EUROPEAN COMMISSION

Brussels, 18.6.2021

COM(2021) 332 final

2021/0160(NLE)

Proposal for a

COUNCIL IMPLEMENTING DECISION

on the approval of the assessment of the recovery and resilience plan for Luxembourg

{SWD(2021) 159 final}

2021/0160 (NLE)

Proposal for a

COUNCIL IMPLEMENTING DECISION

on the approval of the assessment of the recovery and resilience plan for Luxembourg

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility 1 and in particular Article 20 thereof,

Having regard to the proposal from the European Commission,

Whereas:

(1)The COVID-19 outbreak has had a disruptive impact on the economy of Luxembourg. In 2019, the gross domestic product per capita (GDP per capita) of Luxembourg was 328 % of the EU average. According to the Commission’s Spring 2021 forecast, the real GDP of Luxembourg declined by 1,3% in 2020 and is expected to increase by 3,1% cumulatively in 2020 and 2021. Longer-standing aspects with an impact on medium-term economic performance include in particular relatively low activity rates, notably for older workers, and a shortage of skilled labour, exacerbated by rising property prices, which prevents businesses from taking full advantage of the opportunities offered by the green and digital transitions to diversify the economy.

(2)On 9 July 2019 and on 20 July 2020, the Council addressed recommendations to Luxembourg in the context of the European Semester. In particular, the Council recommended to (i) take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery, and when economic conditions allow, pursue fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment; improve the resilience of the health system by ensuring appropriate availability of health workers, and accelerate reforms to improve the governance of the health system and e-Health; (ii) mitigate the employment impact of the crisis, with special consideration for people in a difficult labour market position; (iii) ensure effective implementation of measures supporting the liquidity of businesses, in particular small and medium-sized enterprises and the self-employed, front-load mature public investment projects, promote private investment to foster the economic recovery, focus investment on the green and digital transition, in particular on sustainable transport and buildings, clean and efficient production and use of energy, contributing to a progressive decarbonisation of the economy, and foster innovation and digitalisation in particular in the business sector; (iv) ensure effective supervision and enforcement of the anti-money laundering framework as regards professionals providing trust and company services, and investment services, as well as step up action to address features of the tax system that facilitate aggressive tax planning, in particular by means of outbound payments. Having assessed progress in the implementation of these country-specific recommendations at the time of submission of the recovery and resilience plan, the Commission finds that the recommendation on taking, in line with the general escape clause, all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery, has been fully implemented. Substantial progress has been achieved with respect to the recommendation on the support of the liquidity of businesses and the recommendation on front-loading mature public investments projects to foster the economic recovery.

(3)[The Council recommendation on the economic policy of the euro area 2 recommended to euro area Member States to take action, including through their recovery and resilience plans, to, inter alia, ensure a policy stance which supports the recovery and to further improve convergence, resilience and sustainable and inclusive growth. The Council recommendation also recommended to strengthen national institutional frameworks, to ensure macro-financial stability and to complete the Economic and Monetary Union and strengthen the international role of the euro.] [If the Council recommendation is not adopted by the time of the CID adoption, please remove the recital].

(4)On 30 April 2021, Luxembourg submitted its national recovery and resilience plan to the Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. That submission followed a consultation process, conducted in accordance with the national legal framework, of local and regional authorities, social partners, civil society organisations, youth organisations and other relevant stakeholders. The national ownership of the recovery and resilience plans is underpinning their successful implementation and lasting impact at national level and credibility at European level. Pursuant to Article 19 of that Regulation, the Commission has assessed the relevance, effectiveness, efficiency and coherence of recovery and resilience plan, in accordance with the assessment guidelines of Annex V to that Regulation.

(5)The recovery and resilience plans should pursue the general objectives of the Recovery and Resilience Facility established by Regulation (EU) 2021/241 and of the EU Recovery Instrument set up by Council Regulation (EU) 2020/2094 in order to support the recovery in the aftermath of the COVID-19 crisis. They should promote the Union´s economic, social and territorial cohesion by contributing to the six pillars referred to in Article 3 of Regulation (EU) 2021/241.

