LUXEMBOURG

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Luxembourg has one of the highest GDP per capita in the world. Luxembourg is a major financial hub and many European Union institutions are located there. The large current account surplus stems from the particular growth model of a country based on an efficient financial sector, which has weathered the 2008-2009 crisis well.

Risks to domestic financial stability due to the size of Luxembourg’s financial sector are mitigated by the fact that the sector is well capitalised, liquid, diversified and specialised.  However, greater risk-taking and pending changes in global corporate taxation represent a downside risk. Another vulnerability stems from the fact that the healthy fiscal metrics (a public debt ratio limited to 25% of GDP) are highly dependent on the growth model. More recently, rising real estate prices and elevated household indebtedness have appeared on the radar screen.

The very small, very open economy of Luxembourg makes growth structurally more volatile than for larger economies. In 2019, real GDP grew by 2.3%, below the rate observed in recent years (3.6% on average per year since 2013), but still 1-ppt above the euro area average. At -1.3%, the contraction in GDP in  2020 is one of the least severe among the Eurozone countries.. The European Commission expects real GDP growth of 4.8% in 2021 and of 3.3% in 2022.

Summary

BNP Paribas BGL is a market leader in Luxembourg with 4,000 employees locally, a substantial business centre and direct market clearing access. BNP Paribas provides full service capabilities for retail and institutional customers across all major business lines, including cash management, trade finance and FX & interest rate hedging.

Currency

  • Luxembourg uses the euro (EUR).

Bank accounts

  • A company is generally considered resident in Luxembourg if its place of effective management or legally registered office is located there.

Factoring

Luxembourg is serviced from Belgium.

Please consult the Belgian pages.

BNP Paribas Cash Management Capabilities

Cash collections
Cheque collections
Direct debit collections
Domestic incoming transfers
Virtual IBAN
Virtual accounts
International incoming transfers
Card acquiring

Payments & collections

Electronic credit transfers remain the most popular payment method for business-to-business payments, representing 99% of cashless payment values in Luxembourg. Card payments, using both credit and debit cards, are widely used by consumers for low-value payments. The use of other electronic payment channels is increasing, with both mobile and internet banking growing in popularity. The Digicash by Payconiq mobile wallet is used by over 25% of the population of Luxembourg.

Electronic banking services are available from all banks. Domestic companies primarily use MultiLine. MultiLine supports the EBICS (Electronic Banking Internet Communication Standard). Electronic invoicing is also available: Saferpay is an e-payment solution which enables secure online retail purchases and bill payments. Larger companies have access to SWIFT for Corporates.

All the country’s leading commercial banks provide online and mobile banking services. Online and mobile banking services are available and widely used.

Short term investments

Interest payable on credit balances

  • Interest-bearing current accounts are permitted for residents and non-residents.

Demand deposits

  • Interest-bearing demand deposits are permitted for residents and non-residents. 

Time deposits

  • Time deposits are available in EUR or major foreign currencies with terms ranging from one week to one year.

Certificates of deposit

  • Domestic banks issue certificates of deposit with terms ranging from overnight to 12 months.

Treasury (government) bills

  • Luxembourg's government does not issue Treasury bills.

Commercial paper

  • Domestic commercial paper is issued by companies and public authorities with terms ranging from overnight to 12 months.

Money market funds

  • Domestic money market funds, SICAVs (société d’investissement à capital variable), are popular short-term investment instruments.
  • SICAVs are open-ended investment funds.

Repurchase agreements

  • Repurchase agreements are commonly available in Luxembourg.

Banker's acceptances

  • Banker's acceptances are not used in Luxembourg.

BNP Paribas Trade Finance Capabilities

Documentary credits
Documentary collections

International trade

  • As a member of the EU, Luxembourg follows the EU customs code and applies all associated regulations and commercial policies.
  • Trade with other countries in the European Economic Area (EEA) and Switzerland is exempt from tariffs and other controls.