P wc why luxembourg

Why Luxembourg?A prime location for doing business

February 2009 Edition

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PricewaterhouseCoopers

AMCHAM

1. Introduction: Luxembourg’s profile

2. 9 key opportunities for business

3. 10 key differentiating advantages of Luxembourg

4. Economy and finance: a healthy country

5. Key players: an attractive location for companies

6. Corporate taxation: advantages offered by Luxembourg

7. Employment and labour costs: an optimal balance between

low business costs and high purchasing power

8. Luxembourg: one of the best quality-of-life locations in the world

9. Main challenges for Luxembourg’s future

10. A great competitive location for business

11. Conclusion: 10 key advantages for doing business in Luxembourg

Summary

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Competitive position of Luxembourg at international level

33rdrd for growth environmentfor growth environment(Goldman Sachs, Economic Research, 2006)

22ndnd for economic globalizationfor economic globalization(KOF Index of Economic Globalization, 2008)

33rdrd GDP per capita in PPPGDP per capita in PPP(CIA World Factbook, 2008)

11stst safer place in terms of risksafer place in terms of risk(political, economic, debts(political, economic, debts……))(Euromoney’s semi-annual survey ofcountry risk, 2008)

11stst for personal safetyfor personal safety(Mercer Consulting, 2008)

11stst GNP per capita inGNP per capita in PPPPPP1)1)

(World Development IndicatorDatabase, World Bank, 2008)

Least risky place to do businessLeast risky place to do business (Euromoney’s semi-annual survey, 2008)

Note: 1) PPP: Purchasing Power Parity

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1. LUXEMBOURG’S PROFILE

Introduction

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The Grand Duchy and its neighbours

• One of the smallest of the 27

European Union countries

• Total area of 2,586 km²

(nearly 1,000 square miles)

• 483,800 inhabitants

2055 forecast: 650,000 inhabitants

• Borders with Belgium in the Westand the North, with Germany in the

East and with France in the South

• Centre of the Greater Region

Introduction

Source: Statec 2008

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Once upon a time…

• Written history of « Lucilinburhuc » dates back to about 960

• Part of Spain, UK, France, Prussia, Austria over the centuries

• One of the most heavily fortified European cities: “Gibraltar of the North”

• Elevated to the status of Grand Duchy in 1815 and given to the King of

Holland as “personal property”

• Full independence in 1867 (Treaty of London)

• UNESCO World Heritage site for its fortifications

• Occupied by Germany in both World Wars

• Founder member of the European Union (EU)

Introduction

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Government and political system

• Luxembourg is a constitutional monarchy

• The Monarch (Grand Duke Henri) has been the head of

state since the abdication of his father, Jean, in 2000

• The Prime Minister (Jean-Claude Juncker) is the head of

government (2004) and is chairman of the Euro-Group in

2005 (Finance Ministers of the Eurozone)

• The Chamber of Deputies is a unicameral body with 60

seats and is elected by a system of proportional

representation for a five-year term

• Following the 2004 elections, the coalition is formed by the

Christian Social party (CSV) and the Socialists (LSAP)

• The next elections will be held in 2009

Grand Duke Henri

Jean-Claude Juncker

Introduction

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• French and German are the official

languages for legislative and

governmental purposes

• Since 1984, the national and the

everyday spoken language is

Luxembourgish (Lëtzebuergesch),

a Moselle-Frankish dialect

• Reputation for multilinguism:

many people converse fluently in

French, German and English

Introduction

Lëtzebuerg ass e schèint Land …

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This motto shows that Luxembourg aims to reconcile international

integration with its citizens’ independent character

Introduction

“We want to remain what we are”“Mir wëlle bleiwe wat mir sinn”

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• Entered into the Benelux CustomsUnion in 1944

• Joined NATO in 1945

• 1952: Luxembourg was the host of

the first European institution, the

European Coal and Steel

Community, whose initiator, Robert

Schuman was born in Luxembourg

• One of the six founding countries of

the European Economic Community

in 1957

Introduction

Europe: the way to the future …

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• Met all EMU convergence criteria and joined the Eurozone on January 1, 1999

• The Legal and Financial operations of the European Union are

headquartered in Luxembourg with more than 10,000 officials:

EU Commission (Publications Office, Eurostat, etc.) 3,500 officials

Secretariat of the European Parliament 2,500 officials

European Courts of Justice 1,700 officials

European Investment Bank 1,300 officials

European Court of Auditors 760 officials

European Translation Agency 175 officials

2010 : the future Court of the Community Patents

Introduction

Europe: the way to the future …

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• Lorraine, Luxembourg, Saarland,Wallonia and Rhineland-Palatinate arepart of the Greater Region

• Perfectly sited in the middle of the areaof most important economicdevelopment in Europe (Blue Banana)

• Half of old Europe’s GDP is produced inthe area lying within the Blue Banana

• With their shared historical heritageand common culture, Greater Regioninhabitants have a genuine internationalspirit and are mostly multilingual andhighly mobile

Introduction

Greater Region: major assets

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Luxembourg and Greater Region: beyond borders

Source: Portail statistique de la Grande Région 2006, Statec, 2008

Luxembourg:

The heart of a wealthy 11,350 million people consumer market

Introduction

• Land Area: 65 400 km²

• Population: 11,350 million people

• 166,000 cross-border workers of

which 143,563 towards Luxembourg

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Source: The IMD World Competitiveness Scoreboard, 2008

Introduction

(1) USA 1

(2) Singapore 2

(3) Hong Kong 3

(6) Switzerland 4

(4) Luxembourg 5

(5) Denmark 6

(8) Netherlands 10

(16) Germany 16

(20) United Kingdom 2171.904

74.735

80.476

83.852

84.405

89.656

94.964

99.330

100.000

0 10 20 30 40 50 60 70 9080 100 One of the key differentiatingfactors of Luxembourg isundoubtedly its internationalcompetitiveness.

This IMD annual rankingsurveys 55 countries based on4 main factors:

• Economic performance• Business efficiency• Government efficiency• Infrastructure

(14) Ireland 1277.638

Luxembourg’s competitiveness

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Luxembourg’s competitiveness

Source: « The World Competitiveness Scoreboard », IMD, 2008

Introduction

The Competitive landscape – Luxembourg vs. US rankings

U.S. ranking Luxembourg ranking

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2. 9 OPPORTUNITIES FOR BUSINESSFind out more about Luxembourg’s business opportunities

“Delphi Luxembourg can service customers in many European countriesbecause of its central geographical location in Europe, neutral positionregarding our customer base and multilingual, multinational andmulticultural environment. Luxembourg is known for its social peace,attractive fiscal and social environment for both employees andemployers.” DELPHI AUTOMOTIVE Systems

“In Luxembourg we can count on quick and non-bureaucraticGovernment support for any business-related needs and onwell-educated and motivated employees displaying greatlanguage and technical skills.”

FANUC Robotics Europe S.A.

“The Grand Duchy of Luxembourg is an attractive location for internationalbusiness, because it can offer an experienced and dedicated workforce withbroad language skills. In addition, the social environment is remarkably stable,and administrations and the Government are supportive to the business.”

