Luxembourg’s space industry tipped to grow

Isabelle Charlier and Aurélie Caillard, who respectively specialise in corporate and technology law at Pinsent Masons, said developments in recent years help differentiate Luxembourg from other European countries as an attractive place to establish a space company.

Luxembourg’s space industry has its roots with the establishment of satellite communications company the Société Européenne des Satellites (SES) in 1985 and has developed ever since. Today, Luxembourg has its own Space Agency, which is tasked with attracting industry investment, as well as specific legislation that provides for authorisation of rights to explore and use ‘space resources’ and carry out ‘space activities’.

According to Luxembourg government, more than 70 companies and public bodies comprise Luxembourg’s space industry and together employ around 1,400 people.

Late last year, the Luxembourg government and Space Agency published a new space strategy for the period 2023 to 2027. The strategy (12-page / 147KB PDF) aims to support the government’s objectives of making space one of Luxembourg's “economic pillars” – the space sector has been estimated as accounting for between 2% and 4% of Luxembourg’s gross domestic product (GDP) in recent years.

The strategy identifies the potential for space infrastructures to contribute to social, environmental and security issues, and highlights the need for responsible space activities amidst the proliferation of space debris. Sustainability is therefore a core theme of the strategy, with actions identified including to ensure space activities arising from Luxembourg are sustainable, and that skills in space traffic management and in in-orbit services are strengthened and developed.

The strategy also highlights the government’s intention to simplify the process for registering space objects and develop further regulation in respect of very high-resolution Earth observation data and on the return of astronauts and the restitution of objects launched into outer space.

An up-to-date legal framework that reflects international agreements and best practice is just one of a number of important factors in attracting foreign investment into Luxembourg and its space industry specifically, according to Charlier and Caillard.

Isabelle Charlier said: “Luxembourg is already a highly regarded international centre for business, with it being a major financial services and legal centre with strong transport links. Luxembourg’s economy supports high-skilled jobs and associated high wages, and this promotes a good standard of living. While real estate is expensive, businesses benefit by having access to capital, legal services, and talent, as well as a generous tax and incentives regime.”

“In the space sector specifically, the strong local start-up and research community offers multinational aerospace companies, such as those established in the US, opportunities to enter the Luxembourg market via mergers, acquisitions or other forms of partnerships. With further regulation proposed and a clear drive to ensure Luxembourgish businesses are at the heart of space sustainability initiatives, we are likely to see continued growth in the Luxembourg space sector over the years ahead,” she said.

Aurélie Caillard said: “For foreign businesses looking to establish operations in Luxembourg, it will be important to consider compliance with foreign direct investment rules. There are potentially advantageous corporate and tax structures that can be established too, while local legislative requirements also need to be considered in areas such as employment law and, for example, data protection – there are restrictions around the international transfer of personal data under the General Data Protection Regulation (GDPR) that may need to be navigated, for example.”