There is a low risk of corruption in the judiciary and the government respects the judiciary's independence (HRR 2017). Bribes and irregular payments in exchange for favorable judicial decisions are perceived as very rare in Luxembourg (GCR 2015-2016). Only one in seven citizens believe bribery and abuse of power are widespread in the judiciary (EB 2017). Roughly three-quarters of companies perceive the judiciary's independence as 'fairly good' or 'very good' (JS 2017). Companies express satisfaction with the efficiency of the judicial framework when it comes to challenging regulations and settling disputes (GCR 2017-2018). Foreign companies report that investment disputes in the country are rare, but domestic or international arbitration is permitted (ICS 2017). Luxembourg has ratified the New York Convention 1958 and the Convention on the Settlement of Investment Disputes.

Enforcing a contract in Luxembourg is significantly less time-consuming and involves only half the costs compared to the average among OECD high-income economies (DB 2018).

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 2017), 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).

Corruption is not a significant problem in the Luxembourg public services sector, and businesses rarely encounter demands for irregular payments (GCR 2015-2016). However, two out of five businesses believe that the use of connections and bribery are the easiest way to obtain certain public services (FEB 2017), indicating that risks of nepotism are present in Luxembourg at similar levels to other Western European nations. Inefficient government bureaucracy is ranked by companies among the most problematic factors to doing business in Luxembourg (GCR 2017-2018). The regulatory system is generally transparent and non-discriminatory (ICS 2017). However, Luxembourg's administrative culture is also typified by pragmatism, meaning that some matters are decided on an ad-hoc basis and interpretation may, therefore, vary (SGI 2017).

Starting a business is more time-consuming, yet less costly on average compared to the OECD countries (DB 2018).

There is a low risk of corruption in Luxembourg's land administration. Only one percent of businesses report having been asked for a bribe when applying for a building permit (FEB 2017), which sharply contrasts with the perception of two out of five citizens that bribery and abuse of power are widespread among officials issuing building permits (EB 2017). Businesses report strong confidence in the government's ability to protect property rights (GCR 2017-2018). All land titles and property ownership are registered in the cadastre system (ICS 2017). Expropriation laws are complex, meaning expropriation actions, of which none have occurred in the recent past, can thus be complicated (ICS 2017). Investors do not face concerns over indirect expropriation through other means, such as confiscatory tax regimes (ICS 2017).

Registering property in Luxembourg takes more steps than the OECD average (DB 2018). The number of steps and time required to deal with construction permits are in line with the OECD average (DB 2018).

Luxembourg's tax administration carries a moderate to low corruption risk for companies. Bribes and irregular payments when paying taxes are very uncommon (GCR 2015-2016). One in five citizens surveyed perceive bribery and abuse of power to be widespread among tax authorities (EB 2017). Roughly one in seven businesses surveyed consider non-payment of VAT to be among the most common corrupt practices in Luxembourg (FEB 2017). Nonetheless, the country has a relatively small VAT gap, in comparison to its European peers, of a little over five percent (VAT GAP 2017). Luxembourg has signed the Paying taxes is significantly less time-consuming on average compared to OECD countries (DB 2018).

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 being channeled through Luxembourg (ICIJ, Nov. 2014). Among these count IKEA, Pepsi Bottling Group Inc., the Canadian Public Sector Pension Investment Board, etc. Luxembourg has been reluctant to provide 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). Luxembourg's government has continued to make tax deals with multinationals; reporting from 2016 reveals the country signed 172 additional deals (EURactiv, Dec. 2016).

There is a very low risk of corruption in Luxembourg's customs sector. Bribes and irregular payments are perceived as rarely exchanged during customs procedures (GETR 2016). One in five citizens believe bribery and abuse of office are widespread among police and customers officers (EB 2017). Companies express high satisfaction with the time-predictability and efficiency of the clearance process (GETR 2016). Trading across borders in Luxembourg does not require any time and only one document (DB 2018).

Businesses may face moderate corruption risks when operating in Luxembourg's public procurement sector. Companies perceive favoritism in the decisions of government officials to be fairly uncommon (GCR 2017-2018). Likewise, bribes and irregular payments in the process of tender awards and diversion of public funds are not perceived as common (GCR 2017-2018). About a quarter of businesses believe that corruption has prevented them from winning a tender in Luxembourg (FEB 2017): The most commonly cited reason behind it was tailor-made criteria for certain participants (FEB 2017).

