Luxembourg's economy is highly dependent on international trade and commerce; and banking is preeminently important to the country's international status.  Luxembourg seeks to establish policies which will maintain and expand its business and power base.

12.1    Government Initiatives

Luxembourg has grown into a worldwide center for financial services as a result of a deliberate decision to ease regulations in order to attract business.  This decision was made in the 1960's when the steel industry, which had been the country's main source of revenues, declined.  Significant aspects of current government policies include:
 

• the effective lifting of restrictions on foreign investment funds
• locally registered holding companies are exempt from corporate dividend taxes and interest payments as well as capital gains tax
• high degree of banking secrecy

Sources:  Europe, Prime Minister of Luxembourg:  Jean-Claude Juncker, March 1999, Luxembourg 1999 Country Commercial Guide, www.state.gov/www/about_state/business/com_guides/1999/euro/luxem99_06.html
 

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