OCDE - Financing SMEs and Entrepreneurs 2026 - Luxemburgo de 2026

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FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Key facts on SME financing According to the latest available data, SMEs (firms that employ less than 250 empl oyees) accounted for 99.5% of all non-financial firms in Luxembourg in 2023. SMEs employed approximately 64.6% of the labour force and generated 60.4% of the economy’s total value added. New lending to all enterprises amounted to EUR 46.4 billion in 2024, of which EUR 11.4 billion went to SMEs. As a result, SME lending accounted for 24.5% of total new lending in 2024. It should be noted that the analysis relies on a new and more accurate dataset, AnaCredit, that provides a clearer picture of credit conditions in Luxembourg. According to AnaCredit data, SME interest rates fell from 6.92% in 2023 to 5.80% in 2024, reflecting the easing of ECB policy rates. Over 2007 –2024, interest rates for SMEs remained consistently above those for large firms. Lend ing conditions improved in 2024, with the SME rate declining to 5.80% from 6.92% in 2023, and the rate for large firms falling to 4.64% from 4.88%. As a result, the interest rate spread between SMEs and large firms narrowed accordingly, decreasing from 2.04 percentage points in 2023 to 1.15 percentage points in 2024. Alternative forms of financing, such as venture capital, may be important for SMEs seeking finance. In 2024, nearly EUR 60.8 million of venture capital was invested in Luxembourg’s firms. The largest port ion of all venture capital funding was invested in firms active in ICT (EUR 30.6 million ). Several measures have been implemented to facilitate SME financing. On 24 March 2025 the Minister of the Economy and the Minister of Finance presented an action plan entitled “10 Action Points for Start-ups.”

of all venture capital funding was invested in firms active in ICT (EUR 30.6 million ). Several measures have been implemented to facilitate SME financing. On 24 March 2025 the Minister of the Economy and the Minister of Finance presented an action plan entitled “10 Action Points for Start-ups.” It introduces tax incentives to stimulate private investment in young innovative firm s, expands support for deep-tech and sector-specific incubators, and develops new financial instruments to s trengthen venturecapital funding. Additional measures include the creation of an AI Experience Centre and an AI Factory to accelerate the development and adoption of advanced technologies. According to the AnaCredit dataset, government-guaranteed loans amounted to EUR 0.8 billion in 202 4. This is a gradual decrease from EUR 1 billion in 2023, EUR 1.6 billion in 2022 and EUR 1 billion in 2021. During the same period, government loan guarantees to SMEs totalled EUR 0.9 billion in 2024, compared to EUR 0.7 billion in 2023, EUR 1.3 billion in 2022, and EUR 0.8 billion in 2021. The se figures emphasise the countercyclical nature of these loans and highlight the government's commitment to s upporting SME financing during the COVID-19 pandemic. The government has also emphasised innovation within SMEs. In 2024, SMEs ac counted for 73% of Research, Development, and Innovation (RDI) projects financed by the Ministry of the Economy. The number of bankruptcies among all firms in Luxembourg stood at 1163 cases in 2024, marking a 26.7% increase from the 918 reported in 2023. Luxembourg2 

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Table 1. Scoreboard for Luxembourg

increase from the 918 reported in 2023. Luxembourg2 

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Table 1. Scoreboard for Luxembourg Indicator Unit 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Debt Outstanding business loans, SMEs EUR billion

13.9 15.6 16.5 17.5 Outstanding business loans, total EUR billion

38.0 42.2 43.0 60.6 Share of SME outstanding loans % of total outstanding business loans

36.5 36.8 38.3 29.0 New business lending, total EUR billion

7.6 7.7 8.7 11.4 New business lending, SMEs EUR billion 20.1 24.2 22.7 46.4 Share of new SME lending % of total new lending 37.6 31.7 38.2 24.5 Outstanding short-term loans, SMEs EUR billion 1.3 1.6 1.8 1.9 Outstanding long-term loans, SMEs EUR billion 12.6 13.9 14.7 15.7 Share of short-term SME lending % of total SME lending 9.14 10.38 10.93 10.58 Government loan guarantees, SMEs EUR billion 0.81 1.28 0.75 0.95 Government guaranteed loans, SMEs EUR billion

