European headquarters in Luxembourg
Luxembourg’s reputation as a banking centre is recognised all over the world. To travellers, Luxembourg is considered as an insider tip: recently the German magazine “Der Stern” published an article about Luxembourg as a tiny holiday destination. But what about the country’s attractiveness besides banking and tourism? Just a few know that Luxembourg hosts the European headquarters of global players such as Amazon, eBay and iTunes.
Jean-Claude Knebeler, Director of Foreign Trade at the Ministry of the Economy and Foreign Trade and Member of the Board at Luxembourg for Business, identifies many reasons why international companies take the decision to relocate their headquarters to Luxembourg.
Global players in the heart of Europe
At first sight, the principal reason for setting up a European headquarters office (HQ) in Luxembourg seems to be tax driven. Companies begin their business in a small way with a small team but soon realise that the country offers opportunities that could drive their business forward. So they begin using Luxembourg as a hub, from where they offer services to the rest of the group. The reasons for this are obvious: the Luxembourg market is internationally focused and neutral, in contrast to domestically focused markets such as Germany and France.
It is this special business culture that sets Luxembourg apart from other economies. The culture is characterised by easy access to the authorities, down-to-earth help when problems appear and the will to find solutions via a dialogue. Young employees, in particular, appreciate the quality of life and the beautiful environment of the country and not rarely decide to stay. According to Knebeler, „employees are the best propagandists for the country“.
The fact that Luxembourg is an international financial centre also plays a role when companies decide to relocate to Luxembourg. Financial professionalism and a wide range of service providers are as attractive as the know-how of resident lawyers, tax advisers and fiduciaries. „Luxembourg is not only an international financial centre, but an international business hub“, Knebeler says. However, he is aware of the need to attract companies to Luxembourg and is therefore offering proactive services like easy contact with the Ministries of Economy and Finance. Knebeler likes to know his customers personally and is on familiar terms with many of them. He adds, ruefully “Somebody has to take the first step. Luxembourg is not as well known as we might believe” and, clearly, the best advertising comes from the headquarters themselves.
When in Rome do as the Romans do
For Americans, it is word of mouth recommendations that count. Typically, they ask residents to report on their own experience in Luxembourg. Russians tend to count on their business networks, while the Chinese decision making process is characterised by closeness and confidentiality. The danger that an HQ might migrate from Luxembourg is small. Even if a tax harmonisation eliminates some earlier benefit, Luxembourg stands up as a choice for the advantages already mentioned.
Although the Luxembourg tax structure is quite complex, it can offer solutions that are tailor-made for each company, an advantage that sets Luxembourg apart from other countries with flat tax rates. Even though nobody would choose Luxembourg on the basis of its ancillary labour costs, they do not present a disadvantage either. Where highly-qualified staff are concerned, Luxembourg ancillary labour costs are competitive. Employees stand out for their language skills and multi-cultural education. and the working population is made up of dozens of nationalities enrich their personalities.
Bad press is better than no press
Jean-Claude Knebeler has no problem when people say that Luxembourg is „a small country; statements like that move business to Luxembourg as well.“ But over the long term, Luxembourg wants to strengthen its reputation as a place of possibilities and solutions that cannot be found in other economies. Names like Jean-Claude Juncker and the Schleck brothers, world ranking cyclists, also contribute their might to the Luxembourg brand.
„We are not just the Boulevard Royal with its banks and businessmen in suits counting money all day long“, Knebeler underlines. The Luxembourg cultural scene, its industry and research institutes can play with the big boys. „We are more than the cliché that people have in their heads.“ EK