R 131227Z JAN 09
FM AMEMBASSY LUXEMBOURG
TO SECSTATE WASHDC 6485
USDOC WASHDC
CIMS NTDB WASHDC

UNCLAS LUXEMBOURG 000011 
 
 
FOR OFFICE OF INVESTMENT AFFAIRS - EB/IFD/OIA, TREASURY, COMMERCE, 
AND USTR 
STATE FOR EUR/WE SHARP 
 
E.O. 12958: N/A 
TAGS: OPIC KTDB USTR LU
SUBJECT:  LUXEMBOURG INVESTMENT CLIMATE STATEMENT 2009 
 
REF: STATE 123907 
 
 
¶1.  The following is Luxembourg's submission for the 2009 Investment 
Climate Statement: 
 
¶A.  Openness to Foreign Investment 
---------------------------------- 
 
The Grand-Duchy of Luxembourg offers a very favorable and welcoming 
attitude toward Foreign Direct Investment (FDI).  FDI reflects how 
willing foreign entities are to invest in a given country. 
Successive Luxembourg governments have effectively attracted new 
investment in medium, light and high-tech industries, as well as 
services, through the use of incentives, including deferred 
corporate tax payment schedules, capital investment subsidies and 
financing of equipment and start-up entities through the state 
lending agency, SNCI. Despite the current global economic crisis, 
Luxembourg remains the most attractive location for business 
investment in Europe - along with Switzerland - with the advantage 
of being a member of the European Union (EU). 
 
The key points of climate attractiveness for FDI in 
Luxembourg are: 
 
Economic and political stability - even in the midst of the 
financial crisis, Luxembourg maintains fiscal stability and relative 
strength in productivity and growth as compared to other EU 
countries. 
 
Openness and accessibility of government officials and 
decision-makers; coordination of vision by government leaders for 
the country's future development. 
 
Improved fiscal conditions through tax reforms enacted in 2008: 
 
-  Lower official basic corporate tax rate (now 21%) 
-  Abolition of capital duty tax 
-  Introduction of super-reduced tax rate (6%) on 
 
Intellectual Property (IP) revenue (of particular interest to 
scientific/research projects) 
 
Presence of "critical mass" of U.S.-origin companies in diverse 
sectors (industry; e-commerce/IT;  financial/investment services), 
facilitating due diligence and cooperation on common issues. 
 
Leading new sectors of investment opportunity 
 
     ¶1.  Biotechnology / Health Technologies 
 
In spring 2008, Luxembourg announced a major investment initiative 
in biomedical research in collaboration with cutting-edge U.S. 
biotech firms (TGen) and research institutions (Institute for 
Systems Biology - ISB). The government has committed EUR 140 million 
over the next five years to develop a center of expertise in the 
area of molecular medicine. Unique opportunities have thus been 
created for foreign private investment in technological excellence 
and scientific research toward preventive medicine. 
This project is open and attractive to highly-skilled workers of all 
nationalities and serves as a strong export platform for 
incorporating U.S. products and services. 
 
Part of this project is to be located with the expanded University 
of Luxembourg at the new campus in Esch/Belval, a redeveloped 
industrial area south of the capital city. This new center of 
excellence for academia, research and technology offers diverse 
opportunities for investment and partnership. 
 
     ¶1.  E-Commerce 
 
The European Union (EU) directive on services provided 
electronically attracted a number of non-EU companies to establish 
European headquarters in Luxembourg thanks to its low VAT (sales 
tax) rate (lowest in Europe at 15 percent rate as opposed to 
Ireland's 21 percent or Germany's 19 percent). Services offered by a 
company registered outside the EU are subject to the VAT levy of the 
customer's country of residence, whereas if registered in an EU 
member state, the VAT of company headquarters' country is applied. 
In the past four years, major U.S. electronic service (e-commerce) 
providers have chosen Luxembourg as their European base of 
operations, including Amazon.com, Apple i-Tunes, Digital River, and 
PayPal (eBay). 
 