0.98 1.55 1.02 0.82 Non-performing loans, total (NFCs) % of all business loans

0.60 0.67 0.78 Interest rate, SMEs %

Government guaranteed loans, SMEs EUR billion

0.98 1.55 1.02 0.82 Non-performing loans, total (NFCs) % of all business loans

0.60 0.67 0.78 Interest rate, SMEs %

3.74 3.78 6.92 5.80 Interest rate, large firms %

1.61 2.20 4.88 4.65 Interest rate spread Percentage points

2.13 1.58 2.04 1.15 Percentage of SME loan applications SME loan applications/ total number of SMEs 18.20 25.80 16.40 23.00 26.15 18.94 32.28 27.02 22.68 27.77 17.20 14.16 21.35 Non-bank finance Venture and growth capital EUR million 102.8 303.6 57.3 130.1 218.8 85.7 31.1 34.2 90.5 168.2 42.2 136.7 93.5 189.7 57.0 239.3 123.9 60.8 Venture and growth capital (growth rate) %, Year-on-year growth rate 195.26 -81.12 126.91 68.18 -60.84 -63.72 9.87 164.97 85.84 -74.93 224.27 57.27 7.81 -69.96 319.84 -48.24 -50.94 Factoring and invoice discounting EUR million

349 321 180 299 407 339

Other indicators Payment delays, B2B Number of days

Bankruptcies, SMEs Number 659 553 664 869 916 978 967 827 854 943 887 1 159 1 232 1 173 1 158 1 001 918 1 163

Payment delays, B2B Number of days

Bankruptcies, SMEs Number 659 553 664 869 916 978 967 827 854 943 887 1 159 1 232 1 173 1 158 1 001 918 1 163 Bankruptcies, SMEs (growth rate) %, Year-on-year growth rate -16.1 20.07 30.87 5.41 6.77 -1.12 -14.5 3.26 10.42 -5.94 30.67 6.30 -4.79 -1.28 -13.6 -8.29 20.69

Source: See Table 2. 3

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Macroeconomic and financing conditions The current macroeconomic outlook continues to be shaped by a series of overlappin g crises. Recent global developments including shifts in trade policy and rising geopolitical tensions have further weakened economic prospects. According to the Note de conjuncture (STATEC, 2025[1]), Luxembourg’s GDP showed yearly growth rates of 6.9% in 2021, a contraction of -1.1% in 2022 and -0.7% in 2023 an d a modest recovery of 1% in 2024. In the first trimester of 2025, Luxembourg’s GDP contracted again by -1% due to the shift in U.S. trade policy. According to the most recent Note de conjoncture , GDP growth in 2025 is projected to reach 1% (STATEC, 2025b). The health restrictions linked to the pandemic initially caused a disinflationary shock; inflation in 2020 was 0.8% (compared to 1.7% in 2019). Subsequently, the post-Covid rebound and the war in Ukraine generated a surge in commodity prices, particularly energy and food, and led to a high inflation period of 8.2% in

0.8% (compared to 1.7% in 2019). Subsequently, the post-Covid rebound and the war in Ukraine generated a surge in commodity prices, particularly energy and food, and led to a high inflation period of 8.2% in

2022. Harmonised inflation rate decreased back to 2.9% in 2023 and to 23% in 2024, to i ncrease gain to 2.5% in 2025 due to rising global trade tensions (EUROSTAT, 2026). In 2026 , the war in Middle East and raising energy prices contributed to a deterioration in the economic outlook. Recent proj ections estimate an inflation rate of 2.5% for 2026, followed by a decline to 1.7% in 2027(STATEC, 2026 ).

Figure 1 shows the evolution of interest rates between 2019 and 2025. For loans below EUR 1 million, the data indicate a sharp increase in the second half of 2022, reaching a peak at the beginning of 2024 (4.83%), followed by a period of stabilisation and a slight decline. As of September 2025 , interest rates stood at 4.79% for loans up to EUR 1 million and 3.5% for loans above EUR 1 million. Figure 1. Interest rate on loans by amount of loan in Luxembourg Percent

Note: Monthly data; Loans to Eurozone Non-Financial Corporations, Floating rate and up to 1 year initial rate fixation.