GOODYEAR Luxembourg

Source: Luxembourg’s Board of Economic Development, 2006

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A prime location for automotive industry

9 opportunities for business

At the crossroads between Germany, France and Belgium, Luxembourgoffers excellent location to reach main suppliers and customers in Europe

• More than 9,000 employees on more than 30 sites

• These players deliver their products to over 50 plantswithin a range of 600 kilometres

• Car manufacturers and assembly lines in Germany,France, Belgium, the Netherlands and the UK can besupplied from Luxembourg on the same day deliverybasis

• A variety of services have been developed around thissector: certification and approval of vehicles, R&D andinnovation…

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A prime location for e-business, ITC and broadcasting players


• Various e-business global players decided to set up their activities, or eventheir headquarters in the Grand-Duchy:

• They enjoy significant advantages:

Central situation in Europe

Supportive business climate

Multilingual resources

Efficient and fast administrative channels

Interesting fiscal opportunities

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A prime location for logistics players and retail companies


Eurohub Luxembourg: logistics players and consumer goods producers enjoya lot of advantages:

• Central situation in Europe

• Direct access to major consumer markets, withover 90 destinations: China, USA, Israel, SouthAmerica…

• A wealthy population within an accessibleperimeter

• At the heart of an excellent communicationnetwork

• Multilingual workforce

• Attractive fiscal context (e.g. the possibility toimport non-EU goods without the requirement

to prefinance import VAT)

Source : C&W, European Distribution Report 2006

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• Biotechnology development is one of governments key priorities

A prime location for health industry and biotechnologies situatedin the Greater Region (1/2)

A health sciences and technologies hub under development in Luxembourg

• 15 universities and 14,000 medicalstudents, high profile biomedical researchinstitutes and international researchconsortia

• Big pharma players such as Boehringer,Abbot or Biogen and over 300 SMEs indistribution, medical devices and pharma

• Infrastructure support in IP management,seed funding, logistics and industrycollaborations

• International clinical trial network

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An ambitious initiative with first-rate partners and a five-year investment of €140 million isexpected to help Luxembourg develop cutting-edge skills and expertise in molecular medicine.

Details of the three projects and areas of research:

Example given with a business case in Health Life Sciences (Luxembourg, 2008)

• “Integrated Biobank of Luxembourg (IBBL)”, a collaborative effort ofthe three Public Research Centres and the University of Luxembourg inpartnership with the Translational Genomics Research Institute (TGen),Phoenix, the Institute for Systems Biology, Seattle and the FredHutchinson Cancer Research Centre, Seattle. Over the next years, IBBLwill become the corner stone for the development of personalisedmedicine in Europe.

• “The Lung Cancer project” in collaboration with the consortium“Partnership for Personalized Medicine (PPM)” in Phoenix, Arizona andunder the direction of Prof. Lee Hartwell, Nobel Prize winner 2001. Thisproject tackles the challenge of detecting lung cancer in time to make it acurable disease.

• “Institute of System Biology (ISB)”, development of 2 research projects:- Genome sequencing of part of Luxembourg population;- Blood protein specific to certain organs (diagnostic).

A prime location for health industry and biotechnologies situatedin the Greater Region (2/2)


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A prime location for banking


• 153 banks of which 90% are foreigners, with more than 17 nationalities

• More than 27,000 employees in the banking sector in June 2008

• Total balance sheet of banks: €934,988 million (as at July 2008)

• Centre of excellence for Private Banking and Investment Management

• Innovative financial centre within the European landscape with internationalsolutions: securitisation, SICARs, real estate vehicles, pension funds andSIFs

• Favourable regulatory environment

Source: CSSF, July 2008

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A prime location for investment funds


Luxembourg as a hedge fund centre

• 2nd largest global leader for domiciled funds behind the United States

• 11,964 compartments of UCIs in July 2008

• The total amount of assets under management rose above €1.9 trillion, i.e.26% of the European investment funds industry in June 2008

• Luxembourg UCITS net sales represent €6,207 million as the European netsales represent € -101,417 million as at 2nd quarter 2008

• 585 hedge funds units under administration in Luxembourg and 1,101 fundsof hedge funds units at the close of 2007

• AuM in hedge funds: €63 billion in December 2007

Sources: Efama and Alfi, 2008

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A prime location for structured products

Securitisation

Private Equity

Real Estate

116

47

80

290

116

129

2005 2006

Sources: CSSF, Mémorial, Fitzrovia and Inrev, 2008

500 securitisationcompanies, ofwhich 19 are

regulated(October 2008)

206 SICARs(July 08)

28 out of 57existing Real

Estate Funds ofFunds domiciledin Luxembourg(October 2008)

435

182

210

2007 2008


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A prime location for listings


• 4,200 issuers coming from about 105 countries

• More than 45,570 quotation lines and 13,353 new listings

• 31,469 debt securities listed

• 46% of international bonds listed in Europe are listed in Luxembourg

• 522 issuers from 13 different countries list 7,372 lines of UCIs

Over the years, the Luxembourg Stock Exchange has consolidated its

predominant role in the international bond and investment fund markets

Sources: PwC publication « Luxembourg Stock Exchange: a prime location for listing », 2006PwC publication « Investment Management: Luxembourg-the location of choice », 2008Available on PwC Luxembourg website (www.pwc.com/lu)

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“For SES, the support of the Luxembourg’s government hasbeen critical over the history of the company, and obviouslyand practically for the large of the company, which wouldnot have taken place without that support”

SES, September 2008

“Delphi is developing some of our key environmental technologies right here in Luxembourg and wefind that the environment in Luxembourg is perfect for an R&D facility to help us develop these world-class technologies”“We are here in Luxembourg because we follow our important automotive consumers to Europe andLuxembourg’s central location allows us easy access to all of our European customers”

DELPHI, September 2008

“The social stability here in Luxembourg is also one of thereputations the country has if it comes to investment”

DUPONT, September 2008

3. 10 KEY DIFFERENCIATING FACTORS

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Luxembourg’s location allows direct

access to the EU and to the most

important European cities: Paris,

London, Amsterdam, Brussels,

Berlin, Zurich, Milan, Geneva…

Source: Portail statistique de la Grande Région

Ten key differentiating factors

1. A highly strategic positionRight in the middle of a 500million people consumer market

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2. A neutral placeMultinationals that have chosen Luxembourg

Top international providers – based on number of employees (Statec)

• Industry

• Telecommunications

• Transports & Logistics

• Financial Services


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3. A very welcoming and safe country

• Luxembourg ranks as the world’s top

city for Personal Safety in 2008. The city

scores 131,4 followed by Bern, Geneva,

Helsinki and Zurich

• Luxembourg belongs to the top cities in

terms of quality of living and ranks 17

out of 215 cities in 2008

• Luxembourg, second best place in the

world in terms of lifestyle and facilities

for expatriates in 2006

Sources: Mercer Human Resources Consulting,2008 ; ECA international, 2006


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Sources: Statec, 2008-2009 ; CEPS/Instead study, 2008