However, following a challenge by some member states of the EU 
directive and intense negotiations, on December 5th, 2007 the EcoFin 
(committee of finance ministers of the EU) decided to extend the 
current directive for VAT on electronic services but only through 
¶2014.  This allows for a continued favorable investment situation 
for U.S. e-commerce companies to establish their European 
headquarters in Luxembourg and benefit from the lowest VAT rate of 
15%.  However, starting in 2015, the proposed change to the 
directive will be implemented to divide VAT revenue between the 
country of supply and the country of consumption of the service, at 
a progressively decreasing share for the country of supply - thereby 
decreasing the incentive to locate point of supply in Luxembourg 
specifically for the VAT rate.  Despite the loss of this decision 
factor, Luxembourg's attractiveness as a headquarters location will 
continue to be driven by a favorable fiscal climate (moderate 
consolidated corporate tax rate equivalent to the EU average of 
around 29%, no capital gains tax, no tax on dividend income...), a 
rapidly-developing technological infrastructure (led by the 
government initiative "LuxConnect" to enhance bandwidth availability 
and connectivity), a well-educated and multilingual workforce and a 
high quality of life as measured yearly by the Mercer Consulting 
worldwide survey.  Together this enables Luxembourg to present 
itself as a "center of excellence" for IT and e-commerce companies, 
as well as the innovative and growing internet service sector 
(domain name management, etc). 
 
     ¶2.  Logistics 
 
Since the closing of the USG WSA (Warehouse Services Agency) 
facility, the Luxembourg government has been developing the site as 
a logistics hub to house international companies performing 
logistics operations. The site offers efficient access to cargo 
railways and highways connecting through Europe and diverse 
investment opportunities. 
 
     ¶3.  "Eco-Technologies" 
 
The Ministry of Economy has launched a broad "eco-technologies" 
initiative to attract new companies and support technology projects 
and activities which are ecologically-friendly. This initiative is 
in line with the country's environmentally-conscious culture and 
policies (high rate of recycling; emissions-controls; subsidy 
programs for "green" building and energy conservation), as well as 
with the new EU directive to reduce overall CO2 emissions by 20% in 
the Union by the year 2020. 
 
U.S. firms are among the most prominent foreign investors in 
Luxembourg, producing tires (Goodyear), chemicals (DuPont), glass 
(Guardian Industries) and a wide range of industrial equipment. 
 
The major laws affecting incoming foreign investment through 
acquisitions, mergers, takeovers, and "greenfield" (starting from 
nothing) investments are based on the Luxembourg company laws, which 
are regularly updated. 
 
The Luxembourg judicial system upholds sanctity of contracts. There 
is no overall economic or industrial strategy that has 
discriminatory effects on foreign-owned investors. There are no 
limits on foreign ownership or control, only general screening of 
foreign investment; screening mechanisms are routine and non- 
discriminatory. 
 
Luxembourg generally boasts a liberal investment regime. There are 
no officially "closed" sectors; however, a few industries, primarily 
utilities, are still dominated by majority state-owned companies, 
such as electric power (Cegedel) - although this sector is rapidly 
opening up, telecommunications (P&T), and cable television (one 
provider per region such as Coditel for the capital city area and 
Eltrona for the Moselle region). 
 
That said, there are no major sectors/matters in Luxembourg in which 
foreign investors are denied national treatment (equivalent to 
domestic firms). 
 
Foreign investors are allowed to participate equally in ongoing 
privatization programs, and the bidding process is transparent with 
no barriers erected against foreign investors at the time of the 
initial investment or after the investment is made. Moreover, there 
are no laws or regulations specifically authorizing private firms to 
adopt articles of incorporation or association which limit or 
prohibit foreign investment, participation, or control, and there 
are no other practices by private firms to restrict foreign 
investment, participation in, or control of domestic enterprises. 
 
As one of the most competitive countries in the world with favorable 
economic conditions, the government's proactive policies in 
attracting FDI contribute to consistent investment growth and 
continuing positive projections for future investment, despite the 
current global economic crisis. Many international firms find it 
convenient to locate European headquarters or holding companies in 
Luxembourg as a result of the country's openness to foreign cultures 
and excellent balance between the high quality of life and high 
purchasing power. Approximately 60 percent of Luxembourg residents 
and over 60 percent of the workforce are composed of foreigners 
(non-Luxembourgers), mainly from EU countries (Portugal; Italy; 
France; Germany; Belgium). 
 
¶B.  Conversion and Transfer Policies 
------------------------------------ 
 
There are no restrictions on converting or transferring funds 
associated with an investment (including remittances of investment 
capital, earnings, loan repayments, lease payments) into a freely 
usable currency and at a legal market-clearing rate. There have also 
not been any recent changes to remittance policies with respect to 
access to foreign exchange for investment remittances. There is no 
difficulty in obtaining foreign exchange. 
 