(6)The implementation of the Member States’ recovery and resilience plans will constitute a coordinated effort of investment and reforms across the Union. Through the coordinated and simultaneous implementation of these reforms and investments and the implementation of cross-border projects, these reforms and investments will mutually reinforce each other and generate positive spill-overs across the whole Union. Therefore, about one third of the impact of the Facility on Member States’ growth and job creation will come from spill-overs from others Member States.

Balanced response contributing to the six pillars

(7)In accordance with Article 19(3) point (a) and section 2.1 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan represents to a large extent (Rating A) a comprehensive and adequately balanced response to the economic and social situation, thereby contributing appropriately to all six pillars referred to in Article 3 of Regulation (EU) 2021/241, taking the specific challenges and the financial allocation of the Member State concerned into account.

(8)Luxembourg presents a broad range of investments and reforms in the recovery and resilience plan. In addition, Luxembourg plans to complement the support under Regulation (EU) 2021/241 through the use of additional national funds for the implementation of the investments and reforms included in the plan. This structure involving additional national funds allows Luxembourg to include measures contributing reasonably to all the six pillars of Article 3 of that Regulation in spite of its limited maximum financial contribution.

(9)Luxembourg’s selection of measures puts a strong emphasis on the green and digital transition, with a 60,9 % climate contribution and a 31,6 % digital contribution, well above the corresponding minimum allocations of respectively 37 % and 20 %. The green components of the recovery and resilience plan are also broadly consistent with Luxembourg’s National Energy and Climate Plan, while some projects proposed in the plan are also part of broader strategies, such as one dedicated to the knowledge-based economy. The recovery and resilience plan also features a relatively strong social dimension (skills, health and housing), thereby enhancing economic, social and territorial cohesion.

Addressing all or a significant subset of challenges identified in Country Specific Recommendations

(10)In accordance with Article 19(3) point (b) and section 2.2 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to contribute to effectively addressing all or a significant subset of challenges (Rating A) identified in the relevant country-specific recommendations, including fiscal aspects thereof, addressed to Luxembourg or challenges identified in other relevant documents officially adopted by the Commission in the context of the European Semester.

(11)The recommendations related to the immediate fiscal policy response to the pandemic can be considered as falling outside the scope of Luxembourg’s recovery and resilience plan, notwithstanding the fact that Luxembourg has generally responded adequately and sufficiently to the immediate need to support the economy through fiscal means in 2020 and 2021, in line with the provisions of the General Escape Clause.

(12)The plan includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Luxembourg by the Council in the European Semester in 2019 and in 2020 on (i) labour market policies (addressing skills mismatches, enhancing the employability of older workers), (ii) the resilience of the healthcare system, (iii) increasing available housing, (iv) the green transition (investments in renewable energy generation, sustainable transport, environmental protection and biodiversity), (v) the digital transition (improving connectivity and digital skills of the population, and fostering the digitalisation of firms and public administration), (vi) effective supervision and enforcement of the anti-money laundering framework.

(13)A major contribution to skills development is provided by investments in vocational training programmes for job seekers and workers placed on short-time work scheme, respectively. Those vocational training programmes should also contribute to mitigating the employment impact of the crisis. The plan also includes a complementary reform which should design further vocational training programmes for the most promising job profiles.

(14)The resilience and governance of the health system are expected to be strengthened by reforms and investments aimed at addressing some of the structural problems of the health sector in Luxembourg – the lack of health professionals and the need to increase the efficiency of the health system – notably through its digitalisation. The reform aiming at performing a legislative recast of the competences of a number of health professionals should increase the attractiveness of health professions and respond to the shortage of care practitioners in a context of increasing demand for care. Investments should also help develop the digitalisation of the health sector with interoperability in mind. The single digital register for health professions should enable to manage data on health professionals in Luxembourg, allowing short- to medium-term demographic projections and to better identify the need for physicians by field of expertise, and geographical areas. This should contribute to anticipating shortages of professionals. The development of teleconsultations is also a way to limit pressure on health professionals, while reducing the need for physical travelling in the context of the COVID-19 pandemic.

(15)The recovery and resilience plan should contribute to improving the sustainability of transport. It includes a reform to promote the purchase of zero- or low-emission vehicles by procuring authorities and entities, and an investment to further deploy a network of charging points for electric vehicles across the country.

(16)Protection of natural environment and biodiversity is pursued by measures encouraging municipalities to invest in improving the natural environment and biodiversity status of their urban, open, aquatic, and forest areas.

