Luxembourg is one of the richest countries in the world in terms of GDP (Gross Domestic Product) per capita. It's natural to think that the cost of living must be particularly high. But is that really the case? What salary is required to live comfortably in Luxembourg? This article will answer these questions by covering all the key areas of spending to help you best prepare for your relocation to the world's only Grand Duchy.
Inflation trends in Luxembourg
Many countries have experienced significant inflation increases in recent years, and Luxembourg is no exception. Like elsewhere, energy prices and the cost of consumer goods have risen dramatically.
In 2022, inflation in Luxembourg jumped by 6.34% before dropping to 3.51% in 2023. STATEC, Luxembourg's statistics institute, predicts inflation will sit between 2.2% and 2.5% in 2024, with a slight increase to around 3% in 2025 as the government lifts the cap on oil prices. Despite these significant numbers, inflation in Luxembourg remains lower than the EU average, which was 9.3% in 2022 and 6.2% in 2023.
Additionally, Luxembourg is one of the few countries in the world that automatically indexes salaries to the cost of living, meaning that whenever the latter increases by 2.5%, the minimum wage is adjusted accordingly to help limit the impact on residents' standard of living. For example, in 2023, when inflation was notably high, Luxembourg's minimum wage was automatically revised three times. This policy helps maintain the purchasing power of the country's residents.
What salary do you need to live in Luxembourg?
Determining the minimum salary required to live in a country is always tricky, as it depends on individual criteria and lifestyle. While Luxembourg's minimum wage is high (€3,085 gross for qualified employees and €2,570.93 gross for non-qualified employees in September 2024), it's often criticized for not being enough to live comfortably in the country. The average gross monthly salary in Luxembourg is about €6,326, while the median salary is €4,843 gross.
To live comfortably in the country, it's estimated that you need to earn around €3,600 net per month per adult. This is why many workers who cannot secure such salaries choose to live near the borders to enjoy a better quality of life. In fact, living expenses in Luxembourg are estimated at around €3,450 per month for a family of four, excluding housing, and approximately €990 per month for a single person, again without housing costs.
Housing costs
Housing is undoubtedly the most expensive sector in the country. Finding a place to live in Luxembourg can be a real challenge. The country is small, and housing demand is high. As a result, real estate prices are soaring, both for rentals and purchases, and housing-related expenses can account for up to 50% of household budgets.
Renting in Luxembourg
The rental market in Luxembourg is very tight, especially in the capital, Luxembourg City. In December 2023, the average price per square meter in the city exceeded €30. Prices continue to rise year over year.
Here are some examples of average rental prices for different types of housing in and around the capital:
- Studio (30m2): Between €1,000 and €1,500/month
- Two-bedroom apartment (80m2): Between €2,000 and €3,000/month
- Four-bedroom house (120m2): Between €3,500 and €5,000/month
While these figures refer to the capital, rental prices across Luxembourg remain high. For instance, the average price for a 30m2 studio in Schengen, one of the country's most affordable towns located about 30 minutes by car from Luxembourg City, is €750. Traffic can also be problematic, with significant congestion during rush hours, something to consider when choosing where to live.
Despite Luxembourg's government efforts to address housing access difficulties with new measures, the impact has been minimal.
As of August 1, 2024, rental deposits are capped at two months' rent (previously three months), and agency fees, once entirely covered by tenants, are now split with landlords. Housing subsidies are also available, and residents can apply for “affordable” housing, although waitlists are generally full.
Buying property in Luxembourg
Similar to rentals, buying property in Luxembourg is a significant investment, and purchasing a house is becoming increasingly difficult for many residents.
In 2024, the average price per square meter for real estate in the Central region, home to Luxembourg City, reached €10,734. In the Northern region, the country's least expensive area, the average price is €6,114 per square meter.
On average, purchasing an apartment in the country costs €910,819, and buying a house costs €1,314,360. However, once the property is acquired, there are almost no additional taxes, aside from a very low property tax (typically under €100/year, depending on the size and location of the home).
As with the rental market, the government has introduced measures to combat rising housing costs with limited success. For first-time homebuyers, it's possible to benefit from a tax credit of up to €30,000 per buyer (up to €60,000 for a couple), regardless of income level. However, to qualify, you must live in the property for at least two years, and it cannot be used for any other purpose, including running a business from home.
Applicants can also apply for moderately priced housing under certain conditions, such as restrictions on reselling or a capped profit upon resale. However, the waitlists for these homes are often full, sometimes even before construction is completed.
Transportation costs in Luxembourg
Luxembourg offers a unique feature: in 2020, it became the first country in the world to make public transportation (trains, trams, buses) entirely free. This initiative is part of the government's efforts to reduce traffic congestion and promote more sustainable travel.
For those who use only public transport, this sector is free. However, outside of the capital and a few cities (such as Mersch or Esch-sur-Alzette), owning a private vehicle is often necessary. Despite extensive bus connections, travel times outside of rush hours can indeed be 3 to 4 times longer compared to driving. Luxembourg boasts an excellent road system, with many free, well-maintained highways.
Owning a private vehicle does come with costs, from purchase to maintenance. Leasing is a popular option, making vehicles more affordable. This long term rental service usually covers maintenance and repairs (excluding tires), avoiding unpleasant surprises. It's common practice to swap vehicles when a lease ends, meaning Luxembourg has a very modern and frequently updated car fleet.
