Luxembourg: public finances

What is Luxembourg's budget deficit?

Luxembourg's general government deficit was 2.0% of GDP in 2025, after a surplus of 0.9% in 2024, according to Eurostat data notified in April 2026. In euros, STATEC puts net borrowing at EUR 1,756.0 million in 2025: the central government deficit of EUR 2,335.2 million was partly offset by a social security surplus of EUR 701.1 million, according to Luxembourg in Figures 2026.

The government's draft budget for 2027, published on 7 October 2026, expects a general government deficit of about EUR 1 billion in 2026 and EUR 570 million (0.6% of GDP) in 2027. Those are projections, and the central government alone is expected to run a deficit of about EUR 1.9 billion in 2027.

Official sources: STATEC: Luxembourg in Figures 2026 (PDF) · State budget 2027 at a glance (Luxembourgish)

What is Luxembourg's debt to GDP ratio?

Luxembourg's general government debt was 26.5% of GDP at the end of 2025, up from 26.3% in 2024, according to Eurostat. In euros, STATEC puts the total at EUR 23,695.1 million, of which central government owed EUR 22,046.0 million, according to Luxembourg in Figures 2026.

The Ministry of Finance's budget site says debt will rise to 29.3% of GDP by the end of 2026, because of a new loan issued this month, then edge down to a projected 28.6% in 2030, staying below 30% of GDP.

Official sources: STATEC: Luxembourg in Figures 2026 (PDF) · State budget 2027: our debt (Luxembourgish)

What is in Luxembourg's budget for 2027?

In Luxembourg's draft budget for 2027, 47% of central government spending goes on social benefits, subsidies and grants, 24% on pay and 13% on investment, equal to 4.5% of GDP, according to the Ministry of Finance budget site. Operating costs take 7% and transfers to the communes 7%.

On the revenue side, direct taxes bring in 52% and indirect taxes 34% of the total. The central government is expected to run a deficit of about EUR 1.9 billion, while the local government sector is expected to have a surplus of EUR 495 million and social security EUR 920 million. The draft was published on 7 October 2026.

Official sources: State budget 2027 at a glance (Luxembourgish)

What is the VAT rate in Luxembourg?

The standard VAT rate in Luxembourg is 17%, according to the Indirect Taxation Portal of the Registration Duties, Estates and VAT Authority. There are also an intermediate rate of 14%, a reduced rate of 8% and a super-reduced rate of 3%.

Which goods and services qualify for each lower rate is set out in annexes A (8%), B (3%) and C (14%) of the VAT law of 12 February 1979; everything else is taxed at 17%. Taxes on production and imports, which include VAT, brought general government EUR 10,370.5 million in 2025, according to STATEC's Luxembourg in Figures 2026.

Official sources: AED: national VAT rates (French) · STATEC: Luxembourg in Figures 2026 (PDF)

How much tax does Luxembourg collect?

Luxembourg's general government revenue was EUR 42,171.4 million in 2025, against expenditure of EUR 43,927.4 million, according to Luxembourg in Figures 2026 from STATEC. Current taxes on income and wealth raised EUR 16,042.3 million, taxes on production and imports EUR 10,370.5 million and social contributions EUR 11,297.0 million.

Income and wealth taxes fell slightly from EUR 16,464.1 million in 2024, while spending rose from EUR 40,370.1 million. Social benefits were the largest spending item, at EUR 17,985.6 million. These are general government figures, covering the central government, the communes and social security together.

Official sources: STATEC: Luxembourg in Figures 2026 (PDF)

What is Luxembourg's national debt?

The latest figure from the IMF, for 2025, is 26.5% of GDP. That is the highest since at least 2005. It is 43rd highest of 51 in Europe & Central Asia, where the median is 46.9% of GDP. Of 185 countries with 2025 data, 164th highest.

What is Luxembourg's fiscal deficit?

In 2025, general government net lending or borrowing in Luxembourg was -2.0% of GDP, according to the IMF, a deficit. The peak was 4.4% of GDP in 2007 and the low -3.1% of GDP in 2020. Across Europe & Central Asia the middle value was -2.4% of GDP, and Luxembourg placed 22nd highest of 51. Worldwide: 74th of 188.

How much does Luxembourg's government take in?

According to the IMF, general government revenue in Luxembourg was 47.1% of GDP in 2025. Its high point since 2005 was 2024, at 47.7% of GDP; its low point was 2008, at 41.3% of GDP. Across Europe & Central Asia the middle value was 41.3% of GDP, and Luxembourg placed 12th highest of 50. Of 187 countries with 2025 data, 23rd highest.

How big is Luxembourg's government spending as a share of GDP?

In 2025, general government spending in Luxembourg was 49.1% of GDP, according to the IMF. It is the top of the series, which starts in 2005. It is 11th highest of 50 in Europe & Central Asia, where the median is 43.3% of GDP. World rank, highest first: 21st of 186.

How much tax does Luxembourg collect?

In 2024, central government tax revenue in Luxembourg was 28.6% of GDP, according to the IMF. It is the top of the series, which starts in 2005. Europe & Central Asia median: 20.8% of GDP; Luxembourg is 2nd highest of 42. Of 92 countries with 2024 data, 5th highest.

How much does Luxembourg spend on its military?

SIPRI puts military spending in Luxembourg at 0.9% of GDP in 2025. It is the top of the series, which starts in 2005. Across Europe & Central Asia the middle value was 2.0% of GDP, and Luxembourg placed 40th highest of 46. Of 149 countries with 2025 data, 120th highest.