(17)Increase in housing supply should be supported through investments and reforms, notably by increasing incentives and lifting barriers to build. The legislative recast of the Housing Pact should incentivise municipalities to create affordable housing. The generation of renewable energy as part of the ‘Neischmelz’ investment project should support the creation of a new housing district, as well as contribute to the clean production of energy.

(18)The recovery and resilience plan includes investments in digitalisation and innovation and serves the digital transition. Training programmes FutureSkills and Digital Skills put the emphasis on developing digital skills. The investments in an interoperable digital register of healthcare professionals, and telemedicine should support the digitalisation of healthcare. The measures to promote a data-based economy should reinforce the security of personal data by the implementation of highly innovative ultra-secure quantum communication solutions. The effectiveness and efficiency of public administrations and their services should be increased through their digitalisation and by improving their interoperability.

(19)The plan also includes a number of reforms to support addressing the country-specific recommendation calling on Luxembourg to ensure effective supervision and enforcement of the anti-money laundering framework as regards professionals providing trust and company services, and investment services. These reforms are designed to reinforce the anti-money laundering framework and its enforcement, to better use data registered on legal persons, to better understand risks of money laundering and terrorist financing as a basis for targeted mitigation measures, as well as to clarify applicable sanctions. Moreover, the regime applicable to trust and company service providers will be reviewed and reinforced through a modification of the relevant legislation.

(20)The plan includes a legislative measure prohibiting the deductibility of outbound royalties and interest payments to non-cooperative tax jurisdictions, which entered into force on 1 March 2021. However, this measure corresponds to the implementation of an agreement reached at EU Council level in December 2019, applying to all Member States, irrespective of whether they have been given a recommendation to address aggressive tax planning in the context of the European Semester.

Contribution to growth potential, job creation and economic, social and institutional resilience

(21)In accordance with Article 19(3) point (c) and section 2.3 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to have a high impact (Rating A) on strengthening the growth potential, job creation, and economic, social and institutional resilience of Luxembourg, to which a well-functioning internal market is key, contributing to the implementation of the European Pillar of Social Rights, including through the promotion of policies for children and youth, and on mitigating the economic and social impact of the COVID-19 crisis, thereby enhancing the economic, social and territorial cohesion and convergence within the Union.

(22)Simulations by the Commission services show that the plan has the potential to increase the GDP of Luxembourg by between 0,5 % and 0,8 % 3 by 2026. The recovery and resilience plan includes a significant number of reforms and investments that will address the impact of the crisis, strengthen Luxembourg’s growth potential as well as its economic, social and institutional resilience. The investments and reforms of the plan are expected to promote a recovery consistent with the green and digital transitions. They are also expected to contribute to solving the persistent shortage of skilled labour, a limiting factor for growth and investment, in particular in information and communication technologies and health. In particular, the plan includes several measures to provide jobseekers with continuous on-line programmes designed to develop digital and other future-oriented skills, developed by the reformed Agency for the Development of Employment (ADEM) to increase employment opportunities. Other measures of the broader digital governance strategy are expected to contribute to foster digital integration in the private sector, notably by placing users experience at the centre. The measures included in the plan also support an improved accessibility to housing, cleaner and more efficient transportation systems and improved accessibility and quality of the health system.

(23)The recovery and resilience plan envisages significant investments to address social challenges and improve social cohesion, and integration of vulnerable groups. In particular, one measure of the plan includes a target for the participation of older workers to foster their participation and to facilitate the integration in the labour market of the people that might more likely be lacking up-to-date digital skills. The plan aims at reaching one of the headline targets of the European Pillar of Social Rights Action Plan for the EU by 2030, namely that at least 60 % of all adults should be participating in training every year by 2030. In addition, investments in the plan to strengthen the health system are expected to benefit the most vulnerable people. This is also expected to contribute to the implementation of the European Pillar of Social Rights and social cohesion through improving accessibility to healthcare in underserved areas.

Do no significant harm

(24)In accordance with Article 19(3) point (d) and section 2.4 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to ensure that no measure (Rating A) for the implementation of reforms and investments projects included in the recovery and resilience plan does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council 4 (the principle of ‘do no significant harm’).

