Luxembourg needs talent. But unlike some other European Union countries (that’s you, Netherlands), Luxembourg is doing something tangible to attract highly skilled internationals. Several things, actually.
But before we get to the details, a little background.
The business lobby Union des Entreprises Luxembourgeoises’ first “employment barometer,” launched in 2023, projects that Luxembourg will need 300,000 new workers by 2030. Largely overlooked and hemmed in geographically by France, Belgium and Germany, Luxembourg – along with Switzerland – is ranked as one of the wealthiest countries in Europe based on GDP per capita … about 133,000 euros.
Unlike Netherlands, Germany and France, which actually make stuff, Luxembourg is the Wall Street of Europe, generating all that wealth from banking, investment banking, finance and cross-border trade. And unlike those other countries, Luxembourg has a tiny population of only 700,000 people.
Now this is wild:
Nearly three-quarters (72 percent) of Luxembourg’s workforce is composed of foreign nationals, representing more than 160 nationalities, Luxembourg’s statistics portal shows.
This heavy reliance on outside workers has Luxembourg out beating the bushes for highly skilled internationals.
So, how do they lure more talent?
Tax break
Among the changes is an updated “impatriate regime.” This policy gives a 50-percent income tax exemption to arriving expat employees who haven’t lived, worked or commuted from neighboring countries in the past five years. The exemption is good for up to 400,000 euros per year for as long as eight years and is meant to make it easier for crucial companies to recruit top talent, a significant financial benefit for newcomers weighing a move to Luxembourg versus other European hotspots. For example, the Netherlands is considering abolishing (again) its 30-percent ruling, giving highly skilled internationals an exemption on the first 30 percent of pre-tax income.
Startups
• Investment: The state-owned bank Société Nationale de Crédit et d’Investissement will allocate 300 million euros during the next five years to investing in strategic sectors such as cybersecurity, deep tech, sustainable technologies, healthtech, space and fintech, according to media sources.
• Tax credit incentive: To unlock early stage risk capital, the government will introduce legislation offering a significant tax credit to wealthy people who invest in innovative Luxembourg-based startups. Essentially, Luxembourg’s version of the American accredited investor schemes.
• 200,000 euro spin-off aid: This is a dedicated financial aid program designed to encourage the creation and financing of spin-off companies. Sort of like what TNO does in the Netherlands. This initiative will provide up to 80 percent public co-financing, capped at 200,000 euros per project, and requires a minimum 20 percent private investment.
• Incubators: Along with the money, the plan foresees the development of incubators dedicated to the healthtech, space and auto-mobility sectors. And this is where it gets interesting for highly skilled internationals because hooking up with the right startup can make you rich, rich, rich. Or at least rich enough to afford a small house in Luxembourg.
• Tax incentives and stock options: The plan proposes tax advantages for stock options offered to startup employees.
• National talent desk: the Ministry of the Economy, in collaboration with Luxinnovation, the Chamber of Commerce and the Chamber of Skilled Crafts, is creating a national “talent desk” as a central contact point to guide HSIs to Luxembourg-based companies.
Outreach
In 2023, the Luxembourg government established its High Committee on Talent Attraction, Retention and Development to tackle the talent shortage head-on. The committee is charged with promoting Luxembourg as a talent hub and improving data tracking to better understand labor market needs. This includes evaluating Luxembourg’s image among talent pools in France, Portugal, China and India and analyzing talent attraction strategies in other European countries.
There are also a lot of other plans that include creating AI hubs and whatever, most of which would seem quixotic in any other country. But Luxembourg, like Switzerland, has the capital to play catchup in AI and pretty much any other sector … and attract the world’s smartest people.
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See more about Luxembourg here in Dispatches’ archives.
Co-CEO of Dispatches Europe. A former military reporter, I'm a serial expat who has lived in France, Turkey, Germany and the Netherlands.