• Insignificant government debt (6,8% of the country’s GDP in 2007)

• Annual Budget 2008 : €8,416 billion

• Growth of GDP:

+ 5.8% on the 1987-2007 period (average annual GDP growth)

+ 4.5% in 2007

+ 2.0% in 2008 (forecast)

• Stable inflation rate: +2.5% on the 2006-2008 period

• Low unemployment rate: 4.4% (august 2008)

• High standard of living: Average income = €3,726/month

Minimum gross salary (adult): €1,642/month

4. A wealthy country

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5. A skilled multicultural workforce

Source: Statec 2007, 2008


67.1% of workers are foreigners

Other EU

9%

Others

14%

Portuguese

37%

French

13%

Belgian

8%

Italian

9%

German

6%

English

2%

Dutch

2%

42.6 % of residents are foreigners

English

2%

Dutch

2%

Italian

4%

Belgian

17%

German

15%

Portuguese

18%

French

34%

Others

5%Other EU

3%

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6. Excellent basic infrastructure (1/3)

• Public investment

allows Luxembourg to

create infrastructures

which are necessary

for economic growth

• They help companies

to stay competitive

Source: Eurostat, 2006 (data of 2004)

High public investment in public infrastructure (in % of GDP)


4.7

0 1 2 3 4 5

AustriaGermany

LatviaBelgium

United KingdomDenmarkSlovakia

ItalyEstoniaFinland

NetherlandsPortugalSwedenFrance

SloveniaSpain

LithuaniaPoland

HungaryIrelandGreeceCyprus

MaltaLuxembourg

Czech Republic

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• The country possesses a strong communication infrastructure, through which,amongst others, broadband fiber optics networks are connected to the majorEuropean financial centres and satellite connections

• High Tech Data and Recovery Centres providing outsourcing activities have a strongpresence and are key players in the ICT landscape of Luxembourg

The Teralink network, a distinctive technology- Trans-European Fiber Network spanning more than 4,000 km- 13 points of presence (PoP) in 6 EU countries linking Amsterdam, Brussels,

London, Paris, Frankfort and Strasbourg- Each city connected by redundant fibre routes, provided by different

suppliers- State of the art technology (up to 88 x 40Gbits (3.5 Terabit/s))- Among the 3 carriers in EU implementing a network of this size with this

newest technology.

The e-BRC resilience centrewas elected best data centre

2008 in Europe !

State-of-the-art ICT infrastructures and competencies



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In Luxembourg and its neighbourhood you will find:

• 15 universities, 40 elite universitycolleges, European and internationalschools (12 language sections)

• 10 world-renowned research centres

• Around 93 golf courses in the Greater

Region


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7. Top level financial and multinational IT clusters


• Excellent financial network: 153 banks (2008)

• Luxembourg is the leader of the European Fund Business with 26 % of

European funds domiciled in Luxembourg (2008)

• Innovative investment products: securitisation, real estate…

• Strong IT and communication providers:

- AMAZON

- iTunes

- SES Global

- SKYPE

- Vodafone

- …Sources: CSSF, 2008 ; Alfi Annual Report, 2008

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8. A good logistical network (1/3)

About 1 hour away by plane from:

- Amsterdam - Munich

- Frankfurt - Paris

- London - Zurich

- Milan …


TGV offers great connectivities from Luxembourg:

- Strasbourg: 1h30 - Lille: 2h30

- Paris: 2h05

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Luxembourg Airport: more than 1,7 million passengers in 2007. SinceApril 2008: new airport building with a capacity of 3 million passengershas been inaugurated.

Road-rail transport: unique railway service that permits intermodaltransport without unloading.

Cargo handling: close to 900,000 tons handled in 2007 (+10.6%compared to 2006 and expected growth of 6% until 2023).

Direct airfreight lines: to 90 destinations around the world:China, Israel, USA, South America…

Cargolux: 1st European Air Cargo Hub, 5th freight airport in Europeand« Best All-cargo Airline 2008 » (Air Cargo News magazine).

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State-of-the-art logistics parks in a unique environment:


EUROHUB South:

- 50 hectares

- 12 km from the airport

- Rail/Road interface

- Piggy-back facility

- Container port

EUROHUB Centre:

- 18 hectares

- 4 km from international airport of Findel

- 5 km from City centre

- 20 km from the French, German and Belgiumborders

- Aircargo handling facilities

Modern Infrastructures

- A unique railway service has been developed thatpermits intermodal (road and rail) transport withoutunloading;

- Since 2007, this unique railway links Bettembourg toPerpignan (<1000 km);

- This technology enables a quick, safe and competitivetransfer of standard semi-trailers from the road to therail.

Source: Modalohr, 2007

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9. Flexible and welcoming Authorities

• A small country

• Officials easily contactable

• Open approach adopted by the Authorities

• Readiness for dialogue and quick decision-making process

Result: potential problems can be discussed with ease

and decisions taken within a short time-frame


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10. An attractive life style

Worldwide quality-of-life index


Luxembourg belongs to the top cities in terms of quality of living and ranks

17 out of 215 in 2008 (Mercer Human Resources Consulting)

Source : The Economist Intelligence Unit’s quality-of-life index, 2005

7.2

7.4

7.6

7.8

8

8.2

8.4

Ireland

Switzer

land

Norway

Luxe

mbo

urg

Sweden

Austra

lia

Iceland

Italy

Denmar

k

Spain

Singa

pore

Finland US

Canada

8.02

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4. ECONOMY AND FINANCELuxembourg: a healthy country

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Current standard of livingGDP per inhabitant in Purchasing Power Standards (PPS) in EU27

Source: Eurostat, 2007 (forecast - based on EU27 = 100)

Economy and finance

0 50 100 150 200 250 300

Estonia

Portugal

Czech Republic

Cyprus

Greece

EU27

Italy

Spain

France

Germany

United Kingdom

Sweden

Iceland

Netherlands

Switzerland

Ireland

Norway

Luxembourg

284

• 284 is the GDP perinhabitant in PPSwhen cross-borderworkers areconsidered.

• 219 is the GDP perinhabitant in PPSwhen cross-borderworkers aren’tconsidered.

• It is important tonote that, in bothcases, Luxembourgranks 1st.