Source: Banque Centrale du Luxembourg: Capital markets and interest rates, Table 3.1.

0 1 2 3 4 5 6 Loans over 1 million € Loans up to 1 Million €4 

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

SMEs in the national economy Table 2. shows that SMEs accounted for 99.5% of all non-financial firms in Luxembourg in 2022 (the latest

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

SMEs in the national economy Table 2. shows that SMEs accounted for 99.5% of all non-financial firms in Luxembourg in 2022 (the latest year for which structural business statistics are available). SMEs, measured as fi rm with less of 250 employees, accounted for 65.3% of labour force and generated 62% of the total value added of the nonfinancial business. Some caution is needed when reading Table 2 . because the data refer to the non-financial business economy and, the financial sector is particularly relevant in Luxembourg. This industry accounted for 23.5% of the entire economy's gross value added (STATEC, 2024) and employed approximately 54 800 persons at the end of the year. Table 2. Firms in Luxembourg in 2022 by firm size Firm size (employees) Number of firms % Number of persons employed % Value added at factor cost per class size (in EUR million) % All firms 39 245 100.0 311 848 100.0 32 237.1 100.0 SME (0-249) 39 065 99.5 203 660 65.3 19 980.6 62.0 Micro (0-9) 34 522 88.0 51 795 16.6 6 140.7 19.0 Small (10-19) 2 328 5.9 31 125 10.0 2 608.4 8.1 Small (20-49) 1 444 3.7 43 797 14.0 3 766.4 11.7 Medium (50-249) 771 2.0 76 943 24.7 7 465.0 23.2

Small (20-49) 1 444 3.7 43 797 14.0 3 766.4 11.7 Medium (50-249) 771 2.0 76 943 24.7 7 465.0 23.2 Large (250 +) 180 0.5 108 188 34.7 12 256.5 38.0

Note: Figures refer to total non-financial business economy.

Source: Structural Business Statistics, LustatDF_D1110.

SME lending Between 2007 and 2020, new SME lending fluctuated between EUR 8.7 in 2020 and 18.0 bil lion in 2011, representing on average around 12% of total new business lending. After the shift to AnaCredit data in 2021 (see Box 28.1), the share of SME lending rises sharply, reaching 37.6% in 2021, 38.2% in 2023, and 24.5% in 2024. This difference reflects differences in coverage and definitions bet ween the two datasets (Riillo and Gobbo, 2025). In terms of outstanding credit, total business loans expanded from EUR 38.0 billion in 2021 to EUR 60.6 billion in 2024, while SME loans grew from EUR 13.9 billion to EUR 17.5 bill ion over the same period. Consequently, the SME share of outstanding loans declined from 36.5% in 2021 to 29.0% in 2024, suggesting that large firms accounted for a growing proportion of total credit. Interesting ly, the share of outstanding SME loans and the share of new SME lending are broadly comparable. In 2024, when the difference reaches its maximum, SMEs account for 29.0% of total outstanding loans and 24.5% of new lending. This pattern is consistent with trends observed in other OECD countries (see OECD, 2025). Looking at the distinction between short-term and long-term SME loans. In 2021 –2024, short-term SME

lending. This pattern is consistent with trends observed in other OECD countries (see OECD, 2025). Looking at the distinction between short-term and long-term SME loans. In 2021 –2024, short-term SME loans (≤ one year) represented around 9–11% of total SME lending, indi cating that Luxembourg’s SME financing remains primarily long-term in nature. 5

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Box 1. Change in the source for SME financing data for Luxembourg In 2021, Luxembourg changed the data source used for the Scoreboard. While SME lending indicators prior to 2021 were based on Interest Rate Statistics (IRS) data, from 2021 onwards Luxembo urg has reported the Scoreboard data using AnaCredit. One of the main reasons to change inlcude the limited definition of SME loans. While before SME loans were defined as new business loans of up to EUR 1 million, the shift to Ana Credit in 2021 provides a more accurate picture of SME lending as Anacredit allows the identification of SME s based on employment and other size criteria defined by the European Union, rather than by loan a mount (Riillo and Gobbo, 2025). In addition, it provides an accurate picture of the credit situation in Luxembourg, as it includes loans granted to Luxembourgish firms by all financial institution s across the euro area. Furthermore, AnaCredit allows for the first time, the observation of outstanding business lo ans, including both outstanding shortterm loans to SMEs (≤ one year) and outstanding long-term loans to SMEs. Credit conditions The interest rate paid by SMEs and the interest rate spread (i.e. the difference between the borrowing costs faced by large firms and by SMEs) are important indicators of the credit condi tions faced by SMEs. The yearly interest rate charged to SMEs is computed as the average monthly interest weighted by the amount of loans granted in the same month. The interest rate spread measures the difference in

