The cost of utilities, real estate in Luxembourg, eating out, childcare and other elements of daily life, are likely to differ to that of your home country. See if you can truly afford Luxembourg prices.
Dubbed as the Green Heart of Europe, Luxembourg boasts a wealth of nature, culture, art and history. Although only a small country, Luxembourg is a powerhouse of economics and politics and although it is expensive to live in Luxembourg, the Grand Duchy is a popular destination for expats.
This guide provides expats with a detailed overview to the cost of living in Luxembourg.
Cost of living in Luxembourg
The cost of living in Luxembourg is fairly high compared with many of its European neighbours. So much so that it is typical for expats to head across the borders to Belgium, France and Germany to buy electrical equipment and luxury items.
Yet despite the high prices, Luxembourg boasts a VAT rate of just 17%. Furthermore, according to figures produced by Statistiques de Luxembourg, almost half the population of Luxembourg are foreign nationals.
The cost of living may be high in Luxembourg, but the level of wages is comparable. The country’s minimum wage of €2,071 a month (2019 figures), is the highest in Europe. The average net salary is €47,580 (2019).
Luxembourg is the only Grand Duchy remaining in the world, and somewhat unsurprisingly performs very well in the OECD Better Life Index. The country ranks above average for disposable income, jobs, earnings, work-life balance, social connections, civic engagement, health and well-being, housing and environmental quality.
The majority of expats live in or around the country’s capital, Luxembourg City. It is the most developed city in the Grand Duchy as well as the political, economic and cultural centre.
Other popular places to live are Kirchberg in the north, Belair in the west, Hamm in the east and Cessange, Bonnevoie and Eich in the south. The southern cities are less expensive.
Cost of living in Luxembourg compared to other cities
The cost of living in Luxembourg is comparable to other cities in the world as follows:
- 28% cheaper than Zurich
- 29% cheaper than New York
- 25% cheaper than London
- 6% more expensive than Munich
- 24% more expensive than Madrid
- 18% more expensive than Brussels
- 9% cheaper than Paris
Costs of real estate in Luxembourg
The cost of housing in Luxembourg is very expensive. If you are only planning to stay in the country for a short period, the best idea is to rent, but if you intend to stay long-term, you should consider buying property.
Renting property is notoriously difficult, partly because estate agents work short hours and are difficult to get hold of. Rent prices are also very expensive in Luxembourg and contracts terms are for a minimum of one year. You may also have to pay a deposit of one to three months.
In the most expensive cities – Luxembourg City, Belair, Limpertsberg and Kirchberg – the average rent prices are around €1,400 for a one-bedroom apartment. For a three bedroom property, expats should expect to up to €3,500.
Elsewhere in the country, particularly the south and east, house prices are slightly more affordable, starting at around €700 a month for a one-bedroomed apartment and between €1,500-€2,000 for three bedrooms.
If you want to buy a property in Luxembourg, you will need a deposit of 20%-25% to get a mortgage. The average price per square metre in Luxembourg varies significantly, from around €6,000-€8,000.
House prices in Luxembourg City are the most expensive in Europe. In the most popular areas, you could be look at paying as much as €500,000 for a one-bedroom apartment and around €1m for 3-bedrooms. For equivalent properties elsewhere in the country the prices are €350,000 and €800,000 respectively.
Luxembourg prices: Utility costs
Utility costs in Luxembourg are also slightly more expensive than other EU countries. The typical monthly bill is €150-€300 for electricity, gas and water.
TV, phone and broadband deals packages are available from the major telecommunications firms. Offers for all-in packages start from €28 a month and rise as high as €50 a month.
Luxembourg prices: Transport
Luxembourg has an excellent public transport network consisting of buses and trains. Because the country is small it doesn’t cost much to get around or cross the borders to one of the neighbouring countries.
Commuters can purchase day tickets for €4 or short-term tickets for €2 which are valid for 2 hours. A monthly travel pass is €40. You can use the same ticket on the bus or the train.
Taxi fares in Luxembourg are much more expensive than public transport. The starting tariff is around €2.50-€3 and the average cost per 1km is €3.
If you live in one of the villages outside the city centre, you will probably need a car to get to work – and in some of the smaller villages to go shopping as there are very few supermarkets or convenience stores. In February 2019, petrol prices in Luxembourg were €1.14 a litre for Unleaded and €1.06 for diesel.
Luxembourg prices: Groceries
The cost of grocery shopping is higher in Luxembourg than most places. Check out Numbeo for the latest average prices of staple foods.