219

100

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Industrial development in Luxembourg

• Until recently, dominated by steel which fell from 60% of GDP

contribution in the 70s to 20% in 2000

• Efforts to diversify the industrial structure started in the early 1950s

• Chemicals, rubber, plastics, glass and high-tech industries have

developed into a second major industrial focus alongside steel

• Media, global satellite and films are important and thriving new industries

Economy and finance

Luxembourg’s industrial production grew by 6.5 % between April2007 and March 2008

Source: Eurostat, 2008

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Structure of the economy

Move from an industry-based to a service-based economy(in % of gross added value)

9.3%

85.2%

0.4%5.1%

Industry, energy including Services Construction Agriculture

47%

43%

6% 4%

Source: Le Luxembourg en chiffres, Statec, 2008

1970 2007

Economy and finance

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Focus on services

Structure of the services sector in 2007(% of gross added value)

Source: Le Luxembourg en chiffres, Statec, 2008

Economy and finance

Financial

services

35%

Real estate,

services to

enterprises

23%

Others services

18%

Trade,

transport and

communication

services

24%

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The competitive position of Luxembourg as a global financialcentre

1 United Kingdom 7,324

2 Germany 3,905

3 USA 3,188

4 France 3,088

5 Japan 2,595

6 Cayman Islands 1,921

7 Switzerland 1,565

8 Netherlands 1,422

9 Belgium 1,248

10 Luxembourg 1,164

11 Ireland 1,137

Source: Bank for International Settlements, March 2008

External positions of banks in $ billion

Economy and finance

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Soundness of banks

Economy and finance

5.6 5.8 6 6.2 6.4 6.6 6.8 7UK 44

USA (40)

Germany (39)

France (19)

Switzerland (16)

Singapore (13)

Hong Kong (11)

Ireland (9)

Belgium (7)

Luxembourg (3)

Sweden (2)

Canada (1)

Banks in your country are:From 1 = insolvent and may require a government bailoutTo 7 = generally healthy with sound balance sheets.

Source: World Economic forum, Executive Opinion Survey 2007, 2008

Netherlands (6)

UK (44)

(Country rankings are in brackets)

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Banking in Luxembourg: keys to success

• Liberal legislative environment

• Political and economic stability

• Statutory banking confidentiality

• Competitive fiscal framework

• Professional expertise

• Multilingual staff

Economy and finance

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Banks: history of growth

1970 1975 1980 1985 1990 1995 2000 2005

Sources: ABBL, BCL, CSSF, 2008

Number of banks Employment in the banking sector

153

27,003

Economy and finance

June 2008

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Balance sheet of Luxembourg banks

1970 1980 1990 2000

Source: CSSF, October 2008

€934,988 million

July 2008

5,85

97,10

309,37

647,63

Economy and finance

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Origin of banks in Luxembourg

Source: CSSF, 2008

43

21

15

12 11

6 65 5 4 4

3 3 3 3 2

7

LUX/BELGIU

M

ITALY

GERMANY

SWITZERLAND

FRANCE

OTHERCOUNTRIES

JAPANUSA

SWEDEN UK

NETHERLANDS

DENMARK

CHINABRAZIL

PORTUGAL

ISRAEL

Economy and finance

ICELAND

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A first-class reputation in the fund industry

• First country to transpose the European directive 85/611/EEC in March 1988

• Second fund domicile in the world behind the United States

• Major trends are:

– Globalisation of the world’s economies and capital markets

– Convergence and concentration in the financial services industry

– Changing regulatory climate and customer needs

– Technological advances

Economy and finance

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A prime location within the European investment fund market

Source: Efama, Quarterly Statistical Release n°34, June 2008

1.1%78.5Netherlands

1.6%116.4Belgium

1.6%117.5Sweden

2.2%158.0Switzerland

2.0%148.9Austria

8.7%635.4UK

4.1%300.1Italy

1.7%122.3Denmark

11.3%826.1Ireland

3.3%240.0Spain

13.5%983.0Germany

19.3%1,405.8France

26.1%1,902.1Luxembourg

0.0%3.0Romania

0.0%3.1Slovenia

100%7,280.2TOTAL

0.1%4.6Slovakia

0.8%55.9Finland

0.3%18.6Greece

0.2%15.1Turkey

0.1%6.6Czech Republic

0.3%20.2Liechtenstein

0.2%12.8Hungary

0.4%28.5Poland

0.4%31.3Portugal

0.6%46.4Norway

Ucits and Non-Ucits net assets by country of domiciliation (in € billion)

Economy and finance

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Growth in the number and volume of funds

Number of funds

Assets under management (€ billion)

76

805

3

72.3

1 785

874.6

3,220

1,902

Economy and finance

Sources: CSSF, 2008 ; Alfi News flash, July 2008

July 2008

The record of €2 trillion assets under management has been surpassed in 2007

It’s important to note that, even if the assets under management are slowly decreasing since 2008, thenumber of funds is still increasing elsewhere.

1980 1985 1990 1995 2000 2005

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Presence of US fund promoters in Luxembourg

Number of Luxembourg-based mutual funds sponsored by US promoters

1,198

0

200

400

600

800

1000

1200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: Fitzrovia, December 2007

Economy and finance

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US and German fund promoters, now the leaders in Luxembourg

USA

19.2%

Germany

20.6%

UK

9.7%Switzerland

17.2%

Italy

8.7%

Economy and finance

Source: CSSF, June 2008

Assets under management of Luxembourg domiciled fundsby origin of promoter

(by net assets, in % as at June 2008 value for a total of €1,902 billion)

Others (35countries)

24.6%

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Export trade partners (2007)

Others

4%

Germany

26%

France

17%

Other EU

countries

29%

Belgium

12.5%

Other

European

Countries

4.5%

Asia

4.5%

USA

2.5%

Economy and finance

Source: Statec, as at December 2007

The total amount of exports reached €11.8 billion in 2007(+ 4.6% compared to 2006)

More than 85% EU 27

55.5% Direct neighbour countries

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Import trade partners (2007)

Others

2.5%Asia

3%USA

4%

France

11.5%

Other EU

Countries

15.5%

Germany

29.5%

Belgium

34%

Economy and finance

Source: Statec, as at December 2007

90.5% EU 27

75% Direct neighbour countries

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AMCHAM

Foreign direct investment from Luxembourg

Total amount of direct investments from Luxembourg in other major countries

1.4%

3.3%

7.8%

7.9%

9%

9.3%

12.6%

23.7%

0 5 10 15 20 25

Ireland

Switzerland

Brazil

Spain

France

Germany

United States

Belgium

Source : Statec, 2006

Total: €29,338.8 million

64% EU15

Economy and finance

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High level of foreign direct investment

Total amount of direct investments in Luxembourg (in € million)

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Others

Other EU

Netherlands

Italy

France

USA

Belgium

Germany

Bank Insurance Industry/Other services

- €46,1 billion invested in 2006

- 56.7% in the banking sector

- 60% from neighbour countries

Source: Statec, 2006

Economy and finance

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2008 Government budget

25%2 216 51119%1 585 000VAT

32%2 743 53936%3 033 180Other

100%8 710 220100%8 415 780Total

2%140 0001%115 000Wealth Tax

24%2 131 00026%2 193 000Personal Tax

17%1 479 17018%1 489 600Corporate Tax

2009 – Draft2008 – VotedX 1000 €

Source: Inspection Générale des Finances, 2008

A balanced budget dedicated to economic health and innovation

Economy and finance

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AMCHAM

0 20 40 60 80 100 120

ItalyGreece

BelgiumHungary

GermanyFrance

PortugalMalta

CyprusAustria

EU27Netherlands

PolandUK

SwedenSpain

FinlandSlovakia

Czech RepublicDenmark

IrelandSloveniaLithuania

LatviaLuxembourg

Estonia

Source: Eurostat, data of 2007

General government debt (in % of GDP, 2007)