(25)Luxembourg’s recovery and resilience plan includes a systematic assessment of each measure against the principle of ‘do no significant harm’. The information provided allows to assess that measures will comply with the principle, for instance, by providing justifications on the modalities of application of the existing EU and Luxembourg legislative framework to avoid any significant harm.

Contribution to the green transition including biodiversity

(26)In accordance with Article 19(3) point (e) and section 2.5 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan contains measures that contribute to a large extent (Rating A) to the green transition, including biodiversity, or to addressing the challenges resulting therefrom. The measures supporting climate objectives account for an amount which represents 60,9 % of the plan’s total allocation, calculated in accordance with the methodology of Annex VI to Regulation (EU) 2021/241. In accordance with Article 17 of Regulation (EU) 2021/241, the recovery and resilience plan is consistent with the information included in the National Energy and Climate Plan 2021-2030.

(27)Luxembourg’s recovery and resilience plan puts a strong focus on the green transition. A significant part of the investments will be dedicated to projects in that area. The plan includes a measure consisting in deploying renewable energy generation capacity on a specific site, in an innovative way. Luxembourg will put into place a support scheme for electric vehicles charging points. It will also support biodiversity protection and restoration actions through conventions between the government and municipalities. Other challenges, such as the energy renovation of buildings, do not feature prominently in any investment measure and this is largely explained in the context of the low maximum financial contribution. This is also the case for the development of the public transport infrastructure, which, however, Luxembourg is pursuing independently of the support provided under Regulation (EU) 2021/241.

(28)Overall, the measures described in the plan are expected to have a lasting impact on the green transition. They are expected to make a significant contribution to advancing national climate and energy objectives as set out in Luxembourg’s National Energy and Climate Plan, which requires additional measures. They are also expected to contribute to the Union’s energy and climate targets for 2030 and the objective of EU Union climate neutrality by 2050.

Contribution to the digital transition

(29)In accordance with Article 19(3) point (f) and section 2.6 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan contains measures that contribute to a large extent (Rating A) to the digital transition or to addressing the challenges resulting from it. The measures supporting digital objectives account for an amount which represents 31,6 % of the plan’s total allocation, calculated in accordance with the methodology of Annex VII to Regulation (EU) 2021/241.

(30)A set of measures included in Luxembourg’s recovery and resilience plan contributes to the digital transition. A number of investments aim at digitalising public administration and the services provided as well as the health system, with a view to increasing their effectiveness, efficiency and interoperability. The plan also includes investments to develop basic and advanced digital skills. This should promote digitalisation and innovation and contribute to meeting demand on the labour market.

(31)Luxembourg’s recovery and resilience plan also includes measures to address the challenges resulting from the digital transition. One of the investments included is the development of an ultra-secure communication infrastructure based on quantum technology, which should contribute to personal data security, a major challenge of the transition. The plan also aims to digitalise the Agency for the Development of Employment (ADEM) to improve the efficiency of the public authorities in ensuring satisfaction of labour market needs.

Lasting impact

(32)In accordance with Article 19(3) point (g) and section 2.7 of Annex V to Regulation (EU) 2021/241, the recovery and resilience plan is expected to have a lasting impact on Luxembourg to a large extent (Rating A).

(33)The implementation of the investments and reforms envisaged by Luxembourg in its plan has been designed as an additional lever to support Luxembourg in the achievement of its long-term objectives. The measures presented in the plan focus on innovative and sustainable economic activities with significant exploitation potential. Through many innovative projects, Luxembourg is diversifying its economic activity, creating new investment opportunities, and embarking on a more resilient growth path. In addition, the recovery and resilience plan aims at providing an adequate response to the current health crisis, which is likely to aggravate existing inequalities. Lasting impact of the plan can also be enhanced through synergies between the plan and other programmes, including those financed by the Cohesion policy Funds.

(34)All three pillars of the recovery and resilience plan aim at structural changes in policies. The initiatives promoting digital skills aim to strengthen and diversify the professional skills of jobseekers and employees on short-time working schemes, with a particular focus on the development of digital skills. In a longer-term perspective, the reforms included in the plan to foster lifelong learning and improve the adequacy of training to the needs of the labour market should make the labour market more resilient. Measures included in the plan should contribute to the improvement of resilience and performance of the health sector by addressing the shortage of health professionals and skills, promoting better governance and the digitisation of the health sector, including telemedicine. Measures to accelerate the decarbonisation of transport are expected to contribute positively to the green transition by promoting the use of renewable energy sources and by creating new ‘green’ jobs. Moreover, in order to promote a more transparent and fairer economy, reforms included in the plan aim at strengthening the legal supervisory framework for the fight against money laundering and terrorist financing. Therefore, it can be concluded that the reforms and investments are expected to bring a lasting structural change to relevant policies.