The cost however does depend on where you shop. The Luxembourg owned supermarkets, Cactus, Alima and Co-op offer high-end quality but are also more expensive.
Delhaize, Match and Auchan are more reasonably priced whilst at the discount end, Aldi and Lidl offer decent quality foods for a fraction of the cost of home-grown markets.
Luxembourg prices: Education
Education is something of a paradox. On the one hand, education is one of the few areas where the Grand Duchy falls below some of neighbours in the OECD Better Life Index, yet is one of the few countries in the world that as a 100% literacy rate for children aged of 15.
State schools are free of charge for expats that are registered on the social security. However, lessons are taught in one or all three of the official languages; German, French or Luxembourgish. Students must be proficient in all three languages in order to graduate.
Expat children typically attend one of the International Schools, but tuition fees are high. Fees cost around €3,000 for pre-school and up to €18,500 a year for 16 year olds. Fees go up each year according to the age of students. There is also additional one-time application and entrance fee to enrol your children.
University fees are much less expensive and start around €600 per semester for a bachelors course together with a €100 registration fee per semester.
Luxembourg prices: Healthcare
The public healthcare system in Luxembourg provides free basic healthcare to all citizens.
However, employed individuals pay monthly contributions to the healthcare system at a rate of 2.8% of your gross earnings. Employers also pay half the contribution costs on behalf of employees.
Self-employed individuals must also contribute in accordance with the type of job. Manual workers with a greater risk of needing medical treatment pay a higher rate of almost 10% whilst other professions pay 5.2%.
These contributions cover residents for childbirth, rehabilitation, hospitalisation, medical prescriptions and consultations. However, treatment must be paid for upfront and recovered later provided you have made sufficient contributions.
Although the public healthcare system will be sufficient for the majority of expatriates, you do have the option of taking out private health insurance.
For more information about the healthcare system in Luxembourg, see are comprehensive guide here.
Childcare costs in Luxembourg
Childcare is expensive in most countries and with the high cost of living in Luxembourg, finding an affordable solution to look after your children is difficult.
Families with young children have the option of a crèche, day nursery, independent baby sitter or au pair. A crèche accepts children from the age of three months old up to the age of four, but prices can be as high as €1,280 per month. In Luxembourg City, nursery fees are around €1,400-€1,600 a month. Low income families may be able to get subsidies known as cheque-service accueil (CSA) to help with childcare costs.
Professional childminders may offer a less expensive solution, particularly for children of school age. Typical prices for parental assistants and nannies are between €8-12. Additional children cost an extra euro an hour. Only childminders age 15 or over can ask for payment.
Should you require a full-time childminder in Luxembourg, the best solution is to hire an au pair. They are entitled to a quarter of the minimum wage of €500 as pocket money, but should be given board and lodgings. Bear in mind that a live-in au pair will add at least €250-300 a month to your grocery bills, but is still half the cost of a private nursery.
For more details about the type of childcare services in Luxembourg check out our comprehensive guide.
Cost of dining out at restaurants in Luxembourg
Eating out in Luxembourg can be expensive and often left to special occasions. However, you can still enjoy good quality food in inexpensive restaurants for €17-€30 per person. A mid-range restaurant will average out at around €70 per person.
If you’re dining on a budget the cost of a typical lunch is €9-€17, but you can buy sandwiches and middle-eastern snacks from €5.50 to €10. A pint of beer in Luxembourg is between €3.30 and €5.50.
The cost of living in Luxembourg: Personal income tax
Personal income tax in Luxembourg is based on your marital status and the amount of income for each household. Singles are taxed on class 1 or 1a contributions and married couples on class 2 contributions. You can find the latest figures here.
If both spouses in a married couple earn taxable incomes, the class 2 contributions are based on a combined assessment. Separated couples are typically granted class 1 or 1a contributions.
Taxable income starts from €11,265 a year. Individuals that earn less than this amount do not pay tax. The maximum is 42% on an income that exceeds €200,004.
You can find more in our guide on personal income tax in Luxembourg.
Social security and pension costs in Luxembourg
Social security contributions are paid directly from your salary and cover illness, unemployment, occupational accidents, pension, childbirth, long-term care insurance and death.
Employees pay the following rates, but the bulk of social security and pension is paid by the employer.
- 8% towards pension
- 3.05% for health insurance
- 1.4% for dependency insurance
You will find more information about your rights to social security and how much you can claim in our comprehensive guide.
For economic indicators of prices, such as inflation and tax news see the Luxembourg Government’s website.
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