Luxembourg Corruption Report


Luxembourg_250x148.jpgCorruption does not constitute a problem for businesses in Luxembourg. The country has a strong legal framework to curb corruption, and anti-corruption laws are effectively enforced. Nonetheless, some corruption cases have revealed conflicts of interest between the private and public sectors, tainting transparency in the country. The legal framework criminalises bribery, facilitation payments, gifts and abuse of office, among other offences. Neither bribery nor facilitation payments are widespread in Luxembourg. 

December 2015
GAN Integrity

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Judicial System

The judiciary in Luxembourg is perceived to be corruption-free. More than one-third of citizens regard it as the most trusted institution in terms of reporting corruption (European Commission, Feb. 2014). The judiciary is among the three public services deemed the least corrupt in the country, but practices of nepotism have been reported (GRECO, July 2013). The government respects the judiciary's independence (HRR 2014), and companies feel the judiciary effectively settles commercial disputes (GCR 2015-2016). Luxembourg has ratified the New York Convention 1958 and the Convention on the Settlement of Investment Disputes.


Luxembourg's police services do not present a corruption risk for businesses. The government has effective mechanisms to monitor and prevent abuses within the police (HRR 2014), yet almost one-third of citizens believe bribery and abuse of office are widespread (European Commission, Feb. 2014). Companies demonstrate a high level of trust in the police to protect businesses from crime and to uphold the rule of law (GCR 2015-2016).

Public Services

Corruption is not a significant problem in the Luxembourg public services sector, and businesses rarely encounter demands for irregular payments (GCR 2015-2016). Four in ten businesses believe that the use of connections and bribery are the easiest way to obtain certain public services (European Commission, Feb. 2014). Inefficient government bureaucracy is ranked by companies among the most problematic factors to doing business in Luxembourg (GCR 2015-2016), and over half of businesses report that the complexity of administrative procedures represents a problem (European Commission, Feb. 2014). Nonetheless, administrative procedures are streamlined and transparent, and red tape is reportedly less widespread when compared to other European countries (ICS 2015). Starting a business is more time-consuming, yet less costly on average compared to the OECD countries (DB 2016). 

Land Administration

The land administration in Luxembourg carries a low corruption risk for companies. A very small number of businesses report to have had recourse to bribery in order to obtain a building permit (European Commission, Feb. 2014). Four in ten citizens believe that bribery and abuse are widespread among officials issuing building permits (European Commission, Feb. 2014). Property rights are well defined, and surveyed businesses report that these rights are well protected (GCR 2015-2016). Registering property in Luxembourg is more time and cost consuming than the OECD average (DB 2016).

Tax Administration

Luxembourg's tax administration carries a very low corruption risk for companies. Tax rates and tax regulations are not identified as obstacles to investment (GCR 2015-2016), and paying taxes is significantly less time-consuming on average compared to OECD countries (DB 2016). Tax evasion is among the most pertinent issues in the fight against corruption in Luxembourg, primarily due to the country’s banking secrecy laws, which appeal to foreign tax evaders. Luxembourg has signed the multilateral competent authority agreement to automatically exchange information between authorities and other states on tax information exchange (OECD, Oct. 2014).

Confidential documents leaked by a team of journalists from 26 countries have exposed the extent to which Luxembourg is a tax haven for multinational corporations around the world. The leaked documents revealed that billions of USD in taxes were saved by having been channelled through Luxembourg. Among these count IKEA, Pepsi Bottling Group Inc., the Canadian Public Sector Pension Investment Board, etc. Luxembourg has been reluctant in providing the EU with documents on the country’s tax rulings so that the former can decide on the legality of the proceedings (ICIJ, Nov. 2014). 

Customs Administration

There is a very low risk of corruption in Luxembourg's customs sector. The customs administration is transparent, and companies report occurrences of irregular payments, such as bribery, to be very rare (GETR 2014). Trading across borders in Luxembourg does not require any time and only one document (DB 2016).

