Luxembourg vs. Italy for moving and living

Luxembourg vs Italy: briefly about the main things

We’ll start our comparison by exploring some essential points defining Luxembourg and Italy. We will elaborate on key aspects such as land area, population, culture, climate, language and lifestyle. These factors form the foundation of each country’s identity and will provide a solid basis for understanding the broader differences between them.

Grand Duchy of Luxembourg

One of the world's smallest countries landlocked in northwestern Europe. Famous for steel and tax regimes for businesses and assets.

Italian Republic

A land of rich history, stunning landscapes, art, cuisine, and vibrant culture. Famous for its cuisine and language of love.

Population and territory

Let's begin by comparing the size and population of Luxembourg and Italy. As expected, Italy is significantly larger and more populated, but by how much? Luxembourg is one of the smallest countries in Europe. In contrast, Italy is huge, meaning Luxembourg could fit into Italy about 116 times.

When it comes to population, Italy also dwarfs Luxembourg. In 2023 Italy had 58,997,201 people, nearly 89 times more than in Grand Duchy. Interestingly, the population trends in these countries reveal a lot.

Source: Eurostat

Since 2012, Luxembourg's population has grown by 135,956 people, an increase of 25.90%. Meanwhile, Italy's population has decreased by 397,006 people, a decline of 0.67%, which is quite unusual in the European context.

General vibe compared

When it comes to culture, lifestyle, climate, and language, Luxembourg and Italy offer distinct experiences that reflect their unique histories and geographical positions. Despite being European neighbours, the vibe in each country is quite different, shaped by a blend of tradition, modernity, and the diverse influences that have touched their shores.

Languages

Climate

Lifestyle

Culture

Luxembourg is a great place to live. You can find a good job with good pay and enjoy a relaxed city life. Italy is a known place for many looking for luxurious lifestyle and laid-back atmosphere. No wonder, it is famous for its riposos and great cuisine, architecture and many famous artists.

What are the similarities?

Artistic

Both Luxembourg and Italy have deep cultural roots, with a strong appreciation for history, art, and tradition.

European unity

Both countries share a European identity, influenced by their geographical position and historical connections.

Life balanced

In both Luxembourg and Italy, there is an emphasis on enjoying life, social gatherings, food, leisure activities.

Language

Both countries value linguistic diversity, with multiple languages spoken, especially in business settings.

Quality and cost of life

We will now focus on two key aspects of the comparison between Luxembourg and Italy: the quality of life and the cost of living. These factors are often closely related and play an important role in determining where you should live.

Assessing the quality of life is inherently subjective, but certain metrics can provide insight into how citizens in Luxembourg and Italy perceive their well-being. One such metric is the Global Life Satisfaction Index, a survey conducted across Europe where citizens rate their life satisfaction on a scale from 0 (very dissatisfied) to 10 (very satisfied).

According to this index, the average life satisfaction score in Europe is 7.1. Luxembourg scores slightly above this average with a 7.2, indicating a generally high level of contentment among its residents. Italy, on the other hand, scores a bit lower at 7.0 but still remains close to the European average.

Source: Eurostat

Another useful tool for measuring quality of life is the Quality of Life Index provided by Numbeo, which aggregates eight sub-indices, including purchasing power, safety, health care, and pollution. In this index, Luxembourg scores 225.71, significantly higher than Italy's score of 153.13.

This discrepancy between the results of the first and second studies shows how subjective this aspect is and how difficult it is to estimate. A better approach to this point would be to analyse the different characteristics of each country and see how they fit with your tastes and preferences.

Cost of living

Next, let’s explore the Luxembourg vs Italy cost of living comparison, which is crucial for anyone considering a move to either country. To get a clear picture, we’ll look at data from Numbeo, the world's largest database on the cost of living, which provides a range of indexes comparing global cities against New York City as a baseline.

Source: Numbeo

The most comprehensive of these is the “Cost of Living Plus Rent Index,” which estimates the cost of consumer goods, services, and rent in comparison to New York City. According to this index, the cost of living in Luxembourg is significantly higher than in most European cities, including many in Italy. However, the exception is Milan, where the cost of living is slightly higher than in Luxembourg.

Overall, Luxembourg’s high cost of living is reflective of its status as a wealthy, small nation with a strong economy, high wages, and a high demand for housing. In contrast, Italy, with its more varied economy and regional differences, generally offers a lower cost of living, especially outside major cities like Milan or Bologna.

Employment and job opportunities

We have arrived at a crucial point: employment and work opportunities. Both countries offer ample opportunities, but each excels in different areas.

Both Luxembourg and Italy are prominent destinations for international professionals, though their approaches and scales differ significantly due to their size and economic environments.

Top industries

Luxembourg's economy is renowned for its dynamism and openness, consistently ranking among the top in global competitiveness, digitalisation, and innovation. Historically, the steel industry was the cornerstone of Luxembourg’s economic success, making the country a leading global steel producer in the mid-20th century. The sector significantly contributed to the nation's wealth and employment, but after the steel crisis of the 1970s, Luxembourg's government undertook substantial efforts to diversify its economy.

One of the most notable achievements in this diversification was the establishment of Luxembourg as a major financial centre. Today, the financial sector is a vital component of Luxembourg's economy, representing about 25% of the country's GDP. As of April 2024, Luxembourg is home to 117 banks, including major international financial institutions like JP Morgan and Deutsche Bank.

