ANNEX
DEFINITIONS
FINANCIAL SECTOR
Luxembourg’s financial sector is composed of the following:
NACE codes K64.11 (Central banking) as well as K66.21, K66.22 and K66.29 (covering specific auxiliary financial activities) have been excluded from the definition of financial sector. In the former case, the central bank as a public institution performs a separate function from private sector institutions, justifying the exclusion. In the latter case, these firms were excluded to avoid double counting as well as potential overlaps with non-financial services related activities.
Data pertaining to Legal, audit, and consulting services that support the financial sector have been adjusted using a ratio of 75%, reflecting the estimated proportion of their turnover attributable to clients within the financial services sector.
All classifications and data presented are based exclusively on NACE codes (NACE Rev. 2), the standardised system used across the European Union to classify economic activities.
BANKING
Banking is the financial activity carried out by credit institutions other than central banks. This class excludes credit granting for house purchase by specialised non-depository institutions (Code K 64.92) and credit card transaction processing and settlement activities (Code K 66.19).
INSURANCE
Insurance refers to a broad category of financial services that provide risk coverage and financial protection through three main segments: life insurance, non-life insurance, and reinsurance.
Life insurance (classified under Code K65.11) includes services related to annuities, life policies, disability income, and accidental death and dismemberment coverage (with or without a substantial savings element). Non-life insurance (Code K65.12) covers a diverse range of policies unrelated to life, including protection against accidents, fire, health-related risks, travel-related risks, damage or loss to property, transportation-related risks (such as motor, marine, aviation), and financial losses or liabilities. Reinsurance (Code K65.2) includes the activities of assuming all or part of the risk associated with existing insurance policies originally underwritten by other insurance carriers.
OTHER FINANCIAL SERVICES
This refer to financial activities classified under NACE codes K64.91, K64.92, K64.99, K66.11, K66.12, and K66.19, outside banking, investment fund management, insurance, pension funding or financial holding companies. They include a range of activities such as financial leasing, payments, non-bank credit provision, factoring, derivatives, and support functions such as market administration, brokerage, transaction processing, and investment advisory. These services collectively support financial markets and institutions by facilitating funding, investment, risk management, and operational efficiency beyond core monetary intermediation.
LEGAL, AUDIT, AND CONSULTING SERVICES SUPPORTING THE FINANCIAL SECTOR
This category covers a broad range of professional services, including legal services (Code M69.10) such as legal advice and representation, contract drafting, and company formation support; audit and accounting services (Code M69.20), which encompass, among others, bookkeeping, preparation and verification of financial statements, and management of tax-related matters; and consulting services (Code M70.22), providing guidance on strategy, operations, compliance, cost control, and organisational planning.
INVESTMENT FUND MANAGEMENT
This classification encompasses portfolio and fund management activities carried out on a fee or contractual basis for individuals, businesses, and other entities. These include the management of mutual funds, other investment funds, and pension funds, as defined under NACE Code K66.30. It also covers trusts, funds, and similar financial entities under Code K64.30 - legal entities established to pool financial assets or securities on behalf of shareholders or beneficiaries. This category includes open-end and closed-end investment funds, unit investment trusts, and trusts, estates, or agency accounts administered in accordance with trust agreements, wills, or agency contracts.
FINANCIAL HOLDING COMPANIES (NACE code K64.20)
In Luxembourg, financial holding companies generally fall under the SOPARFI (Sociétés de Participation Financière) regime.
SOPARFIs engaged in financial activities are not assigned a specific code in NACE rev. 2, used as the basis of this report. However, they are generally understood to fall under NACE code K64.20, which is part of Section K: Financial and Insurance Activities. This category encompasses the activities of financial holding companies—entities that possess controlling equity stakes in a group of subsidiary companies and whose primary function is to hold these assets. These companies do not offer additional services to the businesses in which they hold equity; specifically, they do not engage in the management or administration of their subsidiaries.
We should note however that at this level of granularity, we cannot categorically rule out that SOPARFIs classified under K64.20 could not, under a deeper indirect analysis, be reclassified into other sectors of activity.
For the purpose of the methodology used in this report, based on limitations of data granularity available, we have chosen to take the totality of K64.20 as a proxy for figures related to financial holding companies. We believe that this is the most feasible representation based on available data, and in line with the opinion in the conseil économique et social (CES) Avis 2021 (see the box on page 29 - 30 of their report available here).
