Luxembourg vs Germany: Salaries, costs of living and advantages of two countries
Comparing Luxembourg against Germany is comparing two extremes, on the one hand Europe's great locomotive and on the other hand one of the smallest countries in Europe. Many questions arise, such as which one is better. Which one has better salaries, has more job opportunities, and offers a better quality of life? Where do they stand, and where do they differ? In this article, we will analyse these two countries, making a comparative relationship in multiple aspects to try to shed light on all these questions.
Here, we try to obtain an objective idea of the subject by analysing factual elements and statistical data. However, the answers to many of the questions that a person may ask when comparing two countries have a subjective component that depends on that person's appreciation, preferences, and circumstances.
Luxembourg vs Germany: an overview of general points
Although both countries share a rich history and have many aspects in common, they also have many differences. We will then begin to explore their similarities and differences by analyzing some essential points that distinguish these two nations, such as land area, population, culture, climate, language, and lifestyle.
Population and territory
In terms of surface area, the two countries are at opposite ends of the spectrum. On the one hand, Luxembourg is one of the smallest countries in Europe with only 2595 km2 and the possibility to be driven from north to south in only one and a half hours. On the other hand, Germany is the fourth largest country in Europe with 357,569 km2, enough to fit Luxembourg a little more than 130 times inside.
In population terms, as expected, Luxembourg is much less populated. As of January 1, 2024, it had 672,050 inhabitants, while Germany had at the same date 83,456,045. By comparison, Germany has about 124 times more inhabitants.
It is also interesting to see the evolution of the population of both nations. Germany increased its population much more in absolute terms, with an increase of 2,688,582 people between 2014 and 2024, while Luxembourg only increased by 122,370 people. However, in relative terms, Luxembourg increased its population much more with an increase of 22.26% versus a modest 3.33% for Germany.
In terms of composition, it is interesting to note that Luxembourg had, as of January 1, 2024, a large percentage of foreign population, an impressive 51.03%, of which the majority are of Portuguese and French nationality. Germany, on the other hand, had 20.23% of its population of foreign origin, a much smaller but still quite considerable percentage.
General vibe
When comparing the general atmosphere in Luxembourg and Germany, many cultural and lifestyle differences stand out; however, given their proximity, they also have many aspects in common.
Although Luxembourg and Germany share cultural similarities due to their location as neighbours in the heart of Europe, each country preserves a unique identity that is reflected in its lifestyle and traditions.
Quality and cost of life
The next two aspects we will analyse are the quality of life and the cost of living in both countries, two important elements that often go hand in hand.
Quality of Life
Capturing trends in the well-being of European citizens is quite complicated due to the subjective nature of this aspect, however, there are European Union statistics that shed some light on this aspect. One of them is the global life satisfaction index, for which Europeans rated their life satisfaction on a scale from 0 (very dissatisfied) to 10 (very satisfied).
According to this index, in 2023, the average in Europe would be 7.3 points. Luxembourg shared the same score, while Germany, with 7.0 points, was near the bottom of the European list.
Cost of Living
Moving on to the cost of living in Luxembourg vs. Germany, we will rely on Numbeo data as they have the world's largest cost of living database and will, therefore, allow us to have a clearer picture.
Numbeo offers several indexes, all of them based on a comparison with New York City costs. Its most comprehensive index, “Cost of Living Plus Rent Index,” calculates the prices of consumer goods, including rent, compared to New York City.
This index compares data from 146 of the most important cities in Europe and shows that Luxembourg is one of the most expensive countries in Europe, ranking 15th and surpassing any of the German cities on the list. Munich is the most expensive German city, followed by Frankfurt and Hamburg, while Dresden, Aachen, and Leipzig are the most affordable.
Employment and work opportunities
At this stage, we have reached a key point, that of employment and job opportunities. Here, both countries offer ample opportunities, but some are more developed in some areas than others.
Industry Sectors
Both have robust but very different economies:
The Luxembourg economy is one of the most dynamic in Europe and one of the most open in the world. It regularly ranks in the top 10 in global rankings based on territorial competence, digitalization, and innovation. In Luxembourg, the most developed industrial areas include the steel industry and financial services.
The Luxembourg steel industry has long been the country's main source of employment and wealth, accounting for a large percentage of the national GDP. In fact, in the mid-20th century, the country became the world's largest steel producer.
The boom in this sector contributed greatly to the country's economic development for a long period. However, after the first steel crisis of the 1970s, the government made considerable efforts to diversify the economy by developing a favourable fiscal environment, which soon made Luxembourg one of the world's leading financial centres.
Today, the financial sector is one of the most important in the country, accounting for 25% of Luxembourg's GDP. In addition, over the last fifteen years, Luxembourg has become the leading European centre for investment funds.
Many of the world's largest multinational companies, such as Pepsi, Ikea, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan, FedEx, Amazon or Deutsche Bank, among others, have set up in Luxembourg.
Germany is the largest economy in Europe and the third largest in the world by nominal GDP in 2023, with 4,430 million dollars. Its economic strength lies in diversification, innovation and export-oriented industries. Germany is famous for its automotive industry, with world leaders such as Volkswagen, BMW, and Mercedes-Benz and is equally strong in mechanical engineering and industrial equipment manufacturing.