In one corruption case, known as the Livange-Wickrange affair, the government allegedly favored 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 of 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, July 2013). Companies are recommended to use a specialized public procurement due diligence tool to mitigate corruption risks associated with public procurement in Luxembourg.

Luxembourg's Penal Code criminalizes active and passive bribery, facilitation payments, trading in influence and taking and accepting gifts or an interest. The government implements anti-corruption laws effectively (HRR 2017). 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. Bribery and trading in influence, giving and accepting gifts worth more than EUR 150 and conflicts of interest are criminalized (Lexology, Aug. 2017). Facilitation payments are not permitted (Lexology, Aug. 2017). The maximum penalty for active or passive bribery for individuals is ten years of imprisonment and a fine between EUR 500 and EUR 187,000 (Lexology, Aug. 2017). 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 2017). MPs are also subject to declaration of assets regulations, however, are not applied to relatives or people with close relations to MPs (GRECO 2017). Interactions and potential conflicts of interest between parliamentarians and third parties are poorly regulated (GRECO 2017).

Luxembourg has signed the multilateral competent authority agreement to automatically exchange information between authorities and other states on tax information exchange (OECD, Oct. 2014). These reforms have been generally successful in combating money-laundering and tax evasion, thereby countering the country's image as a tax haven (ICS 2017). However, Luxembourg still ranks sixth out of over a hundred countries for financial secrecy in its laws (TJN 2018). Whistleblowers in the private and the public sectors are protected under the country's labor laws (Lexology, Aug. 2017). Concerns over the absence of a policy regulating the movement of personnel between the private and the public sectors have been raised. 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 pertain to the limited effectiveness of Luxembourg in pursuing foreign bribery cases and the lack of a national anti-corruption strategy (EUACR, Feb. 2014).

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.

Luxembourg respects freedom of the press, and the media reports without government interference (HRR 2017). The internet is not restricted, and there are no reports of internet monitoring (HRR 2017). 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 2017), but what is made available is up to the discretion of government officials (SGI 2017). Journalists have been pushing for a law in the past few years (SGI 2017). Most major media outlets have close ties to political parties, which is reflected in their reporting (SGI 2017). However, the country's media environment is becoming increasingly pluralistic (SGI 2017). Luxembourg's press environment is considered 'free' (FotP 2017).

The government respects the right of association provided by the constitution (HRR 2017). Interest groups have a large impact on policy-making, due to the small size of the country (SGI 2017). Human-rights NGOs generally operate without restriction (HRR 2017).

• World Bank: Doing Business 2018.
• Tax Justice Network: Financial Secrecy Index 2018.
• Bertelsmann Stiftung: Sustainable Governance Indicators - Luxembourg Report 2017.
• World Economic Forum: Global Competitiveness Index 2017-2018.
• US Department of State: Investment Climate Statement 2017.
• GRECO: Second Compliance Round -Evaluation Report Luxembourg 2017.
• Freedom House: Freedom of the Press 2017.
• European Commission: EU Justice Scoreboard 2017.
• European Commission: VAT GAP Study 2017.
• European Commission: Eurobarometer 470 - Corruption - 2017.
• European Commission: Flash Eurobarometer 457 - Businesses' Attitudes towards Corruption in the EU - 2017.
• Lexology: Anti-Corruption and Bribery in Luxembourg 2017.
• World Economic Forum: Global Competitiveness Report 2015-2016.
• World Economic Forum: Global Enabling Trade Report 2016.
• US Department of State: Human Rights Practices Report 2016.
• Euractiv: "Luxembourg 'Made 172 Secret Tax Deals' with Companies in Year after LuxLeaks", 7 December 2016.
• GRECO: Fourth Evaluation Report - Compliance Report Luxembourg, June 2015.
• European Commission: EU Anti-Corruption Report: Annex 16, Luxembourg 2014.
• OECD: Automatic Exchange of Financial Account Information 2014.
• ICIJ: 'Leaked Documents Expose Global Companies' Secret Tax Deals in Luxembourg', 5 November 2014.
• GRECO: 14th General Activity Report of the Group of States against Corruption 2013.
• GRECO: Fourth Evaluation Round -Evaluation Report Luxembourg 2013.

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