METHODOLGY AND SOURCES
EMPLOYMENT
This refers to the number of individuals employed in Luxembourg, as calculated using the methodology established by STATEC/IGSS. This methodology aligns with the standardised system adopted across the European Union for classifying economic activities, known as NACE Rev. 2 (Nomenclature statistique des Activités économiques dans la Communauté Européenne). The data presented here is provided by STATEC based on the Inspection Générale de la Sécurité Sociale (IGSS) with a level of granularity that allows the breakdown at Section, Division, Group and Class level (i.e., for banking it would be Section K, Division 64, Group 64.1 and Class 64.19 – hence, NACE code K.64.19). The data includes both part-time and full-time workers based in the Grand Duchy of Luxembourg. Individuals employed at branches of Luxembourg-based financial services institutions located outside the Grand Duchy are not included in the scope of this report.
INFERRED GROSS VALUE ADDED, CONSTANT PRICES - BASE 2015
GROSS VALUE ADDED (GVA)
The GVA is a key economic indicator that measures the value of goods and services produced in a specific area, industry, or sector of the economy. It is calculated as:
GVA = Output – Intermediate Consumption
Output refers to the total value of goods and services produced, while Intermediate Consumption represents the cost of inputs used in the production process. GVA is used to assess the contribution of individual producers, industries, or sectors to the overall economy.
USE OF CONSTANT PRICES (BASE YEAR 2015)
This report uses GVA data expressed in constant 2015 prices (technically referred to as chain-linked volumes, with 2015 as the reference year). This approach adjusts for inflation, enabling real-term comparisons over time. By eliminating the effect of price changes, this method ensures that variations in GVA reflect actual changes in output, rather than inflationary distortions.
The use of constant prices is especially important given the significant fluctuations in Luxembourg’s inflation rate between 2014 and 2024 - ranging from a low of 0.3% in 2016 to a peak of 6.3% in 2022, before stabilising at 2.0% by the end of 2024 (click here for further details).
DATA GRANULARITY AND METHODOLOGICAL ADAPTATION
STATEC provides GVA data by economic activity (NACE Rev. 2) at the division level (Divisions 64, 65, and 66) for Section K (Financial and Insurance Activities). However, for Section M (Professional, Scientific, and Technical Activities), data is only available at the section level. This inconsistency limits the granularity of the GVA data compared to employment data, which is available at more detailed levels - Section, Division, Group, and Class (e.g., NACE code K.64.19 for banking).
To address this limitation and ensure consistency between GVA and employment data, an inferred GVA-per-employee approach was adopted. This method involves dividing total GVA at the division level, i.e. K64, K65 and K66, (click here), by total employment per division considering both salaried employees and independent workers (click here) to calculate an average GVA per employee at the division level. The latter was then applied to the more detailed employment data (covering only salaried employees), enabling the estimation of GVA at this report’s sub-sector level based on the distribution of salaried employment.
For example, in the case of banking (NACE code K.64.19), the annual number of salaried employees of a given year was multiplied by the inferred GVA-per-employee for the same year to estimate the banking sector's total GVA per year over the period 2014-2024. The same methodology was applied across all sub-sectors comprised in this report’s definition of the financial sector.
TAX REVENUE
This refers to the amount collected during the calendar year for each tax, as reported by the Administration des Contributions Directes (ACD) and the Administration de l'enregistrement, des domaines et de la TVA (AED). The breakdown is provided according to the NACE Rev. 2 classification, at the Section, Division, Group, and Class levels.
French acronyms have been used in order to allow for easy comparability with ACD and AED figures.
ASSETS UNDER MANAGEMENT (AuM)
GROSS UNDERWRITTEN PREMIUMS
This refers to the collective assets held in management in Luxembourg-domiciled funds across both alternative investment funds (AIFs) and mutual funds (UCITS). It excludes pure financial holding companies. The total AuM is calculated by aggregating the figures presented in tables 13.02 and 13.16 of the Banque centrale du Luxembourg’s (BCL) statistics portal. Breakdowns per category (UCITS vs AIFs) also incorporate data from the Commission de Surveillance du Secteur Financier (CSSF).
This refers to the premium amount charged for an insurance policy that has already been issued. The figures presented in this report reflect the gross amount. All data is sourced from the Commissariat aux Assurances (CAA).
ASSETS UNDER MANAGEMENT (AuM)
This refers to the collective assets held in management in Luxembourg-domiciled funds across both alternative investment funds (AIFs) and mutual funds (UCITS). It excludes pure financial holding companies. The total AuM is calculated by aggregating the figures presented in tables 13.02 and 13.16 of the Banque centrale du Luxembourg’s (BCL) statistics portal. Breakdowns per category (UCITS vs AIFs) also incorporate data from the Commission de Surveillance du Secteur Financier (CSSF).
GROSS UNDERWRITTEN PREMIUMS
This refers to the premium amount charged for an insurance policy that has already been issued. The figures presented in this report reflect the gross amount. All data is sourced from the Commissariat aux Assurances (CAA).