In addition, the chemical and pharmaceutical industries, led by companies such as BASF and Bayer, are fundamental to its economy. The services sector, which encompasses finance, healthcare and tourism, is the largest contributor to GDP, with Frankfurt as the financial centre and home to the European Central Bank. Germany's trade surplus reflects its export dominance, especially in machinery, vehicles, and chemicals. Its low unemployment rate of 3.5% in January 2025 underscores the strength of its labour market and its strong industrial base.
Attracting global talent
Both countries continually attract professionals from all over the world, although Germany, as might be expected as a larger country, has a higher rate of immigration for employment purposes. In 2023, Germany took in 91,095 people for employment purposes, while Luxembourg took in 3,151.
Most In-Demand Professions
In the following table, we can see which are the most demanded professions in both countries; the data for Luxembourg come from ADEM (Agence pour le développement de l'emploi), while the data for Germany come from multiple sources.
| Luxembourg | Germany |
| Analysis of loans and banking risks | Doctors, nurses, and medical technicians |
| Bank customer management | Software developers, data scientists, system analysts, cybersecurity specialists, and UX/UI designers, along with AI and machine learning specialists |
| Front office, back office and middle management in the financial markets sector | Electrical, mechanical, environmental and automotive engineers. |
| Paving and restoration of pavements | Electricians, plumbers, bricklayers, construction supervisors, and cabinet makers. |
| Management and engineering research and industrial development | Drivers for heavy trucks, buses, trams and locomotive engines |
| Production Management and Engineering | Chefs, bakers, pastry cooks, butchers, and other food preparers |
| Installation and maintenance of industrial and operating equipment | Early childhood educators and primary school teachers. |
| Caregiver Assistant | Sales professionals |
| Nurse | Scientists specializing in biotech, nanotechnology, chemistry, and pharmaceuticals |
| Psychologist | - |
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Salaries
Let's now have a look at a comparison of salaries in Luxembourg vs. Germany. In Luxembourg, there are two minimum wages, one for unskilled workers and one for skilled workers. The minimum wage for unskilled workers amounts to 2,637.79 euros, while for skilled workers, it amounts to 3,165.35 euros. Both wages position the country as the one with the highest minimum wages in Europe. The average wage is also extremely high. According to the International Labour Organization (ILO), in 2022, the average wage in Luxembourg stood at 7044 euros per month.
Germany also has a high minimum wage, although much more modest, reaching 2,161 euros per month. In 2002, the average wage in Germany was 4413 euros per month, a little more than half the average wage in Luxembourg.
Taxes
Comparing taxes in Luxembourg vs. Germany is a complicated matter as there are many types of taxes and many variables at play. A starting point to shed some light in this area is the maximum income tax rates. When comparing both countries in this aspect, we have that the highest step in Germany is at 47.50%, just a little higher than that of Luxembourg, which stands at 45.80%. However, this is only an initial perspective, and there are many other factors to consider to get a more accurate picture. If you wish to go deeper into this area it is best to seek professional help.
If you would like to get an idea of how much tax you would have to pay in Luxembourg, we recommend you have a look at our tax calculator.
Relocation procedures and options
Relocating to a new country involves a myriad of questions and considerations, visa requirements, residency permits and the overall settlement process. Below, we explore the most common relocation options and the main requirements associated with each.
Common Relocation Reasons
- Study
One of the most frequent reasons for immigration in both countries is studies. Now, in the contest Luxembourg vs. Germany, which is better for international students? There is no winner. Luxembourg and Germany both have prestigious universities and research institutions that attract students from all over the world. The answer to this question has many subjective factors to consider, such as the field in question and personal preference,s so this requires a personal analysis.
However, whether you choose one country or the other unless being a European national, to study in any of these countries, it is necessary to obtain a student visa whose requirements usually include the following:
- Proof of enrolment at a recognized institution.
- Evidence of sufficient financial resources to cover tuition and living expenses.
- Valid health insurance.
- A valid passport and possibly a background check.
- Work
Another frequent reason is to relocate for work purposes, as both Luxembourg and Germany have strong job markets in various sectors. In order to relocate for work purposes, the following requirements are usually necessary:
- A valid job offer from a company in the destination country.
- A work visa or permit, which the employer often assists in obtaining.
- Proof of qualifications and sometimes proficiency in the local language(s).
- Valid health insurance and a clean criminal record.
- Family Reunification
Family reunification visas allow spouses, children, and sometimes extended family members to live together. Requirements typically include:
- Proof of relationship (marriage certificate, birth certificates).
- Evidence that the family member residing in the destination country can financially support the applicant.
- Accommodation that meets local standards.
- Health insurance coverage.
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How to choose where to relocate between Luxembourg and Germany?
Moving to a new country is an important decision that involves taking into account many factors, such as quality of life, cost of living, employment opportunities and personal preferences. Luxembourg and Germany each offer different characteristics and the choice between the two depends on individual priorities and circumstances. Here we highlight some positives and negatives of each country to help you make an informed decision.
Frequently Asked Questions (FAQ)
How does the climate vary between Luxembourg and Germany?
What languages are spoken in Luxembourg and Germany?
Which country offers a higher quality of life, Luxembourg or Germany?
Source: ec.europa.eu, www.numbeo.com, wikipedia.org, www.make-it-in-germany.com, www.euronews.com, www.thinkeurope.de
We took photos from these sources: Nils Schirmer on Unsplash
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