The average delay period currently in effect for remitting 
investment returns such as dividends, return of capital, interest 
and principal on private foreign debt, lease payments, royalties and 
management fees through normal, legal channels is quite brief, 
approximately 24 hours. Investors can remit through a legal parallel 
market including one utilizing cash and convertible negotiable 
instruments (such as dollar- denominated host government bonds 
issued in lieu of immediate payments in dollars). There is no 
limitation on the inflow or outflow of funds for remittances of 
profits, debt service, capital, capital gains, returns on 
intellectual property, or imported inputs. 
 
¶C.  Expropriation and Compensation 
---------------------------------- 
 
The laws governing expropriation of property are quite complex, and 
the process can be arduous and lengthy, depending on the building. 
The Ministry of the Interior, along with the Ministry of Justice, 
set forth the specific regulations according to each type of case. 
There have been no known expropriatory actions in the recent past or 
policy shifts which would lead to believe there may be expropriatory 
actions in the near future, and there appear to be no tendencies of 
the host government to discriminate against U.S. investments, 
companies or representatives in expropriation. There are also no 
sectors (e.g., mining, banking, telecommunications, large land 
holdings, etc.) that are more at risk for expropriatory or similar 
actions, and no laws that force local ownership. 
 
Instances of "creeping expropriation" or governmental action 
tantamount to expropriation, such as confiscatory tax regimes, that 
might warrant special investigation (particularly by OPIC prior to 
offering coverage), have not been found. 
 
¶D.  Dispute Settlement 
---------------------- 
 
There are arbitration possibilities available for domestic dispute 
settlements with the Luxembourg Chamber of Commerce and, on an 
international level with the International Chamber of Commerce. 
There have been no known investment disputes over the past few years 
involving U.S. or other foreign investors or contractors in 
Luxembourg. 
 
The country's legal system is based on the Napoleonic Code. 
Luxembourg has assimilated the laws of neighboring countries 
according to the nature of the laws: German tax law, French civil 
law, and Belgian commercial law (written and consistently applied). 
Judgments of foreign courts are accepted and enforced by the local 
courts, and Luxembourg does have a written and consistently applied 
bankruptcy law, which is based, like other European countries, on 
EU-wide legislation. Monetary judgments are usually made in local 
currency. 
 
The government accepts binding international arbitration of 
investment disputes between foreign investors and the state, and the 
courts recognize and enforce foreign arbitral awards. International 
arbitration is accepted as a means for settling investment disputes 
between private parties, and there is indeed a domestic arbitration 
body within the host economy. 
 
¶E.  Performance Requirements and Incentives 
------------------------------------------- 
 
Luxembourg maintains measures that are consistent with WTO trade 
related investment measures (TRIMs) requirements, and in general the 
country adheres to WTO regulations in conformity with internal EU 
market directives. Performance requirements and incentives are 
applied uniformly and systematically to both domestic and foreign 
investors. 
 
Luxembourg is considered to be a very attractive tax location for 
doing business: low effective corporate tax rates (now 21%); the 
lowest VAT (value-added tax) rates in Europe at 3 percent, 6 
percent, and 15 percent, according to the good or service purchased; 
limited and recently lowered personal tax burden for high-income 
individuals (among the lowest individual rates in the EU with a 
maximum of 38.9 percent); and a variety of tax incentives 
(investment tax credits, new business tax credit, audiovisual 
certificates for film productions, venture capital investment 
certificates, small business incentives, regional and national 
incentives, research and development incentives, environmental 
incentives). 
 
Luxembourg is one of the world's largest financial centers, with USD 
2.2 trillion Luxembourg-domiciled investment fund assets, second 
only to the United States of America. These funds are generally 
exempt from corporate income tax, municipal business tax, and 
withholding tax on dividends and are only subject to the 
subscription and capital taxes. For nearly two generations, 
Luxembourg has been one of the world's leading financial centers. 
Banks, securities depositaries, insurance and reinsurance companies, 
as well as other financial service companies, may benefit from 
preferential regulations when establishing their taxable basis for 
corporate income tax. 
 
Several other available incentives are not given in the context of 
taxation but rather as general business or financial incentives, 
such as: loans at reduced interest rates; government guarantees on 
loans; real estate development assistance in certain industrial 
sites and buildings; cash grants (for high-technology investments, 
reorganizations of economically justified sectors, research and 
development of innovative products, services or manufacturing 
processes); and financial incentives for audiovisual productions 
using production facilities and locations in Luxembourg. 
 