Monitoring and implementation

(35)In accordance with Article 19(3) point (h) and section 2.8 of Annex V to Regulation (EU) 2021/241, the arrangements proposed in the recovery and resilience plan are adequate (Rating A) to ensure effective monitoring and implementation of the recovery and resilience plan, including the envisaged timetable, milestones and targets, and the related indicators.

(36)Luxembourg has presented a robust system of audit and controls with a clear institutional structure, task allocation and reporting mechanisms that should ensure a thorough monitoring of the implementation of milestones and targets. The Directorate for Economic and Budgetary Affairs within the Ministry of Finance has overall responsibility for the plan and acts as a single point of contact for the Commission. This service, which acts as managing department, is also responsible for drawing up the payment request and management declarations and it coordinates and monitors the implementation of the recovery and resilience plan. The managing department is responsible for aggregating all the information relating to the indicators for which it also carries out consistency checks and, more generally, quality control. Luxembourg has indicated that an IT system for the management and reporting of the milestones and targets is being developed in order to meet the specific management and reporting requirements described in the plan. In accordance with Article 20(5) point (e) of Regulation (EU) 2021/241, Luxembourg should implement this measure in order to comply with Article 22 of that Regulation, by confirming the status of its implementation before the first payment request. A dedicated audit on the system shall be undertaken. The report should analyse any related weaknesses found and corrective actions taken or planned. This should ensure in particular that Luxembourg has a system meeting relevant requirements. Accordingly, a milestone has been introduced in order to ensure that the system is implemented before the first payment request is made.

(37)The General Finance Inspectorate (Inspection Générale des Finances – “IGF”), which is also the audit authority for shared management funds, should act as the audit authority for the implementation of the plan. Based on Luxembourg’s decision to submit one payment request per year, the audit authority should carry out audits of operations and a system audit every year, resulting in an annual audit report. In that report, it will assess whether the management and control system is functioning effectively, so as to provide reasonable assurance that the milestones and targets declared in the payment requests submitted to the Commission are correct. The audit authority is independent from the managing department, which ensures an appropriate separation of functions.

(38)Milestones and targets are also relevant for measures already completed which are eligible according to Article 17(2) of the Regulation. The satisfactory fulfilment of these milestones and targets over time is required to justify a disbursement request.

(39)Member States should ensure that financial support under the Facility is communicated and acknowledged in line with article 34 of Regulation (EU) 2021/241. Technical support may be requested under the Technical Support Instrument to assist Member States in the implementation of their plan.

Costing

(40)In accordance with Article 19(3) point (i) and section 2.9 of Annex V to Regulation (EU) 2021/241, the justification provided in the plan on the amount of the estimated total costs of the recovery and resilience plan is to a medium extent (Rating B) reasonable and plausible, is in line with the principle of cost efficiency and is commensurate to the expected national economic and social impact.

(41)For each reform and investment in the recovery and resilience plan, Luxembourg has provided an explanation and submitted documentation to substantiate the cost estimates. The cost information received is in general considered to be complete and understandable, even though for some measures, further evidence and a better explanation of the underlying assumptions could have been provided so as to achieve an A rating. The General Finance Inspectorate (IGF) has verified all measures covered in the recovery and resilience plan to ensure that the estimated costs are reasonable and plausible. However, no documentary evidence of this verification was submitted. Based on the information received, the estimated costs are “reasonable” to a medium extent for a large majority of the reforms and investments. Luxembourg has overall provided limited historical and comparative cost information to assess the plausibility of cost estimates. For measures started from 1 February 2020 onwards, invoices, tender documents and project plans of the planned investments were provided. Therefore, the estimated costs are “plausible” to a medium extent for the large majority of reforms and investments. Finally, the estimated total cost of the recovery and resilience plan is in line with the principle of cost-efficiency and is commensurate to the expected national economic and social impact.