costs faced by large firms and by SMEs) are important indicators of the credit condi tions faced by SMEs. The yearly interest rate charged to SMEs is computed as the average monthly interest weighted by the amount of loans granted in the same month. The interest rate spread measures the difference in percentage points between the interest rate charged to SMEs and the interest rate for large enterprises. As noted above, the shift to AnaCredit data also affects the measurement of SME interest rates. Figure 2. Interest rates on new loans to SMEs in IRS and AnaCredit Percent

Source: Banque Centrale du Luxembourg: IRS (Interest Rate Statistics) and AnaCredit.

0 1 2 3 4 5 6 7 8 2021 2022 2023 2024 Interest rate, SMEs, AnaCredit Interest rate, SMEs, IRS6 

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Figure 2 compares SME lending rates under the old (IRS-based) and the new (AnaCr edit-based) methodologies. The earlier methodology tends to produce lower figure of the cos t of SME borrowing, although both series show a deterioration in credit conditions in 2023 following the increase in ECB interest’s rates second half of 2022 (ECB, 2025). In 2024, the AnaCredit data indicate that SME interest rates declined from 6.92% in 2023 to 5.80%, in line with the reduction of E CB interest’ rates (ECB, 2025) while the rates based on the previous methodology marginally increased. Figure 3. Trends in interest rate in Luxembourg Percent and percentage points

Source: Banque Centrale du Luxembourg: IRS (Interest Rate Statistics) up to 2020 and AnaCredit onward Figure 3 presents interest rates for SMEs, large firms, and the corresponding spread using all avail able data (IRS for 2007–2020 and AnaCredit for 2021–2024) providing a combined view across the two periods,

Figure 3 presents interest rates for SMEs, large firms, and the corresponding spread using all avail able data (IRS for 2007–2020 and AnaCredit for 2021–2024) providing a combined view across the two periods, although direct comparisons should be made with caution. SME lending rates are consistently higher than those for large enterprises. The gap is smaller in 2007 –2020 than in 2021–2024. Over the full period, the spread ranges from 0.06 percentage points in 2011 to a peak of 2.13 percentage points in 2021. In 2024, the spread remained elevated at 1.15 percentage points, though markedly lower than the 2.04 percentage points observed in 2023. The Survey on the Access to Finance of Enterprises (SAFE) of the European Commissi on and European Central Bank shows that, in Luxembourg, 21.3% of SMEs applied for a loan in 2024, compared to 14.16% in 2023, suggesting an increase in SMEs demand for bank financing. O ver the reference period, the percentage of SMEs that applied for a loan ranged from 16.4% in 2014 to 32.3% in 2018. Alternative sources of SME financing Venture Capital In Luxembourg, venture capital (VC) investments have shown significant variations over the years, both in terms of investment stage (See Table 3 . ) and industry (See Table 4 . ). This volatility could have been caused by the limited number of companies that received VC funds (8 in 2024), rendering VC investments more susceptible to outlier values. Total investment in VC amounted to EUR 60.8 million in 2024 compared to EUR 123.7 million in 2023. In 2024, most VC investment was directed toward growth-stage firms (EUR 0 1 2 3 4 5 6 7 8

more susceptible to outlier values. Total investment in VC amounted to EUR 60.8 million in 2024 compared to EUR 123.7 million in 2023. In 2024, most VC investment was directed toward growth-stage firms (EUR 0 1 2 3 4 5 6 7 8 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201 9 2020 2021 2022 2023 2024 Interest rate, SMEs Interest rate, large firms Interest rate spread, percentage points 7