Performance requirements are imposed on a case-by-case basis, for 
example with respect to employment, as a condition for establishing, 
maintaining or expanding the investment, or for access to tax and 
investment incentives. There is no requirement that investors 
purchase from local sources or export a certain percentage of 
output, however, or only have access to foreign exchange in relation 
to their exports. In the case of foreign investments, there is no 
requirement that nationals own shares, that the share of foreign 
equity be reduced over time, or that technology be transferred on 
certain terms. The government does not impose "offset" requirements, 
whereby major procurements are approved only if the foreign supplier 
invests in manufacturing, R&D, or service facilities related to the 
items being procured. 
 
The government uses incentives to favor investment in certain 
locations and specific geographic areas, for example, abandoned or 
vacant industrial sites as in Esch-sur-Alzette, where a new concert 
hall facility was  erected, and the Esch/Belval high-tech zone is 
being developed, as said previously. These incentives are dependent 
on the size of the operation and nature of the investment. There are 
no enforcement procedures for performance requirements; U.S. and 
other foreign firms are able to participate in government-financed 
and/or subsidized research and development programs on a national 
treatment basis, and there are fair procedures to follow for the 
application and obtention of visa, residence, or work permits. 
Similarly there are few barriers to foreign investors' mobility and 
also no discriminatory or preferential export policies or import 
policies affecting foreign investors. 
 
¶F.  Right to Private Ownership and Establishment 
--------------------------------------------- --- 
 
According to common laws, there is a right of foreign and domestic 
private entities to establish and own business enterprises and 
engage in all forms of remunerative activity in Luxembourg. There is 
also a right of private entities to freely establish, acquire, and 
dispose of interests in business enterprises. In fact, competitive 
equality is the standard applied to private enterprises in 
competition with public ones with respect to access to markets, 
credit, and other business operations, such as licenses and 
supplies. 
 
¶G.  Protection of Property Rights 
--------------------------------- 
 
Secured interests in property in Luxembourg, both movable and real, 
are recognized and enforced through intellectual property laws and 
community laws. The legal system that protects and facilitates 
acquisition and disposition of all property rights, such as land and 
buildings is based on a "land register" called "cadastre" in French, 
where each parcel of property is documented in terms of ownership 
and duration. There is adherence to key international agreements on 
intellectual property rights, as well as adequate protection for: 
intellectual property, patents, copyrights, trademarks, and trade 
secrets. 
 
Adequate steps have also been taken to implement and enforce the WTO 
TRIPS agreement (Trade-Related aspects of Intellectual Property 
Rights). The regulation stipulating the measures to prohibit the 
release for free circulation, export, re-export or entry for a 
suspensive procedure of counterfeit and pirated goods states that 
the authority competent to receive applications must be a customs 
authority. In Luxembourg, this is the Litigation and Research 
Department (Division des Contentieux et Recherches) of the 
 
Directorate of Customs and Excise (Direction des Douanes et 
Accises). The merits of a case are decided by judicial proceedings, 
so the ordinary law courts are responsible for deciding whether 
there are grounds for a case. A number of provisions within the 
agreement deal with different intellectual property rights and allow 
for the possibility of confiscating, or even destroying, counterfeit 
goods and the tools or implements used for their production. The 
Luxembourg customs authorities may impose measures for a period of 
six months, which may be renewed at the request of the right-holder. 
 
The main rules of civil procedure are contained in the Luxembourg 
Code of Civil Procedure and in the Administration of Justice Act. In 
the absence of specific rules concerning material and local 
jurisdiction for certain intellectual property rights, ordinary law 
applies. 
 
¶H.  Transparency of Regulatory System 
------------------------------------- 
 
The Government of Luxembourg (GOL) uses transparent policies and 
effective laws to foster competition and establish "clear rules of 
the game". The legal system is quite welcoming with respect to FDI. 
Tax, labor, environment, health and safety, and other laws and 
policies in no way distort or impede investment. Bureaucratic 
procedures, including those for licenses and permits, are 
sufficiently streamlined and transparent, and there is far less "red 
tape" than in larger European countries. There are no informal 
regulatory processes managed by nongovernmental organizations or 
private sector associations; all procedures are managed by 
government entities. Proposed laws and regulations are published in 
draft form for public comment. In addition, the legal, regulatory, 
and accounting systems are transparent and consistent with 
international norms. There are no private sector and/or government 
efforts to restrict foreign participation in industry 
standards-setting consortia or organizations. 
 