An insignificant Government debt which ensures stability

Economy and finance

6.8%

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5. KEY PLAYERSAn attractive country for companies

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SES Global Leadership

The world’s leader in global satellite communication

Main markets Key figures (2007)

Audio-visual broadcasting

Internet trunking

Corporate networks

Telecommunications services

Key players

Source: SES Global, 2007

Total revenues: €1,610.7 million

Profit of the group: €404.0 million

SES satellite fleet: 44 + 8 future satellites

World’s population covered: 99%

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SES Global world headquartersCoupled with regional market focus

Key players

Source: SES Global, December 2006

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RTL Group world headquarters

RTL Group, the leading European Entertainment Network

Key players

Source: RTL Group, 2008

Largest independent distributioncompany outside US

Global leader in content(Production & Rights)

European leader in TV and radiobroadcasting

Key figures (2007)Main features

43 TV channels, 32 radio stations in 10countries

300 programmes in 22 countriesAudience: over 200 million viewers permonth

More than 8,894 employees in 25countries (December 2007)

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CARGOLUX at a glance…

Key markets

Freight Services & Equipment

Charters

Special Handling

Luxair Cargo Center

Cargolux, the 8th biggest cargo airline in the world, has been elected

“Best All-cargo Airline 2008” Air Cargo News magazine

Key players

Source: Cargolux, 2008

Key figures (2007)

Turnover: $1,682 million

Number of employees: 1,491

Total metric tons carried: 702,765

1st Air Cargo Carrier in Europe

Fleet : 16 in 2008 (Boeing 747)

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CARGOLUXWorldwide presence

Komatsu

Seoul

Shanghai

Taipei

Manila

Singapore

Kuala Lumpur

MadrasBangkok

Hong KongKarachi

Baku

DamascusKuwait

Dubai/SharjahAbu Dhabi

Johannesburg

Beirut

Istanbul

AccraAbidjan

LuxembourgManchester

Prestwick

Shannon

New York

Miami

Huntsville

Houston

Guadalajara

Mexico

BogotaLatacunga

Sao Paolo

Santiago

Rio

CalgarySeattle

PortlandSan Francisco

Los Angeles

AucklandMelbourne

Penang

MaastrichtBudapest

Tehran

Nairobi

Milan

St Denis - Reunion

Curitiba

Panama

Key players

Source: Cargolux, December 2006

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ArcelorMittal world headquarters

The Group is a leading force in the transformation of the global steel industry

Main markets

Automotive

Construction

Packaging

General Industry

Key players

Sources: Arcelor, 2007 ; Statec, 2008

Key figures (2007)

310,000 persons over 60 countries

6,520 people in Luxembourg (2008)

Turnover: $105.2 billion

Production: 116 million tons of steel(10% of world steel output)

2007 key event: merger with Mittal

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This Luxembourg-based company has revolutionised telephony

40 employees

The most downloaded software, close to 200 million registered users

Turnover 2007: $7.7 billion

“There is no question in my mind that Skype will become a $1 billion company”Niklas Zennstrom, CEO – March 2005

Why Luxembourg? - Corporation tax and VAT

- Business friendly environment

- Ability to have a good dialogue with authorities

Event 2007 : with a new banking license, PayPal has recently established itself inLuxembourg to develop the European market

eBay-SKYPE world headquarters

Source: eBay Inc. Annual Report, 2007

Key players

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About 50 employees

Sales and services activities based in Luxembourg

Operational units centre for its European websites

Why Luxembourg? - Favourable business climate

- Efficient and fast administrative channels

- Multilingual, highly-qualified staff

- VAT advantages

Amazon Services Europe: European decision-making centre inLuxembourg

Source: Business Review, 2007

Key players

The world’s largest online retailer

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The iTunes Music Store commands 70% of legal music downloaded

Over 100 million songs sold on iTunes in Europe and more than 1 billionworldwide

Why Luxembourg? - Geographical proximity of iTunes markets and Appleentities: Germany, France, Belgium, Switzerland andthe UK (existing direct flights)

- Business friendly environment

- VAT advantages

iTunes: leading the way for the world’s digital download market

Key players

The number 1 download music store for PC and Mac

Source: Les Echos, 2006

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- Multinational manufacturing company with production sites in three continents

- 2006 revenues – approximately $700 million

- Over 2,500 employees worldwide

Performance Fibers: European shared-services centre andexecutive management headquarters

Key players

One of the world’s leading suppliers of high-tenacity polyester fibers,engineered fabrics, sewing thread fibers and advanced materials

“The sound business environment, vitality of the workforce and stable infrastructurein Luxembourg are key reasons we chose this prime location,”

“Luxembourg is conveniently located to Germany, Belgium and France and close tomany of the areas where we are seeking to expand our business.”

Mr. Carnevale, Performance Fibers’ vice presidentand managing director, Europe.

Source: Board of Economic development, 2007, http://www.bed.public.lu

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Elcoteq provides global end-to-end solutions for telecommunication networks

They operate in 15 countries on 4 continents and employ some 24,000 people

The consolidated net sales for 2007 totalled €4.0 billion

Why Luxembourg? - Central location

- Efficient and business-friendly administration

- Effective legal environment

Elcoteq SE: Head Office

Key players

A leading electronics manufacturing services company(with original design manufacturing capabilities in the communications technology field )

Sources: Board of Economic development, 2007, http://www.bed.public.lu ; Elcoteq SE, April-June 2008

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Significant presence in Europe, the Middle East, Africa, Asia Pacific and the UnitedStates (Partner Networks in a further 42 countries )

260 million customers (March 31, 2008)

Total market capitalisation of approximately £99 billion (December 2007)

The group will create 130 jobs over 3 years, and expects to save around“250 million pounds”

Why Luxembourg? - Business friendly environment

- Officials easily contactable

- Multilingual

- High Connectivity development (via Internet)

Vodafone: global centre for procurement

Key players

The world's leading mobile telecommunications company

Source: Board of Economic development, 2007, http://www.bed.public.lu

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AMCHAM

Rakuten: Japan’s largest e-commerce company

•Rakuten Group created and developed innovative internet services, with notably thelargest online shopping mall in Japan : “Rakuten Ichiba”

•The consolidated net sales for 2007 totalled $1,765 million

•Over 4,375 employees worldwide

•Rakuten Europe will supports its European operations, will be responsible for thecore corporate functions and will also serve as a central platform for logistics andR&D activities

“As part of our globalization strategy, we are honoured to announce the establishment ofRakuten Europe in Luxembourg. At Rakuten, empowering people has been a key principle. Wehope to offer sales services and systems to further allow European SMEs to grow to theirpotential.”

Mr Hiroshi Mikitani, CEO of Rakuten Inc., 2008

The Group has established a regional hub in Luxembourg: Rakuten EuropeS.a.r.l, which will play a key role as the central coordination entity.

