Home Moving to Luxembourg About Luxembourg The cost of living in Luxembourg
Last update on November 08, 2021

Discover how utilities, real estate, dining, childcare, and the cost of living in Luxembourg differ from those in your home country.

Luxembourg boasts a wealth of nature, culture, art, and history. Although a small country, it’s is a powerhouse of economics and politics. Despite the fact that 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.

General cost of living and standards 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 locals 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 the Luxembourg Statistics Portal, almost half the population of Luxembourg is made up of foreign nationals.

The majority of expats live in or around the country’s capital, Luxembourg City. It is the most developed city in Luxembourg and serves as the political, economic, and cultural center of the country. The city of Luxembourg ranks 63rd out of 209 cities in Mercer’s 2021 cost of living rankings. This means it’s more expensive than Hamburg or Barcelona, but less expensive than Berlin, Brussels, or Amsterdam.

Luxembourg performs quite well in the OECD Better Life Index. The country ranks highest among the OECD countries disposable income, and higher than average for jobs, work-life balance, community, civic engagement, health and well-being, housing and environmental quality.

Luxembourg City landscape

The poverty rate in Luxembourg has risen over the last 20 years. It is now at 17.5% of the population, which is lower than the European average (21%). Single-parent families are most likely to be at risk of poverty (40%), as well as large families (35%). In addition, those with a lower level of education and foreigners are slightly more likely to be at risk of poverty.

Wages and salary in Luxembourg

Luxembourg has the highest minimum wage in the European Union (€2,202 per month). This can be raised or lowered depending on worker skills and the age of the worker. Luxembourg’s statistics portal suggests that wages in Luxembourg are generous compared to other countries.

Housing costs 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 of time, the best idea is to rent; if you intend to stay long-term, you should consider buying property.

Rental costs in Luxembourg

Renting property in Luxembourg can be quite expensive. In addition to monthly rent, you may also have to pay a deposit of one to three months.

In Luxembourg city center, the average rent prices are around €1,600 for a one-bedroom apartment. For a three-bedroom dwelling, expats should expect to pay up to €4,000. Elsewhere in the country, particularly the south and east, house prices are likely to be slightly more affordable. You could also live in a neighboring country and commute to Luxembourg to save money.

Property prices in Luxembourg

If you want to buy property, you will need a deposit of 20–25% to get a mortgage in Luxembourg. The average price per square meter in Luxembourg varies significantly, from around €7,000–€15,000.

In the most popular areas, you could be looking at paying as much as €500,000 for a one-bedroom apartment and around €1,000,000 for three bedrooms.

Cost of domestic bills in Luxembourg

Utility bills in Luxembourg

The cost for basic utilities including electricity, heating, cooling, water, and garbage in an 85 square meter apartment in Luxembourg is about €230. Compared to the EU average (€0.13 per kWh), electricity prices in Luxembourg are quite high, at nearly €0.15 per kWh.

Wind turbines in Luxembourg

You can read more about energy costs in our guide to utilities in Luxembourg.

Telecommunications in Luxembourg

There are several telecommunications companies in Luxembourg. Most of them offer a selection of deals on mobile packages, TV, and internet. For an idea of cost, POST Luxembourg offers internet, TV, and telephone packages from €60 per month (20 Mbit/s download speed, 55 channels) to €74 per month (1 Gbit/s download speed, unlimited calls to over 40 countries, 120 channels and other features).

Healthcare costs in Luxembourg

The public healthcare system in Luxembourg provides free basic healthcare to all residents.

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.

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, and parents pay according to their income. Low-income families may be able to get subsidies known as cheque-service accueil (CSA) to help with childcare costs.

Should you require a full-time childminder in Luxembourg, you could hire an au pair. There are several criteria that you and your au pair need to meet, which you can find on the Luxembourg public information portal. They are entitled to a fifth of the minimum wage as pocket money and must also be provided with board and lodgings. Bear in mind that a live-in au pair will add to your grocery bills, but it might still be cheaper than a private nursery.

Study costs in Luxembourg

Despite the Grand Duchy’s high rankings on the OECD Better Life Index, education is on of the few areas where it falls behind.

State schools are free of charge for expats that are registered with Luxembourgish 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.

