Long reliant on cross-border labor from Belgium, Germany, and especially France, Luxembourg’s financial sector has reached a demographic milestone. As of 2024, a majority of the sector’s workforce now lives in Luxembourg.
According to the State of the Financial Sector 2025 report by Luxembourg for Finance (LFF), resident employees make up 53.8 percent of the sector’s total workforce, up from 49 percent in 2014. The shift reflects both internal economic dynamics and structural limits to the cross-border model.
With nearly 20,000 new finance jobs created over the past decade, the cross-border talent pool no longer fully meets the industry’s growing needs. Skills shortages, already well documented in other sectors, are now acutely felt in finance, especially in compliance, asset management, and technical support functions.
Non-EU share tripled since 2014
This demographic change has been accompanied by a marked increase in international talent. Non-EU nationals now account for 10.2 percent of financial sector workers, compared to just 3.2 percent in 2014. This group has grown at an average annual rate of 15.7 percent, the fastest of any category.
For Tom Théobald, CEO of Luxembourg for Finance, this signals a structural repositioning of the financial sector in both scale and skills.
“Luxembourg is demonstrating its ability to attract and retain globally mobile talent, which is essential in an increasingly competitive industry,” he told Investment Officer.
Pressure on home prices
Many of these non-European professionals are young and highly qualified, adding further pressure to the country’s already tight housing market. With high purchasing power, this population segment is driving up demand, a challenge that current construction efforts are struggling to meet. As a result, access to housing risks becoming a barrier to Luxembourg’s continued attractiveness as a financial center.
In response, the government announced in January 2025 a new tax regime aimed at facilitating relocation for expatriates. It includes incentives for young talent and tax relief for highly qualified employees.
Théobald views these measures as essential. “This isn’t a minor adjustment. It’s a strategic lever to maintain our competitiveness and address the evolving labor market.”
Beyond labor issues, the LFF report highlights a significant diversification of the financial center. While banking remains the largest employer, accounting for 35.9 percent of jobs, its share is declining in favor of asset management, specialist service providers, and consulting and audit firms.
Luxembourg continues to expand its role in alternative funds, niche ETFs including CLO and active ETFs, and regulatory support services, all contributing to a shift toward higher value-added functions.
Tax revenue from finance doubled
This evolution is reflected in macroeconomic figures. Between 2014 and 2024, the sector’s value added grew from 13.1 to 17.3 billion euros, an average annual growth rate of 2.8 percent. Over the same period, direct tax revenues from the sector doubled to 7.2 billion euros. Today, financial companies contribute between 60 and 80 percent of all corporate tax revenue, depending on the firm category.
The sector’s economic multiplier effect has also strengthened. Each direct job now supports roughly one additional job in adjacent or induced activities. In 2024, the sector’s 73,272 employees supported nearly 147,000 jobs across the country.
Despite this momentum, the report points to the need for broader planning around infrastructure, public services, and the country’s capacity to absorb qualitative growth.
Théobald emphasizes the depth of the transformation underway. In his view, the sector is not only growing in size. It is climbing the value chain.
“Luxembourg remains true to its foundations, but is now developing specialized segments that are redefining its role within the European financial ecosystem.”