(42)Luxembourg provided sufficient information and evidence that the amount of the estimated cost of the reforms and investments of the recovery and resilience plan to be financed under Regulation (EU) 2021/241 will not be covered by existing or planned Union financing.

Protection of financial interests

(43)In accordance with Article 19(3) point (j) and section 2.10 of Annex V to Regulation (EU) 2021/241, the arrangements proposed in the recovery and resilience plan and the additional measures contained in this Decision are adequate (Rating A) to prevent, detect and correct corruption, fraud and conflicts of interests when using the funds provided under that Regulation, and the arrangements are expected to effectively avoid double funding from that Regulation and other Union programmes. This is without prejudice to the application of other instruments and tools to promote and enforce compliance with EU law, including for preventing, detecting and correcting corruption, fraud and conflicts of interests, and for protecting the Union finances in line with Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council.

(44)Concerning the prevention, detection and correction of serious irregularities, the plan describes the national organisational structure covering the tasks to be performed based on a risk mapping, responsibilities and how they should prevent, detect and correct fraud, corruption and conflicts of interest wherever they occur. The use of the single data-mining and risk scoring tool to be provided by the Commission is also confirmed. The results of the controls should be summarised in a report drawn up during the control of expenditure. However, not all procedures for the protection of the financial interests of the Union described in the plan are already in place and they are expected to be completed by the fourth quarter of 2021. In accordance with Article 20(5) point (e) of Regulation (EU) 2021/241, Luxembourg should implement these procedures in order to comply with Article 22 of that Regulation, by confirming the status of their implementation before the first payment request. This should ensure in particular that Luxembourg has a system meeting relevant requirements. Accordingly, a milestone has been introduced in order to provide assurance on the protection of the financial interest of the Union before the first payment request is made.

(45)Specific measures are implemented to check compliance with the rules relating to public procurement, to prevent corruption and to protect financial interests. The General Finance Inspectorate’s audit approach should be based on an annual system audit covering the system in place for the reporting of the milestones and targets and covering also the internal control system for preventing, detecting and correcting fraud, conflict of interest, corruption and double financing, and annual audits of operations based on an adequate sample.

Coherence of the plan

(46)In accordance with Article 19(3) point (k) and section 2.11 of Annex V to Regulation (EU) 2021/241, the plan includes to a high extent (Rating A) measures for the implementation of reforms and public investment projects that represent coherent actions.

(47)Luxembourg’s recovery and resilience plan consists of eight components with a balanced combination of investments and reforms. Each component is built as a coherent combination of measures and has also synergies with the rest of the plan. In this way, investments and reforms included in the plan, either in the same component or in different components, reinforce or complement each other, and no measure contradicts or undermines the effectiveness of another.

Equality

(48)Equal opportunities in the form of equal access of all to public administration procedures and training, as well as digital inclusion have been mainly considered in the design of components 1A (“Skilling, reskilling and upskilling”) and 3B (“Modernisation of public administration”). Persons with lower digital skills, older persons, and those not possessing a smartphone have been given special consideration in the design of the measures forming those components. Furthermore, the investment in telemedicine as part of component 1B (“Increasing the resilience of health system”) ensures the availability of service via telephone and email to cater for the digital inclusion of persons with lower digital skills and older persons. Lastly, the Housing Pact 2.0 reform in component 1C (“Increasing the supply of public affordable and sustainable housing”) aims at broadening access to housing for low-income households experiencing difficulties in acquiring or renting a dwelling on the private market.

Security self-assessment

(49)A security self-assessment has not been provided as it has not been considered appropriate by Luxembourg, in accordance with Article 18(4) point (g) of Regulation (EU) 2021/241.

Cross-border and multi-country projects

(50)The recovery and resilience plan allocates a substantial amount to an investment in quantum communication infrastructure, which falls under the European Quantum Communication Infrastructure Initiative (EuroQCI). This targeted funding and investment is geared towards a strategic area, as identified in the updated European industrial strategy and will contribute to building capacity and laying groundwork for increasing resilience. It will build a new ecosystem in Luxembourg creating highly qualified expertise and jobs in an advanced digital technology. It will also include the development and deployment of cross-border links between neighbouring national quantum communication networks.

