Since Luxembourg became a tax haven in the 1980s, several dozen German banks have established subsidiaries there, mostly for private wealth management. Today, 49 German banks represent the largest single group of foreign financial institutions in Luxembourg.
The Grand Duchy’s existence has been very convenient for rich Germans, most of whom made their fortune during the nation’s post-World War II economic boom. True, they had the choice of putting their savings in intensely-secret and tax-free Switzerland, but the odds were that their “house bank” back home had a presence in Luxembourg. This way, they could enjoy all the benefits of Switzerland without the hassle and cost of opening a new account.