Sources: Board of Economic Development, 2008 ; Rakuten Inc. Annual Report, 2007

Key players

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6. CORPORATE TAXATIONAdvantages offered by Luxembourg

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International structures: Why Luxembourg?

Low effective tax rate

Fiscal unity allowing the consolidationof tax results

Reliability of tax laws

Flexible tax efficient structuringpossible

Flexible transfer pricing rules

Corporate taxation

Worldwide, Luxembourg ranks 14th for ease of paying taxes (3rd position in the EU), 6th intime to comply and 14th in total tax rate indicator according to the new report "Paying Taxes 2009“.

The report draws on the Doing Business 2009 report that measures the ease of paying taxes for mid-sizedomestic companies in 181 economies, analyses tax systems and tracks related reform efforts. The PayingTaxes report is based on the three following indicators: tax payments, time to comply and total tax rate.

Highlights: Luxembourg competitiveness for “ease of paying taxes”1)

Application of EU Directives ontaxation reduces the reliance ondouble tax treaties

Expanding tax treaty network fornon EU investments

Tax certainty through Advance TaxAgreements

1) World Bank, IFC, PricewaterhouseCoopers - 2008

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AMCHAM

Luxembourg tax productsBolt on products

Standard holding company structures

- Benefits from double tax treaty protection

- Benefits from 0% WT based on parent/subsidiary directive

Finance holding companies

- Benefits from enlargement of EU countries

- No thin capitalisation rules

Corporate taxation

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AMCHAM

Luxembourg tax productsBolt on products

Intellectual Property (IP) Planning companies

- EU Directives on Interest and Royalties

- No amortisation recapture

- No exit costs

US inward Bound Finance Structures

- Benefit from US treaty

Corporate taxation

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A new attractive tax regime for IP

• The investments made by companies in terms ofinvention, creative work and R&D activitiesshould be protected and supported.

• 80% exemption for income coming from IP rightsand capital gains realised on the sale of IP.

• Applies to income paid to Luxembourg taxpayersfor the use of any software copyright, patent,trademark, design, model or domain name.

Corporate taxation

• Luxembourg rankedthird in IP in Europe(following the achievedmeasures in terms ofsuccessful know-how);

• 86% of patents ownedby Luxembourgconcerned inventionsmade by foreigninventors.

Source: European Innovation Scoreboard 2006, Compendium of patent statistics, OECD 2008

Highlights

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Corporate income tax rates

Source: PwC, 2009

Corporate taxation

12.5%

25.5%

28.59%

28%

29.8%

33.99%

33.33%

Ireland

Netherlands

Luxembourg

UK

Germany

France

Belgium

Corporate income tax rate in 2009:

New decrease in 2009 :

As at 2009, the income tax ratein Luxembourg city is of28.59% (law of December 19,2008).

In the next few years, the ratewill decrease to progressivelyreach 25.5%.

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AMCHAM

VAT Rates in the EU

Corporate taxation

Source: European Commission, 2009

15.0%

15.0%

18.0%

19.0%

19.0%

21.0%

21.5%

19.6%

Luxembourg

*United Kingdom

Malta

Germany

Netherlands

France

Belgium

Ireland

Standard VAT rate in the EU in 2009

• In a Business-to-Consumer (B2C) relation, for adematerialized service (e.g. firewall, e-book, etc.), acompany based in Luxembourg can benefit fromone of the lowest VAT rate in Europe, whatever thebuyer ‘s location (i.e. 15% for all private consumersbased in the EU).

• For digital broadcasting services, since 2005 thesuper reduced rate of 3% may apply. This rate isthe lowest in the EU for this type of services.

This regulation will apply until 2015; as from that date, the buyer’s location will determine the application ofthe VAT rates, and will therefore be the same for any cross-border businesses in the EU.

* The rate of 15 % applied in the UK since December 2008 is only temporary until December 31, 2009, to overcome the global financial crisis.Then, the standard rate of 17.5% should be put back in force.

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VAT advantages in Luxembourg

Low VAT rates (the lowest combined rates in the EU)• 3%, 6%, 12%, 15%

Pre-financing optimization (Business-to-Business transactions)• Importation, supply of goods and services

Financial sector• The widest scope of application of the VAT exemption in the EU• A flexible application of the exemption to sub-contracted services

Full VAT deduction• Car-leasing, fuel, entertainment expenses,…

VAT compliance• Easy and flexible• Extended deadlines

Corporate taxation

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What about withholding tax?

General principle

• Favourable withholding tax rate:

- Dividend withholding tax 0%1)

- Royalty withholding tax 0%2)

- Interest withholding tax 0%

Corporate taxation

What about capital duty?

As from January 1, 2009: Capital duty is repealed, i.e. a rate of 0%

1) The official dividend withholding tax rate of 15% is in most cases, decreased to 0% due to either an exemption on the basis of the Parent / Subsidiarydirective or either a possible reduction by application of double tax treaties.2) Royalties from independent artistic / literary activities or sport activities are however subject to a 10% WHT when the activities are performed in Luxembourgby non-residents.

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AMCHAM

What about tax treaties?

Companies can benefits from a range of unique structures to optimize their specificsituation. In Luxembourg, there are 51 double tax treaties in force:

* Double Tax treaties put into force more than 5 years ago

Austria

Belgium

Brazil

Bulgaria

Canada

China

Czech Rep.

Denmark

Estonia *

Finland

France

Germany

Greece

Hungary

Iceland

Indonesia

Ireland

Israel *

Italy

Japan

Latvia *

Lithuania *

Malaysia *

Malta

Mauritius

Mexico

Mongolia *

Morocco

Norway

Poland

Portugal

Romania

Russia

S. Korea

San Marino *

Singapore

Slovak Rep.

Slovenia *

South Africa

Spain

Sweden

Switzerland

Thailand

The Netherlands

Trinidad and Tobago *

Tunisia

Turkey *

United Kingdom

United States

Uzbekistan

Vietnam

Corporate taxation

Source: Administration des contributions directes, 2009

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AMCHAM

What about tax treaties?

Corporate taxation

Source: Administration des contributions directes, 2009

Double tax treaties signed in the last 5 years (not yet in force):

Argentina Hong Kong Kuwait United Arab Emirates

Azerbaijan India Moldavia

Georgia Kazakhstan Ukraine

Double tax treaties currently under negotiation:

Albania Barbados Lebanon Qatar

Armenia Cyprus Macedonia Serbia and Montenegro

Bahrain Kyrgyzstan Pakistan Syria

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7. EMPLOYMENT AND LABOUR COSTSAn optimal balance between low business costs and highpurchasing power

Slide 89


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Who lives in Luxembourg?

Total Population 483,800

42.6 %

Source : Statec, July 2008

Luxembourgers

Of which 205,900 foreigners

Employment and labour costs

Foreigners

Other EU

9%

Others

14%

Portuguese

37%

French

13%

Belgian

8%

Italian

9%

German

6%

English

2%

Dutch

2%

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Who works in Luxembourg?

