it a bustling spot nearby all the main destinations around Europe. And shops are open on Sundays!
Rather high cost of living might be an inconvenience for some. Prices for rent, groceries and transportation are a factor to consider.
Expensive public transportation makes it easier to use a bicycle and keep yourself healthier. If you know how to ride a bike…
Expensive childcare services and education options can be an inconvenience. Especially for younger children, if you move with your family.
Only Dutch is an official language, which leaves you wondering, what would happen, if you could learn all three official languages and use them in different scenarios.
The maximum tax rate of 49.5% is relatively high for individuals with significant income. This is why Luxembourg is regarded as a tax haven, while the Netherlands is viewed as an attractive place to live.
Frequently Asked Questions (FAQ)
Which capital is more expensive to live — Amsterdam or Luxembourg?
A comparison of the cost of living in Amsterdam and Luxembourg, as indicated by Numbeo, reveals that the former is 10% higher than the latter. A significant proportion of this discrepancy can be attributed to the relatively lower cost of rental accommodation. Additionally, restaurant prices are 4.3% lower in Luxembourg. The cost of groceries is 7.4% higher in Luxembourg, yet the purchasing power of the local population is a remarkable 52.3% higher than in Amsterdam.
Which country has the best weather, Luxembourg or the Netherlands?
Well, actually, as they both are close to each other, the weather is not so much different. Both have their fair share of rainy days, mild winters and great summers.
What about public transport in Luxembourg and the Netherlands?
Public transport is well organized and safe in both countries, but in Luxembourg it is for free, in the Netherlands it is rather expensive. The Netherlands have a well developed system for those who love to cycle everywhere, and you will find a lot of like-minded people and dedicated routes.
Which country has better education Luxembourg vs. Netherlands?
Both countries have a highly developed education system. Elementary and secondary education is free for children residing in the country. Luxembourg has one state-run university, while the Netherlands has several. Nevertheless, tuition fees for studies at government-run institutions are relatively low, provided that one is able to gain admission to a programme. Both countries provide financial assistance to students in the form of scholarships.
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Source: ec.europa.eu, ec.europa.eu, en.wikipedia.org, en.wikipedia.org, en.wikipedia.org, www.government.nl, www.numbeo.com, www.numbeo.com, www.numbeo.com, expatmanagementgroup.com, www.mylifeelsewhere.com, luxtoday.lu, luxtoday.lu, www.belastingdienst.nl, luxtoday.lu
We took photos from these sources: Liam Read on Unsplash
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