Consultation process

(51)The draft recovery and resilience plan was presented to the parliamentary Finance and Budget Committee, the feedback of which has informed the finalisation of the plan. Following its adoption by the government, the plan has been presented to the parliamentary committees concerned, as well as to the plenary. Members of the Parliament expressed their views at the subsequent debate ahead of the formal submission. Social partners have been presented the draft recovery and resilience plan, and have shared their views about the priorities to be reflected in the plan. Following the adoption of the plan by the government, a new presentation to the social partners took place. To ensure ownership by the relevant actors, it is crucial to involve all local authorities and stakeholders concerned, including social partners, throughout the implementation of the investments and reforms included in the plan.

Positive assessment

(52)Following the positive assessment of the Commission concerning Luxembourg’s recovery and resilience plan with the finding that the plan satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241, in accordance with Article 20(2) of that Regulation, this Decision should set out the reforms and investment projects necessary for the implementation of the plan, the relevant milestones, targets and indicators, and the amount made available from the Union for the implementation of the plan in the form of non-repayable financial support.

Financial contribution

(53)The estimated total cost of the recovery and resilience plan of Luxembourg is EUR 93 354 077. As the recovery and resilience plan satisfactorily complies with the criteria for assessment set out in Regulation (EU) 2021/241 and, furthermore, as the amount of the estimated total costs of the recovery and resilience plan is lower than the maximum financial contribution available for Luxembourg, the financial contribution allocated for Luxembourg’s recovery and resilience plan should be equal to the amount of the estimated total costs of the recovery and resilience plan.

(54)In accordance with Article 11(2) of Regulation (EU) 2021/241, the calculation of the maximum financial contribution for Luxembourg is to be updated by 30 June 2022. As such, in accordance with Article 23(1) of that Regulation, an amount for Luxembourg should be made available now for a legal commitment by 31 December 2022. Where necessary following the updated maximum financial contribution, the Council, on a proposal from the Commission, should amend this Decision to include the updated maximum financial contribution without undue delay.

(55)The support to be provided is to be financed from the borrowing by the Commission on behalf of the Union on the basis of Article 5 of Council Decision (EU, Euratom) 2020/2053 5 . The support should be paid in instalments once Luxembourg has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the recovery and resilience plan.

(56)Luxembourg has requested pre-financing of 13% of the financial contribution. That amount should be made available to Luxembourg subject to the entry into force and in accordance with the Financing Agreement provided for in Article 23(1) of Regulation (EU) 2021/241.

(57)This Decision should be without prejudice to the outcome of any procedures relating to the award of Union funds under any other Union programme than Regulation (EU) 2021/241 or to procedures relating to distortions of the operation of the internal market that may be undertaken, in particular under Articles 107 and 108 of the Treaty. It does not override the requirement for Member States to notify instances of potential State aid to the Commission under Article 108 of the Treaty,

HAS ADOPTED THIS DECISION:

Article 1
Approval of the assessment of the recovery and resilience plan

The assessment of the recovery and resilience plan of Luxembourg on the basis of the criteria provided for by Article 19(3) of Regulation (EU) 2021/241 is approved. The reforms and investment projects under the recovery and resilience plan, the arrangements and timetable for monitoring and implementation of the recovery and resilience plan, including the relevant milestones and targets, the relevant indicators relating to the fulfilment of the envisaged milestones and targets, and the arrangements for providing full access by the Commission to the underlying relevant data are set out in the Annex to this Decision.

Article 2
Financial contribution

1.The Union shall make available to Luxembourg a financial contribution in the form of non-repayable support amounting to EUR 93 354 077. An amount of EUR 76 625 886 shall be available to be legally committed by 31 December 2022 6 . Subject to the update provided for in Article 11(2) of Regulation (EU) 2021/241 calculating an amount for Luxembourg equal to or more than this amount, a further amount of EUR 16 728 191 shall be available to be legally committed from 1 January 2023 until 31 December 2023.

2.The Union financial contribution shall be made available by the Commission to Luxembourg in instalments in accordance with the Annex. An amount of EUR 12 136 030 shall be made available as a pre-financing payment, equal to 13 per cent of the financial contribution. The pre-financing and instalments may be disbursed by the Commission in one or several tranches. The size of the tranches shall be subject to the availability of funding.

3.The pre-financing shall be released subject to the entry into force and in accordance with the Financing Agreement provided for in Article 23(1) of Regulation (EU) 2021/241. Pre-financing shall be cleared by being proportionally deducted against the payment of the instalments.

