This exceptional social situation can be explained by a great labour and political stability. The poor number of strikes, low unemployment rate and incredibly low income tax rate for individuals (39% maximum) helps the nation have a very stable situation compared to other countries in Europe. The maximum VAT rate is 15%, the lowest in the European Union. Salaries are subject to a yearly indexation, which allows workers to build themselves a wealthy and durably stable situation. Moreover, its citizens benefit from a valuable social security system. Parental leave is automatically granted to both parents, and is usually taken for a full time period of 6 months, as it is recommended by the social security to parents willing to take care of their children under the age of five.
In terms of financial economic activities, Luxembourg is known as a centre of excellence for private banking and investment funds. It is the second place in the world for domiciled funds behind the United States, with $ 2,1 trillion of assets under management in 2010 and more than 11,900 investment funds and sub-funds. More than 26000 employees work in the 128 banks in Luxembourg. The Luxembourgish market place is also being recognised for its new innovative international solutions including: securitisation, SICARs (Société d'Investissement à Capital Risque), Real Estate vehicles, pension funds, and SIFs (Specialised Investment Fund).
Thanks to its exceptional economic situation, Luxembourg also welcomes big industrial firms (e.g.: Arcelor Mittal, Goodyear, Guardian, Dupont) as well as many multinational groups which manage most of their activities from their Luxembourgish headquarters (e.g.: Skype and Amazon). Its strategic geographical situation at the heart of Europe also attracts many transports and logistics firms (e.g.: Cargolux, Panalpina and DHL), which makes of Luxembourg a great European hub.
Luxembourg also values the development of new sectors (i.e. research centres, e-commerce, biotech, green business) enabling a diversification of its economy.
A number of major EU institutions are located in the Kirchberg quarter, including the European Court of Justice, the Secrétariat-Général of the European Parliament and the European Investment Bank.