The country has also become a prominent European hub for investment funds, attracting numerous multinational corporations such as Pepsi, IKEA, and Amazon. This shift towards finance and high-end services has transformed Luxembourg into one of the world’s leading financial hubs.

Work

Luxembourg

Job

How to get a job in Luxembourg: application, interview, contract

Italy boasts a diverse and advanced economy, ranking as the third-largest in the Eurozone and the thirteenth-largest globally in terms of GDP by purchasing power parity. The Italian economy is characterised by its strong presence in several key sectors.

1. Agriculture

   Italy is a major player in global agriculture, particularly known for its wine production. Although agriculture constitutes a smaller portion of Italy’s GDP, it remains crucial in certain regions, with products like wine and olive oil enjoying international acclaim.

2. Manufactures

   The manufacturing sector is the backbone of Italy's economy, with the country ranking as the sixth-largest global producer. Italy excels in producing high-quality goods, especially in niche markets. The automotive industry features luxury brands like Ferrari and Lamborghini, which are symbols of excellence and innovation. Additionally, Italy is a leader in machinery, design, and fashion, all contributing significantly to its economic strength.

3. Natural resources

   Italy has moderate reserves of natural gas, primarily located in the Po Valley and under the Adriatic Sea. It also produces notable mineral resources, including pumice, pozzolana, and feldspar. The extraction of Carrara marble, renowned for its quality, is particularly significant.

4. Financial sector

   Italy's financial sector includes historic institutions such as Banca Monte dei Paschi di Siena, one of the world’s oldest banks. Milan stands out as a global financial center and the capital of fashion. Italy’s role in international trade is substantial, ranking as the tenth-largest exporter in the world as of 2019, with most trade connections within the European Union.

Professions in-demand in Luxembourg vs. Italy

The following table shows the most in-demand professions in both countries, with data sourced from Luxembourg's ADEM (Agence pour le Développement de l’Emploi), while data for Italy are sourced from Schengen News.

Attracting international workers

In 2023, Luxembourg welcomed 3,151 international workers. Italy, being a larger country with a more diverse economy, naturally experiences higher levels of labor immigration. In 2023, Italy hosted 38,103 international workers, almost 12 times more. 

The data highlight a somewhat particular labor immigration trend in Italy over the years. The country experienced a spectacular peak in 2010, with the arrival of more than 350,000 international workers. However, this number saw a sharp decline, reaching a low of 8,409 in 2017.

Source: Eurostat

Since 2021, the numbers have been on the rise again, although there was a slight decrease in the most recent year. In contrast, Luxembourg's immigration trends have been more stable. 

Minimum wages and salaries

In Luxembourg, there are two minimum wages: one for unskilled workers and another for skilled workers. The minimum wage for an unskilled worker aged 18 or older is 2,570.93 euros, while for a skilled worker, it is 3,085.11 euros. According to the International Labour Organization (ILO), the average monthly salary in Luxembourg in 2022 was an impressive 7,044 euros.

The collective agreements, which began to take shape after World War II, cover not only wages but also working conditions and other employment terms. Currently, there are over 800 collective agreements in Italy, leading to significant variations in wages across different professional categories. The lack of a unified minimum wage means that adherence to these agreements can be inconsistent, with some companies potentially paying less than what is agreed upon.

Now, to get an idea of wages in Italy, we can examine the average wage. According to ILO data, the average monthly wage in Italy was 3,116.2 euros in 2022. Almost half that of Luxembourg.

Taxation of the income

When comparing taxes between Luxembourg and Italy, it’s essential to note that the tax systems in both countries are complex, with various types of taxes impacting residents and businesses differently. To provide a starting point for understanding the tax landscape, we can compare the top income tax rates in each country.

• In Luxembourg, the highest income tax rate is 45.80%. This rate applies to individuals with high-income levels and is part of a progressive tax system designed to increase with income brackets. Luxembourg’s tax system is generally known for its favourable conditions for individuals and businesses, contributing to its reputation as a financial hub.
• In Italy, the top income tax rate is slightly higher at 47.3%. Italy also has a progressive tax system, where higher income levels are taxed at higher rates. This rate reflects the country’s approach to income taxation, which aims to address income disparities but results in a higher burden on high earners compared to Luxembourg.

It’s important to note that these figures represent just a snapshot of the tax situation. Both countries have a range of taxes beyond income tax, including corporate taxes, value-added tax (VAT), and social security contributions, all of which can influence the overall tax burden. Additionally, tax regulations and deductions can vary significantly based on individual circumstances and specific financial situations.

Therefore, while comparing the top income tax rates provides an initial perspective, it is advisable to seek professional tax advice to fully understand how the tax systems in Luxembourg and Italy may affect you personally or for your business.

Relocation procedures and options

Now that there is more clarity on the question of which is better Luxembourg or Italy, it is time to move on to more practical things like relocation procedures. Relocating to a new country involves a myriad of questions and considerations. When contemplating a move to Luxembourg or Italy, one might wonder about the visa requirements, residency permits, and the overall process of settling into a new environment.

Popular grounds for relocation

Studies

Work

Family

How to choose where to relocate between Luxembourg and Italy?

Deciding where to relocate can be a challenging decision, especially when comparing two diverse destinations like Luxembourg and Italy. Each country offers unique advantages and challenges that can influence your choice.