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

53.0 million) and companies operating in ICT (EUR 30.6 million). This pattern is consistent with the global rise in investment linked to advances in artificial intelligence (OECD, 2024). Table 3. Venture and growth capital investments in Luxembourg by stage 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Seed 0.2 0.0 0.0 1.0 0.1 0.8 0.0 0.3 0.1 0.0 0.0 9.2 0.0 0.7 1.5 5.0 2.0 0.0 Start-up 5.2 3.1 1.1 1.1 5.4 4.2 5.8 3.2 5.3 0.0 13.3 1.6 14.6 33.9 26.2 197.2 1.9 2.8

Later stage 10.3 26.2 4.3 0.0 0.0 6.8 1.0 0.8 0.5 0.3 0.3 0.0 0.0 1.0 0.4 11.5 29.0 4.9 Growth 87.1 274.4 51.9 128.0 213.3 74.0 24.3 29.9 84.6 167.9 28.5 125.9 78.9 154.1 28.9 25.6 90.8 53.0 Total investment 102.8 303.6 57.3 130.1 218.8 85.7 31.1 34.2 90.5 168.2 42.2 136.7 93.5 189.7 57.0 239.3 123.7 60.8 Total number of companies 10 11 12 19 19 17 10 14 17 15 10 14 11 9 8 6 6 8

Note: EUR million Source: Invest Europe / European Data Cooperative Table 4. Venture and growth capital investments in Luxembourg by industry

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Agriculture 0.0 0.0 0.0 8.0 0.1 0.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Business products and services 25.0 9.1 2.3 15.0 21.9 0.1 0.1 0.4 0.3 5.8 0.3 2.3 5.3 1.5 20.1 12.5 0.0 5.1 Chemicals and materials 0.0 0.0 0.0 0.3 1.9 0.0 0.0 0.0 0.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0 0.0 7.5 ICT (Communications computer and electronics) 59.0 17.7 26.8 64.1 8.1 37.0 1.0 11.5 3.7 16.6 11.8 17.0 5.1 72.2 12.0 38.9 87.2 30.6 Construction 0.0 0.0 1.0 0.0 0.0 0.0 0.0 0.0 14.5 0.0 2.5 0.0 10.8 0.0 0.2 0.0 0.0 0.0 Consumer goods and services 0.0 0.2 0.0 14.6 23.5 20.2 18.6 8.1 17.5 1.1 23.9 24.2 33.0 3.9 0.3 0.0 0.0 0.0 Energy and environment 8.0 23.6 0.2 0.0 0.0 15.3 1.5 1.4 34.8 1.7 0.5 0.0 0.0 0.7 3.4 5.0 22.7 0.0

Financial and insurance activities 10.6 249.0 20.3 0.3 115.3 9.0 0.3 9.7 4.4 120.0 0.8 77.6 2.1 64.1 20.7 179.7 0.1 1.3 Real estate 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.2 0.5 0.3 0.0 0.0 0.0 Biotech and healthcare 0.2 1.4 6.8 22.7 46.5 0.4 3.3 0.1 2.8 2.3 0.1 4.8 0.0 39.8 0.0 3.3 13.8 16.3 Transportation 0.0 2.5 0.0 0.0 0.3 2.9 5.7 2.8 12.5 0.0 0.0 0.0 17.0 7.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 5.0 1.3 0.0 0.7 0.0 0.0 20.7 2.3 0.7 0.0 0.0 0.0 0.0 0.0 0.0 Total 102.8 303.6 57.3 130.1 218.8 85.7 31.1 34.2 90.5 168.2 42.2 136.7 93.5 189.7 57.0 239.3 123.7 60.8

Note: EUR million

Source: Invest Europe / European Data Cooperative Other indicators

Note: EUR million Source: Invest Europe / European Data Cooperative Other indicators Data on non-performing loans are sourced from the Commission de Surveillance du Sec teur Financier

(CSSF). In 2024, 0.78% of the total loan portfolio of Luxembourg banks was classified as non-performing, the highest level ever recorded. This values exceed s the previous peak of 0.64% in 2011 and well above the historical low of 0.12% observed in 2007. Regarding bankruptcies among all firms in Luxembourg, there were 1 163 cases in 202 4, marking an increase from the 918 reported in 2023. Over the reference period (i.e. 2007 – 2024), the number of bankruptcies ranged from 574 in 2007 to a peak of 1 262 in 2019.8 