• International and multiculturalworkforce

• Frontier workers (about 143,563people) and foreign residents(about 205,900 people) make aneclectic population and amulticultural workforce

Belgium

Germany


71,880

34,65037,033

Source: Statec, March 2008

Slide 91


AMCHAM

Total employment growth (in % of total employed population)

4.6 4.5

3.9

2.52.1 2 1.9 1.8 1.8 1.7

1.31.1

0

1

2

3

4

5

Lu

xem

bo

urg

Norw

ay

Irela

nd

Spain

Fin

lan

d

Net

her

lan

ds

US

A

Sw

ed

en

Bel

giu

m

Italy

Fra

nce

UK

2005

2006

2007

Source: Eurostat, June 2008


Slide 92


AMCHAM

Total unemployment rate (2007, in % of labour force)

Source : Eurostat, 2008


6.26.97.58.38.38.4

9.6

3.24.44.75.3

02468

1012

Polan

d

Ger

man

y

Spain

Franc

e

Belgi

um

Finla

nd

Swed

en UK

Irela

nd

Luxe

mbo

urg

Net

herla

nds

EU27

7.1%

Slide 93


AMCHAM

Lower taxation and social charges


Source: PwC, June 2008

2008 annual gross salary of €100,000 - Married / 2 children

* Region of Geneva

3948535961636471Ratio Net/Cost (%)

5271576567707275Net employees

4829433533302825Minus tax/socialsecurity employees

100100100100100100100100Gross salary (t=100)

32497111011116Minus tax/socialsecurity employers

132149107111110111111106Total cost foremployers

BelgiumFranceNetherlandsGermanyUnited

KingdomIrelandLuxembourgSwitzerland*

Slide 94


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8. LUXEMBOURGOne of the best quality-of-life locations in the world

Slide 95


AMCHAM

A great multicultural place in the middle of Europe

Paris

LilleBruges Amsterdam

Strasbourg

Brussels

Trier

Cologne

Metz

Quality of life

Nancy

Slide 96


AMCHAM

Excellent ranking for satisfaction of urban residents

According to the Urban Audit Perception Survey,

72 % of residents are very satisfied to live in Luxembourg

Source: Urban Audit Perception Survey, 2005

43%London

44%Paris

69%Helsinki

72%Luxembourg

81%Stockholm

Residents very satisfiedto live in their city

City

Quality of life

Slide 97


AMCHAM

An affordable cost of living

Cost index of basket of goods in major cities, including housing (New York = 100)

London 120.2

Oslo 112.3

Dublin 105.2

Copenhagen 102.6

New York 100.0

Zurich 97.7

Source : UBS, 2008 ; CEPS-INSTEAD, 2005

Geneva 96.0Tokyo 94.4…

Paris 92.8

…

Luxembourg 91.9

Quality of life

“Among the households living in Luxembourg, 81% have the feeling of good living with

the monthly resources they have.”

Zurich

Luxembourg

100

93.2

Without rent With rent

100

94

Slide 98


AMCHAM

Luxembourg reconciles business with culture and leisure activitiesNominated “Capital of Culture” in 1995 and 2007

Contact: Luxembourg City Tourist Office, www.lcto.lu

Quality of life

Slide 99


AMCHAM

Golf courses in Luxembourg and surroundings

Around 93 golf courses in the Greater Region, of

which 6 are located in Luxembourg

Quality of life

• Kikuoka Country Club

• Golf Club Grand Ducal

• Golf de la Gaichel

• Golf de Clervaux

• Golf de Luxembourg

• Golf de Christnach Luxembourg city

Slide 100


AMCHAM

Culture in Luxembourg

Museums

• National Museum of Art and History

• Modern Art Museum (contemporary

art collection)

• National Museum of Natural History

• Museum of Luxembourg City

• Victor Hugo’s House

Concerts halls and theaters

• Great Theatre of Luxembourg City

(opera, dance…)

• Philharmonie Concert Hall

• Trifolion (concerts hall)

• Rockhal (rock concert hall)

• Theaters: Théâtre des Capucins,

Luxembourg National Theatre,

Esch Theatre…

Quality of life

Slide 101


AMCHAM

Hospitals in Luxembourg and vicinity

Major Hospitals Number of employees

Luxembourg Hospital

Emile Mayrisch Hospital

Kirchberg Hospital

St Louis Hospital

ZithaKlinik (Ste Thérèse)

Metz (France)

Nancy (France)

In Luxembourg, or less than one hour away,

you will find about 20 hospitals and clinics

Quality of life

Sources : www.chem.lu ; www.chl.lu ; www.chk.lu ; www.hsl.lu ; www.zitha.lu ; Statec, 2008

1,900

1,930

900

809

700

7 hospitals

6 hospitals, 9 renowned clinics

• Luxembourg ranks 1st in theEuro Consumer Heart Index asthe most consumer-friendlycardiovascular healthcare systemin Europe. This Index compares 29European systems in fivecategories, covering 28performance indicators.

• Luxembourg ranks 4th in theEuropean healthcare consumersurvey. The EHCI 2008 groups 34indicators of quality into sixcategories: Patient rights andinformation, e-Health, Waiting timefor treatment, Outcomes, Rangeand reach of services provided andPharmaceuticals.

Highlights

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At the leading edge of International Knowledge

In Luxembourg

International School of Luxembourg

European School

St. George’s International School

Lycée Français Vauban

Luxembourg University

Sacred Heart University

Miami University Luxembourg

With various renowned international schools, Luxembourg allowsan excellent access to education for foreign kids

Quality of life

About 2 hours away

Liège University, Liège (Belgium)

Leuven University, Leuven (Belgium)

Université Libre, Brussels (Belgium)

Louvain University, Louvain La Neuve (Belgium)

Metz University, Metz (France)

Henri Poincaré University, Nancy (France)

Robert Schuman University, Strasbourg (France)

Trier University, Trier (Germany)

Universität des Saarlandes, Saarbrücken (Germany)

Slide 103


AMCHAM

The University of Luxembourg

Quality of life

• A recently established university with 4,400 students

• Located in the middle of Europe

• A multilingual working environment that encourages geographical mobility

Source: Université du Luxembourg, 2008

• 3 Faculties on 3 different campuses in theGrand Duchy

• A wide range of student domains, such asmathematics, engineering, law, financialeconomics, banking and finance,psychology, philosophy, Europeansustainable spatial development andanalysis...