University library in Luxembourg

Expat children typically attend one of the international schools in Luxembourg, but tuition fees are high. Fees cost around €3,000 for pre-school and up to €20,000 a year for 16-year olds. Fees increase each year according to the age of students. There is also additional one-time application and entrance fee to enrol your children.

Luxembourg’s university fees are much less expensive. Tuition fees are either €200 or €400 per semester for the majority of bachelor’s programmes at public universities. This is likely to be higher at private institutions.

Cost of food and drink in Luxembourg

Groceries in Luxembourg

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. Luxembourg-owned Cactus, Alima, and Co-op might be a little more expensive than some of the foreign chains such as Auchan, Match, and Delhaize. For the lowest grocery prices, try Aldi and Lidl, both of which have several stores in Luxembourg.

Cost of dining out at restaurants in Luxembourg

Eating out in Luxembourg can be expensive. However, you can still enjoy good quality food in inexpensive restaurants for €18–€30 per person. A mid-range restaurant will average out at around €75 per person.

An outdoor café in Luxembourg

If you’re dining on a budget, the cost of a typical lunch is €9–€17, but you can buy sandwiches and snacks from €5.50 to €10.

Beer, wine, and spirits in Luxembourg

A half liter of local or imported beer in a pub or restaurant will set you back about €5. Meanwhile, you can find much cheaper beer in supermarkets: between €2–€3.50. A bottle of mid-range wine costs around €10.

Transport costs in Luxembourg

Luxembourg has an excellent public transport network consisting of buses and trains. Not only that, but public transport within Luxembourg is free. The only exception is if you travel first class on a train, which costs €3 for two hours or €6 for a day ticket (valid until 04:00 the next day). You can also buy ten 2-hour tickets for €24.

Buses in Luxembourg City

Taxi fares in the Grand Duchy are another matter. The starting tariff is around €3 and the average cost per kilometre is €3.

If you live in one of the villages outside of Luxembourg City, you will probably need to drive to work and perhaps even to go shopping. Petrol prices in Luxembourg are about €1.50 a litre for Unleaded and €1.39 for diesel.

Leisure activities in Luxembourg

Clothing in Luxembourg

Buying clothes in Luxembourg is a little more expensive than surrounding countries. For example, a pair of mid-range jeans will set you back an average of around €95, while a summer dress costs about €35. You can expect to spend about €100 on a pair of running shoes and €140 on dress shoes.

Therefore, clothes shopping is generally more expensive than in Belgium, France, and Germany.

Hobbies in Luxembourg

If you’re into sports, you can expect to pay €25–€80 on gym membership, depending on which facilities you want to use and when. A tennis court costs around €25 to rent for an hour.

For movie fans, you’ll pay €10–15 for an international release at the cinema. This is in line with other European countries.

Taxation and social security in Luxembourg

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 €205,000.

Social security contributions in Luxembourg are paid directly from your salary and cover illness, unemployment, occupational accidents, pension, childbirth, long-term care insurance and death.

Pension costs are 24% of your gross income, which goes to the government’s fund for state pensions and benefits for invalidity citizens. This 24% is made up of 8% from you, 8% from your employer and 8% from the state. You monthly contribution to health insurance is €107.58.

You can find more in our guide on personal income tax in Luxembourg.

Assistance with living costs in Luxembourg

There are several cases in which you might be eligible for benefits. Luxembourg offers financial help for the following:

  • Family
  • Healthcare
  • Incapacity
  • Old age (pensions)
  • Social assistance
  • Unemployment

Family benefits in Luxembourg are quite generous. Parents can receive a birth grant which is made up of three amounts of €580 including a prenatal allowance, an allowance for the birth, and a postnatal allowance. This grant is based on certain eligibility criteria. Otherwise, there is a monthly family allowance (allocation familiale) of €265 which increases by €20 once your child is 6, and by €50 when your child turns 12.

In addition, you also receive a monthly ‘back to school’ allowance (allocation de rentrée scolaire) of €115 per month for children over 6 and €235 for children over 12. As well as these monthly allowances, if you need to take parental leave for the care of your child, you can receive an amount based on your average monthly income. There are also supplementary allowances for disabled children.

If you are involuntarily unemployed and living in Luxembourg, you can receive benefits providing you are registered as a jobseeker and have worked at least 16 hours per week for at least 26 weeks over the past year. This amounts to 80% of your previous gross salary over the past three months, or 85% of your gross salary if you have children.

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