How did Luxembourg’s 1929 tax policy attract holding companies?

In 1929, the Luxembourgish government implemented a policy to encourage the registration of holding companies within the country. By establishing a liberal tax climate, the government provided an attractive alternative for large corporations that were otherwise heavily taxed in many other nations.1

This policy allowed these corporations, which control various subsidiary companies, to maintain offices—often serving as their European headquarters—within Luxembourg city. This strategic move was a key factor in the country's development into a prominent international financial centre.1