Financial centre: Innovative, transparent and internationally competitive
The Luxembourg financial centre is the foundation of our economy and plays a crucial role with more than 60,000 jobs and a significant contribution to the gross domestic product. The DP is expressly committed to a strong, well-regulated and internationally competitive financial centre. We will continue to develop our legislation quickly, in a forward-looking and transparent manner.
Since 2013, the DP-led Ministry of Finance has successfully worked to ensure that the Luxembourg financial sector complies with current international standards in terms of transparency and combating tax evasion.
Furthermore, the DP has implemented important measures over the past years to further enhance the attractiveness of Luxembourg as a business location. This includes not only the introduction of important instruments to attract talent, such as the “Regime d’impatrié” and the “prime participative”, but also a high-quality and public international educational offer, benefits in kind for the benefit of families, and a variety of cultural and leisure activities.
The DP will continue to work towards strengthening the financial centre, especially with regard to “talent attraction”, technological innovation and the diversification of the financial sector. Luxembourg’s positioning over the past few years as a pioneer in the field of alternative funds has proven to be a true success story. In addition, the legal framework has been consistently modernised through, among other things, the adoption of three blockchain laws. We remain ready to seize the opportunities of the digital transformation and make the financial sector in Luxembourg fit for the future.
After the disappearance of the steel industry, finance and insurance quickly gained importance and continue to shape our economy today. This is largely due to the high responsiveness of our financial centre: As a “first mover”, Luxembourg is able to attract new investment on an ongoing basis. To remain a leading financial centre in the future, it is crucial that our legislation is continuously adapted.
The diversification of the Luxembourg economy and in particular of the financial centre is a central concern of the DP. We focus on the development of environmentally friendly, sustainable and socially responsible financial products as well as on the fintech sector. We are convinced that this is where the future of finance lies. By focusing on sustainable and innovative financial solutions, we not only create opportunities for businesses, but also contribute to environmental protection and social progress.
The DP will further promote the fund industry in Luxembourg. This is in direct competition with other states and is increasingly fighting for market share. In order to gain competitiveness vis-à-vis other financial centres, the DP advocates a stable and modern legal framework.
The financial centre of Luxembourg should offer international businesses ideal conditions for accessing the European market. The international networking of our financial centre with foreign countries must also be further strengthened. Our goal is to intensify the exchange with important global partners and to position Luxembourg as an attractive financial centre.
The swift implementation of European directives and regulations as well as international agreements contributes to the stability and planning security of the Luxembourg financial centre. In the case of European directives, these should be implemented as far as possible according to the principle of “the whole directive and nothing but the directive”.
The DP is keen to play an active role in shaping European regulations for the financial sector. This is the only way to ensure that the special features of our financial centre are taken into account. That is why the DP calls for Luxembourg to be represented even better by additional officials in the respective EU institutions.
The government strives for efficient supervision of the sector by the CSSF (Commission de surveillance du secteur financier) and the CAA (Commissariat aux Assurances). These ensure stability and a fair application of the rules, but also trust. In this sense, the DP is in favour of maintaining the controls in the country of origin. Specifically, the DP opposes the undermining of national supervisory authorities and the transfer of their expertise abroad.
Our financial centre must remain innovative in the future. New financial technologies are an opportunity for Luxembourg. The DP has already set important standards in the past with regard to alternative funds, sustainable finance and blockchain. We will continue to proactively accompany these developments, further develop the legal framework and regularly adapt it. Furthermore, this also includes developments in the areas of tokenisation and cloud banking. The introduction of a digital Euro is also seen as promising by the DP. In order to address the regulation of new financial services and products in a coordinated manner, the “Haut Comité de la place financière” will be further strengthened.
The DP will ensure that new financial service providers offering the same services as traditional financial service providers must also comply with the same requirements.
Blockchain technology offers many possibilities and has already had a firm place in finance for several years. Numerous business models are based on blockchain technology, which makes it possible to process huge amounts of data quickly and securely. In recent years, the DP has created the legal framework for this with the Blockchain Laws I, II and III. We will continue to monitor the development of blockchain technology and adapt legislation where necessary, in particular to protect investors.
Luxembourg is at the forefront of digitisation and connectivity thanks to forward-looking investments. This is to be expanded and supported. One piece of the puzzle of the Luxembourg “ecosystem” are our “state-of-the-art” data centres, which are used, among others, by the financial service providers based here to store sensitive data securely and locally. The ICT location Luxembourg is to be strengthened and further expanded.
In this context, the DP will continue to promote the digitisation of basic public services and support both businesses and citizens in digitisation.
Finance is based on fast and secure transactions. Attacks by criminals and third countries are a real security problem because they can cause considerable damage. For this reason, the DP is committed to strengthening cyber security.
Refer to the chapter Digitisation and Media
Under the impetus of the DP-led Ministry of Finance, Luxembourg has developed into a pioneer in sustainable finance. The Luxembourg Green Exchange (LGX) is the first global platform dedicated to environmentally, socially responsible and sustainable securities. The DP will further strengthen sustainable finance.
The DP will create targeted tax incentives to accelerate the energy turnaround. Because public-private partnerships are indispensable for the success of the sustainable turnaround. Innovative financing models, such as blended finance and impact investing, should be further promoted.
Fossil fuels and nuclear power are no alternative to renewable energies in the long term. For this reason, the DP is campaigning for fossil fuels and nuclear power plants across Europe to no longer be classified as sustainable under the EU taxonomy.
Refer to the chapter on Tax policy
To finance the sustainable turnaround, the DP will further expand the Climate fund-of-funds, which finances investments against climate change in developing countries.
Under the leadership of the DP, Luxembourg has established the “Gender Finance” to counteract structural inequalities between the sexes. The goal is to improve women’s access to financial services and economic participation. The DP will continue to promote such projects.
Refer to the chapter on Tax policy
The DP supports the establishment of a joint public-private mutualisation platform for compliance. In this way, the stakeholders involved are provided with the necessary means to meet the various compliance requirements quickly and efficiently.
To ensure the speedy processing of all files and to meet the growing tasks of the supervisory and financial authorities, such as the automatic exchange of information, the DP will continue the government’s recruitment policy and further increase staff. In addition, there is to be an increased use of digitisation and artificial intelligence to further reduce processing times.
The increase in personnel at the tax authorities will promote the dialogue between the administration and taxpayers. In this way, misunderstandings can be avoided and issues can be dealt with more quickly. Furthermore, the DP will examine to what extent processes can be optimised and resources used more efficiently in the interest of the taxpayer by merging the three different tax administrations.
The DP is committed to strengthening the financial literacy of the entire population. In primary and secondary schools, students should gain a basic understanding of finance. With the help of practical experience, the entrepreneurial spirit is also to be promoted. In addition, specialised higher education degrees in finance are to be offered that reflect the importance of Luxembourg as a financial centre.
Luxembourg, under the leadership of the DP, has achieved much in the area of legal prosecution of economic and financial crime, especially money laundering, such as the formation of the “Cellule de renseignement financier” (CRF). Given the importance of these efforts for the country’s international reputation and in order to further strengthen it, we will make even greater efforts and provide the police and judiciary with the necessary resources to consistently apply the existing financial laws. For example, we will examine the introduction of specialised judges and the creation of a public prosecutor’s office for financial offences or the formation of a criminal chamber for financial offences.