Public Procurement

Businesses may face moderate corruption risks when operating in Luxembourg's public procurement sector. One-third of companies believe that corruption is widespread in procurement on the national level (European Commission, Feb. 2014), and slightly more than one in five businesses report that corruption has prevented them from winning a public contract (EUACR, Feb. 2014). Businesses perceive low levels of favouritism by government officials towards individuals or companies, representing a competitive advantage for the country (GCR 2015-2016). Companies identify the main risks of corruption in procurement to be tailor-made specifications for certain companies, collusive bidding, conflicts of interest and unclear selection or evaluation criteria (EUACR, Feb. 2014). Companies previously convicted of corruption are banned from participating in future tenders for a period of up to two years. The government has established procurement procedures to detect corruption, conflicts of interest and favouritism. Staff involved in procurement procedures are trained on the national anti-corruption policy and anti-corruption measures focusing on procurement (IRCPPEU, June 2013).

In one corruption case, known as the Livange-Wickrange affair, the government allegedly favoured one of two contractors bidding on the construction of a football stadium and shopping center by reaching secret agreements and receiving bribes (GRECO, July 2013). There was no judicial follow-up of the case, sparking controversy and criticism towards the government (GRECO, July 2013). The case highlights Luxembourg's limited capacity to deal with such cases involving public officials reaping benefits from private companies when awarding public contracts (GRECO, June 2014). Companies are recommended to use a specialised public procurement due diligence tool to mitigate corruption risks associated with public procurement in Luxembourg.


Luxembourg's Penal Code criminalises active and passive briberyfacilitation paymentstrading in influence and taking and accepting gifts or an interest. The government implements anti-corruption laws effectively (HRR 2014). A Code of Conduct (in French) on financial interests and conflicts of interest for Luxembourg MPs contains provisions regulating the pursuit of the public interest, the criminalisation of bribery and trading in influence, giving and accepting gifts worth more than EUR 150 and conflicts of interest, among other factors (GRECO, July 2013). Cabinet members are compelled by an executive order to disclose assets and any income from the business sector; nonetheless, there are no sanctions outlined for failure of disclosure (HRR 2014). MPs are also subject to declaration of assets regulations, however, are not applied to relatives or people with close relations to MPs (GRECO, July 2015). Political financing is regulated by law but these regulations are not consistently enforced (GRECO, July 2015). Whistleblowers in the private and the public sectors are protected under the country's anti-corruption law (Transparency International 2013). Luxembourg has ratified the United Nations Convention against Corruption, the Criminal Law Convention against Corruption, and the United Nations Convention against Transnational Organized Crime, and is signatory to the Civil Law Convention on Corruption.

Concerns about the overlap between public office and positions in the private sector have been raised as the absence of a policy regulating the movement of personnel between the public and private sectors have increased potential corruption risks. In one instance, it was found that a high-level official from the Ministry of Finance held three other positions. The government did not find any breach in holding the three positions at the same time, despite the positions encompassing activities in the public and the private sectors (EUACR, Feb. 2014). Other criticisms regard the limited effectiveness of Luxembourg to pursue foreign bribery cases and the lack of a national anti-corruption strategy (EUACR, Feb. 2014).

Civil Society

Luxembourg respects freedom of the press, and the media reports without government interference (HRR 2014). The internet is not restricted, and there are no reports of internet monitoring (HRR 2014). There are no laws that regulate public access to information, yet the government reportedly grants access and places a large amount of government data online (HRR 2014). Luxembourg’s press environment is considered 'free' (FotP 2015).

The government respects the right of association provided by the constitution (HRR 2014). The government includes the country's civil society in policymaking and in important discussions surrounding Luxembourg's policies, government proposals, funding, etc. (OECD, 2012). NGOs are an active part of the society, are extensively involved with authorities and provide consultation at least once a year (OECD, 2012).


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