Fuel prices are relatively low in Luxembourg. As of 2024, the average price for a liter of unleaded fuel is about €1.50, while diesel costs around €1.39 per liter. These prices can fluctuate based on global markets but remain competitive compared to neighboring countries.
The most expensive aspects of owning a car (aside from purchase) are insurance and parking. Local insurance providers generally do not recognize driving bonuses from other countries, and annual insurance for a small car, like a Peugeot 208, ranges between €1,000 and €1,200. However, all repairs are well-covered, without deductibles, and service quality is excellent.
While housing usually comes with car parks, finding parking on the street can be a challenge, especially in Luxembourg City, where rates range between €1 and €3 per hour on average.
Luxembourg has over 600 kilometers of bike lanes, which should increase to 950 kilometers in the coming years, allowing for easy travel by bike. The country is becoming increasingly bike-friendly: the capital offers its own electric bike-sharing system, costing €18/year (with the first 30 minutes free, then €1 per hour). The southern region also provides a similar free self-service e-bike system.
While taxis exist in Luxembourg, the cost is prohibitive, averaging €3.50 per kilometer (approximately €33 for a trip from the train station to the airport, despite the two locations being less than 10 kilometers apart).
Healthcare and Insurance in Luxembourg
Luxembourg has one of the best public healthcare systems in the world. All workers and their families have access to it, and contributions are deducted directly from salaries. The National Health Fund (CNS) covers 80% to 100% of medical expenses, depending on the case, and covers 100% of healthcare costs for children up to 18 years old.
Some residents still opt for private insurance to complement CNS reimbursements and gain access to additional services (like reimbursement for alternative medicine such as hypnotherapy or osteopathy). Private insurance costs vary depending on the level of coverage, the insured's age, and their health status. On average, you should budget between €60 and €200 per month for such insurance. Given the excellent coverage of the CNS, private insurance is optional.
Groceries in Luxembourg
Shopping for groceries in Luxembourg is often more expensive than elsewhere in Europe. On average, individuals spend around €291 per month on groceries, while couples spend about €550. For a family of four, monthly grocery costs can approach €1,000. Prices can vary significantly between stores. With Belgium, Germany, and France easily accessible, it's possible to shop there to lower costs. However, some products, like fuel, alcohol, and cigarettes, are cheaper in Luxembourg than in its neighboring countries.
Utilities in Luxembourg
Electricity and heating costs have risen in recent years across Europe, including Luxembourg. In 2024, the average electricity price is €0.1599 per kWh, and gas costs €0.78170 per cubic meter. Many private homes still rely on fuel oil heating, which costs around €0.80 per liter.
For tap water, there is a fixed charge of €2.00/mm in diameter, plus a variable charge based on annual consumption set at €2.25 per cubic meter ( 3% VAT).
Garbage collection fees are relatively low, though they vary from one municipality to another. They rarely exceed €300 per year, and the country encourages waste recycling. The more waste you recycle, the lower your garbage collection costs.
Phone and Internet in Luxembourg
Telephony and internet services in Luxembourg are relatively expensive, though prices are decreasing. The average cost of an internet subscription is €50/month. For a mobile plan with unlimited calls and texts across Europe and about 10GB of data, expect to pay around €20/month. Some providers offer bundled packages (internet, TV, and multiple phone plans) that can reduce these costs.
Entertainment in Luxembourg
Luxembourg offers numerous entertainment options, with widely varying prices. For example, a movie ticket costs €14 for a 2D film, while gym memberships range from €25 to €80 per month depending on the facilities… Many municipalities offer classes (pottery, language courses, IT, yoga, painting, etc.) at very low prices, typically around €200/year.
Restaurants in Luxembourg offer a wide variety of choices in both cuisine and style. Expect to pay between €25 and €50 per person on average for dining out. Luxembourg also has several Michelin-starred restaurants, where prices are significantly higher!
Coffee lovers pay between €2.50 and €5 for a coffee on average, and beer fans should budget between €5 and €7 per drink on average.
Childcare and education
Luxembourg offers a variety of educational systems (English schools, international schools, Montessori schools, public schools, etc.). The cost of education thus varies significantly depending on the school chosen, ranging from free (for public schools) to nearly €20,000 per year per child in some private schools.
Luxembourg provides several childcare systems, from nurseries to "maison relais" structures. Prices are generally based on household income. In 2023, the average cost for a nursery place was €1,056.70 per month.
Maison relais (or drop-in) centers, where children aged 4 and above can stay outside school hours (typically from 7 am to 7 pm) and which also serve as canteens, have been free since the 2022 school year during term time. Meals are also provided at no cost. During school holidays, prices are adjusted based on household income.
Finally, babysitters in Luxembourg charge an average of €13 to €15 per hour in 2024.
Social benefits
The cost of living in Luxembourg is relatively high compared to its European neighbors, but certain specific expenses, like housing, contribute most to the high costs. Aware of these issues, the Luxembourg government has implemented various social benefits to help reduce the overall financial burden. To illustrate, there is housing assistance, and family allowances are generous: in 2024, parents receive €299.86 per month per child aged 0 to 5, €322.53 per child aged 6 to 11, and €356.43 per child aged 12 and up.
These social benefits are not always widely publicized, so it's essential to check with the relevant institutions (ministries, the Housing Fund, CAE…) to find out what you may be entitled to.
Useful links:
Vel'oh (Bike Rental Service in Luxembourg)
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