Knowledge & Curiosities

Why is Luxembourg so rich? Simply answered

Why is Luxembourg so rich? Simply answered

Are you wondering why Luxembourg is so rich? That's a good question. That's why we've compiled the most important facts about the country for you.

Why is Luxembourg so rich? These are the facts!

Luxembourg is considered one of the smallest countries in the European Union. Nevertheless, it is very rich and highly respected. The reasons for this lie in the economic system that the small country between France, Belgium and Germany has excellently developed.

  • The Grand Duchy of Luxembourg is an amazing country. With an area of ​​2,586 km², it is one of the smaller countries in the EU alongside Monaco, Andorra and Malta. Nevertheless, the population size is around 650,000 inhabitants (as of September 2024). However, this has not stopped Luxembourg from refining its own economic system.
  • The GDP per capita (gross domestic product per inhabitant) is very high in Luxembourg. Accordingly, not only companies but also average individuals earn a comparatively large amount of money. For the year 2024, GDP per capita has been estimated at 131,384.16 US dollars. This value is twice as high as in the USA.
  • The reason for this is the financial sector, which accounts for more than half of the gross domestic product. But steel production and tourism also ensure that the country becomes wealthier.
  • Luxembourg is also home to ArcelorMittal, the second largest steel producer in the world. Annual production even exceeds competitors such as Thyssenkrupp or Acerinox. In 2020 alone, ArcelorMittal produced 78 million tons of crude steel.
  • However, it is not just the steel industry that is booming. Luxembourg is attractive to many companies. This is due to its geographical location, which attracts many investors. The favorable tax policy also plays a role in this context. This allows the country to grow, offer many interesting jobs and support programs, and makes life more livable for people overall.
  • But it is not just steel production that makes Luxembourg richer every year. Tourism also contributes a considerable amount to the country's wealth. Tourists like to travel to Luxembourg and make an enormous contribution to the country's wealth. In 2021, guests contributed 1.2 percent of GDP. This means that more jobs can be created every year.

A look at the state’s income

With all these figures, it is time to look at the country's real income. The Luxembourg state budget has a budget of around 500 million euros. This is monitored and managed by the Ministry of Finance. But where does the money really go and how does it affect the country's wealth and attitude to life?

  • In order to replenish its budget, the state collects taxes, social security contributions and dividends from various companies that operate for the benefit of the state. However, these revenues are also used for various expenses.
  • Most of the expenditure is due to public sector salaries. A large part is also earmarked for pension payments or the health sector. The country also attaches great importance to its own infrastructure and recovery projects in the event of natural disasters.
  • Luxembourg is doing valuable work in the field of education. In recent years, the state has made numerous investments to promote the expansion of schools and their digitalization.
  • The development of bridges, roads and transport systems is also important to Luxembourg. What the country earns is given back to the population through renovation in order to improve the quality of life of the population. At the same time, many people consciously move to Luxembourg because they appreciate the country's advantages.

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