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Government policy response Several measures have been implemented to facilitate SME financing. On 24 March 20 25 the Minister of the Economy and the Minister of Finance presented an action plan entitled “10 Action Points for Start-ups.” The plan is based on the roadmap From Seed to Scale (Ministry of the Eco nomy (2023 ) reinforces Luxembourg’s efforts to support start -ups and promote scale-up growth. It introduces tax incentives to stimulate private investment in young innovative firms, expands support for deep-tech and sector-specific incubators, and develops new financial instruments to strengthen venture-capital funding. Additional measures include the creation of an AI Experience Centre and an AI Factory to accelerate the development and adoption of advanced technologies. the Société Nationale de Crédit et d’In vestissement (SNCI) will allocate EUR 300 million over five years to support these initiatives. (Gouvernem ent du Grand Duché de Luxembourg, 2025). Government guaranteed loans A government-guaranteed loan is a financial arrangement where a firm obtains a loan from its regular bank

allocate EUR 300 million over five years to support these initiatives. (Gouvernem ent du Grand Duché de Luxembourg, 2025). Government guaranteed loans A government-guaranteed loan is a financial arrangement where a firm obtains a loan from its regular bank with the backing of a state guarantee. The availability of the AnaCredit dataset, which provides detailed information on individual bank loans exceeding EUR 25 thousand, allows us to estimate the amount of government-guaranteed loans. According to the AnaCredit dataset, government-guaranteed loans amounted to EUR 0.8 billion in 2024 . This is a gradual decrease from EUR 1 billion in 2023, EUR 1.6 billion in 2022 and EUR1 billion in 2021. During the same period, government loan guarantees to SMEs totalled EUR 0.9 billion in 2024, compared to EUR 0.7 billion in 2023, EUR 1.3 billion in 2022, and EUR 0.8 billion in 2021. These figures emphasise the countercyclical nature of these loans and highlight the government's commitment to s upporting SME financing during the COVID-19 pandemic. Funding for Research, Development, and Innovation (RDI). The Luxembourg law of 6 June 2025 renews the national framework for state aid to research, development and innovation (RDI) and supersede previous law of May 17, 2017.new law updates existi ng instruments to reflect current economic and technological priorities, including dedicated provi sions for artificial intelligence and cybersecurity, and aligns national support with EU RDI fun ding rules. The law also introduces targeted measures for business creation and adds a new aid category specifically for S MEs. All manufacturing and service firms based in Luxembourg that are not in severe financ ial difficulty are eligible for financing. RDI projects are expected to have an economic impact. Addition ally, an 'Effect of Incentive' criterion is applied, meaning aid cannot be granted if the project could be e xecuted in the same manner without such funding. Beneficiaries must ensure that IP-protected research results can be licensed

eligible for financing. RDI projects are expected to have an economic impact. Addition ally, an 'Effect of Incentive' criterion is applied, meaning aid cannot be granted if the project could be e xecuted in the same manner without such funding. Beneficiaries must ensure that IP-protected research results can be licensed at market prices on a non-exclusive, non-discriminatory basis. The aid covers the eligible costs for RDI projects, with maximum rates varying depending on the project type and company size. SME firms may be eligible for increased aid. SME status is determined by having fewer than 250 empl oyees and either an annual turnover under EUR 50 million or a balance sheet total below EUR 43 mi llion. This assessment is conducted at the group level, including the applying company and any associated entities forming a single economic unit. According to the activity report of the Ministry of Economy, in 2024, a total of 116 projects or programmes falling within the scope of the revised law (May 17, 2017) were assessed, compared to the 105 projects of the previous year. The total costs of these RDI projects amount to nearly EUR 173.2 million, of which EUR 93.1 million are covered by governmental grants. About 33% of projects had a budget exceeding EUR 1 million. 9

FINANCING SMES AND ENTREPRENEURS 2026: LUXEMBOURG © OECD 2026

Figure 4. Evolution of the share of projects undertaken according to company size Percent

Source: Evolution of the share of projects undertaken according to company size.

