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Luxembourg City – The Hub for Digital Sovereignty

Executive Summary

Luxembourg City is the premier choice for enterprises requiring the highest levels of data security and regulatory compliance within the European Union. By centralizing operations in one of the world’s densest clusters of Tier IV facilities, businesses achieve unmatched uptime and protection for sensitive financial and institutional workloads.

Luxembourg City: At A Glance

FactorRating / DataNotes
Global Connectivity GradeALow latency to Frankfurt and Paris.
Direct Cloud On-Ramps0 – as of September 2025Frankfurt is the nearest on-ramp hub.
Power Cost€0.25/kWh – as of December 2023Predictable costs with 26% renewable mix.
Disaster RiskLow (1) – as of September 2025Among the safest European infrastructure sites.
Tax IncentivesYesFavorable participation exemption and corporate regimes.
Sales Tax17% VAT – as of September 2025One of the lowest VAT rates in the EU.

Network & Connectivity Ecosystem

As an analyst in this space for three decades, I see Luxembourg as a connectivity powerhouse that punches far above its weight. The ecosystem is purpose-built for high-frequency trading and sensitive data management.

Carrier Density & Carrier Neutrality: Carrier count: over 10. A concentrated group of roughly 10–15 major international and regional carriers ensures redundant paths to all European capitals as of September 2025.

Direct Cloud On-Ramps: Over 0, enabling access to 0 cloud regions. There are no native on-ramps for major providers like AWS or Google Cloud (GCP) physically located within the city as of September 2025. Most deployments use high-speed private extensions to the Frankfurt hub, located approximately 200 kilometers away.

Internet Exchange Points (IXPs): LU-CIX is the primary national exchange, facilitating efficient local traffic exchange and reducing reliance on external transit as of September 2025.

Bare Metal: Resilient bare metal solutions are readily available through providers such as Latitude.sh, supporting high-compute workloads without long-term hardware commitments as of September 2025.

Power Analysis

Luxembourg offers a highly stable environment for high-density power requirements, backed by a grid engineered for mission-critical reliability.

Average Cost Of Power: Industrial electricity is priced at €0.25/kWh as of December 2023. This cost reflects a sophisticated energy market that balances fossil fuels with a growing renewable share, providing a predictable expenditure model for large-scale operators.

Power Grid Reliability: The local grid is well-engineered, utilizing redundant feeds and multi-substation support to service the city’s dense cluster of Tier IV facilities as of September 2025.

Market Access, Business & Tax Climate

The business environment in Luxembourg is specifically tuned to support international expansion and capital efficiency.

Proximity To Key Business Districts: Data centers are positioned near the Kirchberg financial district and the Cloche d’Or business hub. This proximity is vital for the banking and European institutional sectors that require sub-millisecond latency for synchronous data replication as of September 2025.

Regional Market Reach: From its central position, Luxembourg serves as a reliable gateway to a population of over 500 million consumers across the European Union as of September 2025.

Tax Advantage For Data Centers: The jurisdiction utilizes a participation exemption and a favorable corporate tax regime to minimize the tax impact on dividends and capital gains. This financial environment enables firms to manage large-scale infrastructure investments with high long-term capital efficiency as of September 2025.

Natural Disaster Risk

Luxembourg City maintains a Low (1) risk profile as of September 2025. This classification makes it a premier site for disaster recovery and primary production environments.

  • River Flood (2.9): The most notable natural hazard, though risk is managed through advanced urban planning and facility elevation.
  • Epidemic (1.8): Managed through a resilient national healthcare infrastructure.
  • Drought (1.3): A minor regional factor with minimal impact on modern closed-loop cooling systems.
  • Earthquake (0.1): Seismic activity is negligible for structural integrity.

Other natural hazards, such as tropical cyclones or coastal flooding, are not applicable to this location or are considered minor as of September 2025.

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