¶I.  Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- --------- 
 
Luxembourg government policies facilitate the free flow of financial 
resources to support the product and factor markets. Credit is 
allocated on market terms, and foreign investors are easily able to 
get credit on the local market, thanks to the sophisticated and 
extremely developed international financial sector. The private 
sector has access to a variety of credit instruments, and there is 
an effective regulatory system established to encourage and 
facilitate portfolio investment. The only area with certain 
restrictions concerns the financing of small and medium- size 
businesses, however somewhat less than in neighboring European 
countries. 
 
Luxembourg's banking system is sound and strong. As of September 
2008, a total of 154 banks (stable vs. year-ago) were operating, 
with total assets of EUR 915 billion (USD 1.26 trillion, a slight 
decrease of -5.3% vs. year-ago) and approximately 27,269 employees. 
Note: most current figures available which do not reflect impact of 
fourth quarter 2008 financial crisis; as of press time, an increase 
in layoffs by the banking sector has contributed to rising 
unemployment. There are no "cross- shareholding" and "stable 
shareholder" arrangements used by private firms to restrict foreign 
investment through mergers and acquisitions. Also, measures to 
prevent hostile takeovers by foreign investors do not exist, since 
the situation is largely non-applicable. 
 
¶J.  Political Violence 
---------------------- 
 
Luxembourg has consistently ranked among the overall safest or 
lowest risk countries and most politically stable in the world. 
There have been no recent incidents involving politically motivated 
damage to projects or installations and the environment is not 
growing increasingly politicized such that civil disturbances would 
be likely. There are no known nascent insurrections, belligerent 
neighbors or other politically motivated activities. 
 
According to World Markets Research Centre of London, Luxembourg is 
rated highly as one of the "least risky places to do business" in 
the world. The risk ratings were noted all "insignificant" for the 
following reasons: political risk (existence of institutional 
permanence, internal and external political consensus); economic 
risk (existence of forward planning, a diverse and resilient 
economy); legal risk (existence of innovative legislation, 
transparency, independence and experience); tax risk (coherent and 
fair taxation system, low "effective" corporate and personal income 
tax rates below EU average); and operational risk (supportive 
attitudes toward foreign investment, high quality of infrastructure, 
existence of "social peace" with Tripartite system of negotiation 
process involving labor, employers and government, low bureaucracy 
and corruption). 
 
¶K.  Corruption 
-------------- 
 
The Grand-Duchy of Luxembourg has laws, regulations, and penalties 
to combat corruption effectively and they are enforced impartially 
with no disproportionate attention to foreign investors or any other 
group. The country ranks very favorably on the World Bank's 
corruption index (very low) and Luxembourg placed #11 (one rank 
higher than year-ago) in Transparency International's 2008 
Corruption Perception Index. In particular, Luxembourg has made 
anti-money laundering and suppression of terrorism financing a 
priority, given its status as a leading world financial center. The 
government has taken the lead in freezing bank accounts suspected to 
be connected to terrorist networks, and in November '04 extended the 
law against money-laundering and terrorist financing to additional 
professional groups (including auditors, accountants, attorneys, and 
notaries). 
 
Regulations are enforced by the strong but flexible Financial Sector 
Surveillance Commission (CSSF, which is equivalent to the U.S. 
Securities and Exchange Commission). U.S. firms have not identified 
corruption as an obstacle to FDI in Luxembourg. There are no areas 
or sectors where corruption is pervasive, whether in government 
procurement, transfers, performance requirements, dispute 
settlement, regulatory system, or taxation. Giving or accepting a 
bribe is a criminal act subject to the penal code. Senior government 
officials take anti-corruption efforts seriously. International, 
regional or local nongovernmental "watchdog" organizations do not 
operate in the country, given the lack of need. 
 
According to industry advisors, a local company cannot deduct a 
bribe to a foreign official from taxes. 
 
¶L.  Bilateral Investment Agreements 
----------------------------------- 
 
Luxembourg has a bilateral taxation as well as an aviation treaty 
with the United States, and there are no taxation issues of concern 
to U.S. investors. 
 