• ...and much more on www.uni.lu

Slide 104


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9. MAIN CHALLENGES FOR LUXEMBOURG’S FUTURE

Slide 105


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2009: a turning point

Main challenges for Luxembourg’s future

• Financial Crisis- Absorption of the global financial crisis and its repercussions on the

economy (e.g. unemployment)

• Diversification of the Economy- Strong impact of the financial sector on the economy- Added value of non financial industries currently being developed

(e.g. recent significant investments were made in the biotechnology field or a new action planfor developing eco-technologies will be published first quarter 2009)

• European enlargement- Increasing competition from new EU Member States- Identify new opportunities to strengthen/ develop business in Europe

• Maintaining and developing a multicultural and qualified workforce

• Developing information, communication and technological infrastructures- Hot city web portal since 2007, 48 antennas (forecast of 450) in

Luxembourg city for a public Wi-Fi (coming soon in Esch)

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10. A GREAT COMPETITIVE LOCATION FOR BUSINESS

Slide 107


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Price in Euro per 10 minutes call, in 2006


A great competitive location for business

4.94.34

2.38 2.32 2.23 1.98 1.9

0.660.85

1.37 1.23

0123456

Finland

Japa

n

Den

mar

k

Franc

eUK

Belgium

Ireland

Luxe

mbo

urg

Polan

d

Net

herla

nds

Cyp

rus

EU 25

1.79

Telecommunication costs to the USA

Slide 108


AMCHAM

Source: Eurobarometer, 2005


Trust in the [country] Government(categories based on % “tend to trust”)

High levels of trust in nationaland European institutions

The residents of Luxembourgplace great trust in theirinstitutions – above all, in theirgovernment (68%), their legalsystem (65%) and their Houseof Parliament.

Slide 109


AMCHAM

Labour productivity per person employed(EU 25 = base 100, base on a PPS series)

0 20 40 60 80 100 120 140 160 180 200

LithuaniaPolandEstonia

PortugalSlovakia

CzechHungaryCyprus

SloveniaMaltaSpainEU 25

DenmarkItaly

SwedenEuro Area

UKFinland

NetherlandsFranceIreland

BelgiumUSA

NorwayLUX

Source: Eurostat, Key figures on Europe 2007/2008, data of 2006

173


Slide 110


AMCHAM

Source: Eurostat, Yearbook 2006-07


05

1015202530354045

Swed

en

Den

mar

k

Luxe

mbo

urg

Ger

man

y

Belgi

um

Franc

eIta

ly UK

Irela

nd

Portu

gal

EU 25

30.2%

Human resources in science and technology for all sectors(in % of total employment)

39.1

Slide 111


AMCHAM

Research and development expenditure for business enterprisesector (in % of GDP)

Source: Eurostat, Yearbook 2006-07


00.5

11.5

22.5

3

Sweden

Finla

nd

Denmark

Germ

any

Luxem

bourg

France

Belgiu

m UK

Netherla

nds

Czech

Republic

Irela

ndIta

ly

EU 25

1.22%

1.54

Slide 112


AMCHAM

Growth of Public expenditures allocated to R&D (in € million)


2000 2001 2002 2003 2004 2005 2006 2007

Ministry of Culture, Higher Education and Research Ministry of Economy Other Ministries

2837.6

47.9

60.6

72

94.5

113.7

142.1

•€215 million of budget forResearch & Development areforecasted in 2009 and €250million for 2010.

•The workforce in the PublicResearch centres will doubleby 2010, as the credit allocatedto Public R&D.

x 5

Statec, 2008

Slide 113


AMCHAM

0

10

20

30

40

50

60

70

80

90

Net

herla

nds

Den

mar

k

Norw

ay

Luxem

bourg

Ger

man

y

Finla

ndUK

Bel

gium

Aust

ria

Irela

nd

France

Spain

Italy



75 %

EU27

= 54%

Access to the Internet (% of households, in 2007)

• Luxembourg Hotcity : As from July 2007, the city of Luxembourg isoffering mobile Internet access for Laptop, PDA or mobile phones.Hotcity is Luxembourg’s mobile future…

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Phones and mobile phonesLevel of access for 100 inhabitants

0

20

40

60

80

100

120

140

160

Lu

xem

bo

urg

Cze

ch

Rep

ub

lic

Port

ug

alA

ustr

iaIr

ela

nd

Norw

ay

Fin

lan

dD

enm

ark

Spain

Sw

ed

en

Germ

any

Sw

itze

rlan

dG

reec

eB

elg

ium

Fra

nce

Mobilephones

Mainphones

15

554

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Strengths

• Best in class in Europe

• Business and Government efficiency

• Reduced time to market

• Strong wishes to develop global infrastructures

Weaknesses

• Over capacity of road infrastructures

• Market size

• Entrepreneurship

Opportunities

• Hub for research, products and services in internationalmarkets (Biotechnologies)

• E-commerce, Logistics and Procurement activities

• Eco-Technologies

• Intellectual Property (IP)

• International group structuring (due to change of tax legislation inother countries)

Risks

• Absorption of theglobal financial crisisimpact

• European integration

• Globalisation

Country competitiveness structure

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Source: EFAMA, September 2008


A highly competitive hub for the European markets

6,207 4,756 4,017

-19,600

-7,280

-93,455-100,000

-80,000

-60,000

-40,000

-20,000

0

20,000

Luxembourg Switzerland

United

Kingdom Germany France Other

European UCITS net sales in € million

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• As from 1st July 2003, non-EU suppliers of ESS are required to register for VAT

purposes in one Member State and charge VAT on their services at the rate

applicable in the customer’s country when supplying private individuals in the EU

• Instead of VAT-registering, by setting up an establishment in Luxembourg, non-

EU suppliers will charge their EU customers only with Luxembourg VAT at 15%

which is one of the lowest VAT rate in the EU

Competitive advantage / easier pricing

To be noted:

- European services platform set up by Amazon and iTunes in Luxembourg

- Worldwide platform set up by Skype in Luxembourg

- Establishment of the Vodafone Group in Luxembourg



……

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Located in the middle of Europe, a 500 million-consumer market

Major Trading Partner

• Germany 2007 Exports: 26%

• France 2007 Exports: 17%

• Belgium 2007 Exports: 12.5%

A Great Distribution Centre

Neighbour countries account for 55.5% of Luxembourg exports

Source: Statec, 2008



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11. CONCLUSION10 key advantages for doing business in Luxembourg

1. A highly strategic position

2. A neutral place

3. A very welcoming and safecountry

4. A financially healthy country

5. A skilled multilingualworkforce

6. Excellent infrastructure

7. Top level financial andmultinational IT Clusters

8. A good logistics network

9. Flexible and welcomingauthorities

10. An attractive life style

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www.amcham.lu

Sponsored by:

PricewaterhouseCoopers Luxembourg

Knowledge Management & Research Unit

www.pwc.com/lu

PricewaterhouseCoopers Luxembourg (www.pwc.com/lu) has about 1800 professionals from 49 differentcountries. PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax andadvisory services to build public trust and enhance value for its clients and their stakeholders. More than155,000 people in 153 countries across our network share their thinking, experience and solutions todevelop fresh perspectives and practical advice.

“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopersInternational Limited, each of which is a separate and independent legal entity.

© 2009 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the networkof member firms of PricewaterhouseCoopers International Limited, each of which is a separate andindependent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP (US).

© Photos: Luxembourg Photothèque, C. Aschman, F. Buny, L. Deflorenne, R. Faber, R. Schleich, C.Olinger, Michael Morris for AMCHAM and Jupiterimages.

The American Chamber of Commerce in Luxembourg and PwC Luxembourg do not necessarily endorse the viewsor opinions expressed in this presentation nor accept any responsibility in connection with information rendered

The American Chamber of Commerce

of Luxembourg (AMCHAM)

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