Since 2016, the proportion of projects carried out by SMEs has surpassed that of large enter prises (See Figure 4). In 2024, SMEs accounted for 73% of RDI projects. This is a slight decrease from 78% in 2023. Aid scheme for SMEs The implementation of the amended law of August 9, 2018, in favor of SMEs continued in 2024, with 1,238 projects receiving positive approval (see Figure 5).

Aid scheme for SMEs The implementation of the amended law of August 9, 2018, in favor of SMEs continued in 2024, with 1,238 projects receiving positive approval (see Figure 5). Figure 5. Evolution of applications submitted in the context of the law concerning the aid scheme for SMEs Number of applications

Source: Ministère de l’Economie (Rapport d’activité 2024, p. 37)

0 10 20 30 40 50 60 70 80 90 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Large firms SMEs 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2015 2016 2017 2018 2019 2020 2021 2022 2023 202410 

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The planned expenditure for all these projects amounts to EUR 152.6 million, with EUR 24.7 mill ion in aid granted. Most of the investment and aid was granted to companies in the crafts, trade, and h ospitality sectors. The aid schemes for SMEs are composed of the following programmes: Programme Fit4Digital The Fit4Digital program supports the competitivity of SMEs in the implement ation of their digital strategy. In 2024, 29 demands have registered and EUR 145 000 aid granted. SME Packages In the context of the energy crisis, the government has launched a support program to help SMEs in their energy and digital transitions. 382 demands have been registered and EUR 1.9 milli on aid has been granted through the different SME packages. Temporary environmental impact assistance To further encourage businesses to invest in measures that substantially improve their environmental

energy and digital transitions. 382 demands have been registered and EUR 1.9 milli on aid has been granted through the different SME packages. Temporary environmental impact assistance To further encourage businesses to invest in measures that substantially improve their environmental impact, temporary aid, up to a maximum amount of EUR 100 000, has been introduced as pa rt of the measures taken by the logement task force and has been extended until June 30, 2025. In 2024, 58 applications were granted for a total amount of €3.8 million. Equipment credits Equipment credit is a common tool used by the SNCI (Société Nationale de Crédit et d’Investissement) to help SMEs finance their investments. In 2024, EUR 6.3 million credit equipment wer e given to craft businesses, EUR 1.6 million to trade businesses and EUR 2 million to hospitality businesses. Other measures The Digital Tech Fund is a CSSF-approved early-stage venture capital fun d of nearly EUR 40 million, managed by Expon Capital. Established as a partnership between the Luxembourg government and private investors, it aims to finance and support technology start-ups in ICT, a priority sector for national economic diversification. Since becoming operational in May 2016, the fund has made 17 investments, including in Aydo and Marketleap in 2024. Its portfolio is gradually reaching maturity, driven by the growth of supported companies, which now employ around 500 people in areas such as cybers ecurity, space, fintech and e-commerce (Ministère de l’Économie, 2025). In 2021 the Orbital Ventures, a public-private partnership was set up to advance space economy. With an initial endowment of EUR 70 million , the fund invests in early-stage companies and focuses on space technologies including downstream (communications, cryptography, data storage, and processing geolocation earth observation) and upstream (space, hardware, materials, electronics, robotics, rockets satellites) areas. End 2021, the European Investment Fund (EIF) committed also to Orbital Ventures and

technologies including downstream (communications, cryptography, data storage, and processing geolocation earth observation) and upstream (space, hardware, materials, electronics, robotics, rockets satellites) areas. End 2021, the European Investment Fund (EIF) committed also to Orbital Ventures and the fund closed at EUR 120 million. The Luxembourg Future Fund 2 (LFF 2), launched in 2023, is a EUR200 million inves tment programme jointly managed by European Investment Fund (EIF) (up to EUR40 million) and Société Nationale de Crédit et d’Investissement (SNCI) (up to EUR160 million). It succeeds the first fund (LFF 1) and supports Luxembourg’s economic diversification by investing in VC/private equity funds and innovative businesses through both early-stage and more mature hybrid debt-equity instruments across sectors suc h as climate tech, fintech, cybersecurity, energy, life sciences and space. (EIF, 2023) 11

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