Other countries with which Luxembourg has bilateral agreements are: 
 
Austria 
Bahrain (aviation) 
Barbados (aviation) 
Belgium 
Brazil 
Bulgaria 
Canada 
Chile (aviation) 
China 
Costa Rica (aviation) 
Croatia (aviation) 
Cyprus (aviation) 
Czech Republic 
Denmark 
Finland 
France 
Gabon (aviation) 
Gambia (aviation) 
Germany 
Greece 
Hong Kong (aviation) 
Hungary 
Iceland 
India (aviation) 
Indonesia 
Iraq (aviation) 
Ireland 
Israel (aviation) 
Italy 
Japan 
Jordan (aviation) 
Kenya (aviation) 
Kuwait (aviation) 
Lebanon (aviation) 
Macau (aviation) 
Malaysia 
Malta 
Mauritius 
Mexico 
Mongolia 
Morocco 
Nepal (aviation) 
The Netherlands 
New Zealand (aviation) 
Norway 
Philippines (aviation) 
Poland 
Portugal 
Romania 
Russia 
Singapore 
Slovakia 
Slovenia 
South Africa 
South Korea 
Spain 
Sweden 
Switzerland 
Syria (aviation) 
Thailand 
Togo (aviation) 
Trinidad and Tobago 
Tunisia 
Turkey 
Ukraine 
United Kingdom 
Uzbekistan 
Vietnam 
 
¶M.  OPIC and Other Investment Insurance Programs 
--------------------------------------------- --- 
 
Luxembourg is a member of the Multilateral Investment Guarantee 
Agency (MIGA). 
 
¶N.  Labor 
--------- 
 
Luxembourg boasts a very stable, diverse, multilingual and qualified 
labor market, benefiting from the approximately 144,000 (average 
first half 2008) readily available cross-border commuter workers 
(both industrial and service employees) who come to work in 
Luxembourg on a daily basis from the neighboring countries of 
Belgium, France and Germany. Foreign (non-Luxembourger) workers are 
treated the same as nationals. 
 
Foreign investors often cite Luxembourg's labor relations as a 
primary reason for locating in the Grand- Duchy. Unemployment in 
Luxembourg was on the rise at 4.7% at the end of 2008, due to the 
impact of the global economic downturn and increased layoffs by 
international corporations; however, the projected average 
unemployment rate for year 2008, at 4.1%, remains one of the lowest 
in the EU, and labor relations have been peaceful since the 1930's. 
Most industrial workers are organized by unions, linked to one of 
the major political parties; Luxembourg is proud of the system of 
representatives of business, unions and government participating in 
a "tripartite" process in the conduct of major labor negotiations, 
which serve to avoid strikes, common in the neighboring countries of 
France and Germany. 
 
¶O.  Foreign-Trade Zones/Free Ports 
---------------------------------- 
 
There are no foreign trade zones, free trade zones, or free ports in 
Luxembourg. 
 
¶P.  Foreign Direct Investment Statistics 
---------------------------------------- 
 
Together with the United Kingdom (UK) and France, Luxembourg is 
among the main actors in FDI flows external to the 27 EU member 
states. In 2006 (latest available figures for FDI in terms of 
stocks), EU stock FDI in Luxembourg amounted to USD 54.4 billion, 
with the neighboring countries Germany, Belgium and France providing 
70% of the total. With regard to extra-EU, Luxembourg was the main 
EU holder of FDI, with stocks of USD 9.1 billion (of which 60% U.S. 
origin). The predominant role of Luxembourg in EU FDI is mainly 
explained by the importance of its financial intermediation 
activity.  Luxembourg is the main recipient of investments from 
other EU Member States. 
 
For the latest available period (third quarter 2008), total 
Luxembourg FDI outflows worldwide amounted to USD 1.42 trillion, and 
inflows into Luxembourg from the rest of the world were 1.48 
trillion (both of which comprised of 75% of a financial/holding 
company nature). Luxembourg's outflows to the USA were USD 1.05 
trillion, whereas inflows from the USA to Luxembourg were threefold 
at USD 3.82 trillion (financially-driven). 
 
FDI include data on capital invested in or by holding companies 
(while the legal structure will change in 2011 as a result of the 
revision of the "1929 Holding" law, FDI is not expected to be 
strongly affected at this point). This type of company accounts for 
a high proportion of the FDI inflows and outflows of Luxembourg. 
Although a precise quantification is not possible, it is reasonable 
to suppose that a large part of extra-EU FDI inflows going to 
Luxembourg are reinvested by holding companies elsewhere in the EU, 
and that a large part of extra-EU outflows are channeled through 
Luxembourg from other EU member states. Additional FDI data can be 
found through Eurostat's "NewCronos" database. 
 
Investments from extra-EU countries were mostly made in one economic 
sector but some other sectors also stood out. Financial 
intermediation was the first sector in terms of volume (56 %) in 
world total inward FDI flows, a slight increase over year-ago. 
Luxembourg was again the top destination for extra-EU investments 
placed in financial intermediation. 
 
Conversion rate used: EUR .72 (year-end 2008) 
 
WAGNER