Eco&Stat n°02-2026 - Determinants of the profitability of firms in Luxembourg

Luxembourg ranks among the least profitable European economies when using the Gross Operating Rate (GOR) as the profitability indicator. This study provides an explanation for this observation. GOR is heavily influenced by the country’s large share of négoce activities (merchanting, subcontracting, and distributive trade) in turnover. Overall, négoce negatively affects GOR across European countries, with a stronger impact for Luxembourg than for others. In absolute terms, Luxembourg’s Gross Operating Surplus has grown strongly—by more than 50% between 2008 and 2020—indicating that the economy does generate substantial profits. The study also highlights that profitability measurement should not rely on a single metric for broad aggregates. In particular, using the margin rate instead of GOR improves Luxembourg’s relative positioning.