4.The release of instalments in accordance with the Financing Agreement shall be conditional on available funding and a decision by the Commission, taken in accordance with Article 24 of Regulation (EU) 2021/241, that Luxembourg has satisfactorily fulfilled the relevant milestones and targets identified in relation to the implementation of the recovery and resilience plan. Subject to the entry into force of the legal commitments referred to in paragraph 1, to be eligible for payment, milestones and targets shall be completed no later than 31 August 2026.

Article 3
Addressee

This Decision is addressed to the Grand Duchy of Luxembourg.

Done at Brussels,

For the Council

The President

(1) OJ L 57, 18.2.2021, p. 17-75.

(2) Pending final adoption by the Council, after endorsement by the European Council. The text agreed by the Eurogroup on 16 December 2020 is available at: https://data.consilium.europa.eu/doc/document/ST-14356-2020-INIT/en/pdf

(3) Such simulations reflect the overall impact of NGEU, which also includes funding for ReactEU, and increased funding for Horizon, InvestEU, JTF, Rural Development and RescEU. Such simulations do not include the possible positive impact of structural reforms, which can be substantial.

(4) Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

(5) OJ L 424, 15.12.2020, p. 1.

(6) This amount corresponds to the amount available for legal commitment by 31 December 2022 after deduction of Luxembourg’s proportional share of the expenses of Article 6(2) of Regulation (EU) 2021/241, calculated in accordance with the methodology of Article 11 of that Regulation

EUROPEAN COMMISSION

Brussels, 18.6.2021

COM(2021) 332 final

ANNEX

to the

Proposal for a Council Implementing Decision

on the approval of the assessment of the recovery and resilience plan for Luxembourg

{SWD(2021) 159 final}

ANNEX

SECTION 1: REFORMS AND INVESTMENTS UNDER THE RECOVERY AND RESILIENCE PLAN

1.Description of Reforms and Investments

A. COMPONENT 1A: Skilling, Upskilling and Reskilling

The component Skilling, Reskilling and Upskilling of Luxembourg’s recovery and resilience plan is a response at the same time to the crisis-induced increase in the level of unemployment, the long-standing challenge of the skills shortages on the labour market, and increasingly widespread recourse to teleworking, entailing organisational changes and a stronger demand mainly for digital skills. Two training programmes target job seekers and workers placed on a short-time work scheme, respectively. A complementary reform shall deliver a training action plan laying down paths for vocational trainings (“Skillsbridges”) designed to provide skills identified as the most needed for the future.

The component contributes to addressing Country-Specific Recommendation 1 of 2019 to enhance employability of older workers, Country-Specific Recommendation 3 of 2019 to stimulate skills development, and Country-Specific Recommendation 2 of 2020 to mitigate the employment impact of the crisis, with special consideration for people in a difficult labour market position.

It is expected that no measure in this component does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852, taking into account the description of the measures and the mitigating steps set out in the recovery and resilience plan in accordance with the DNSH Technical Guidance (2021/C58/01).

A.1. Description of the reforms and investments for non-repayable financial support

Reform: Skillsdësch

Under a broader initiative aimed at developing a skills strategy, and promoting continued and vocational training, a collaborative procedure entailing round-table debates on skills led by all stakeholders (“Skillsdësch”) has been conducted to analyse the demand for skills, and to identify the most promising job profiles. The resulting action plan shall define dedicated training paths called “skillsbridges” helping workers and job seekers to enhance their employability during the green and digital transition. The vocational trainings thus conceived shall be launched in the second quarter 2022.

Investment 1: FutureSkills

In the same context, the FutureSkills programme provides sought-after soft, digital, and managerial skills to selected and motivated job seekers so as to facilitate their short-term re-integration on the labour market, and mobility. The programme sets a dedicated target for job seekers aged 45 year and more to help reduce the widespread early retirements and to improve skills. Contents generated by the programme shall be put at the disposal of a larger population of job seekers over a longer horizon.

Investment 2: Digital Skills

Under the Digital Skills programme, all employees placed on short-time work scheme between January and March 2021 may have access to e-learning courses of digital skills. Using vouchers worth up to EUR 500, they may choose from among basic and intermediary courses. As own IT equipment is not required, the programme caters for the situation of persons with lower digital skills.

A.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion		Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
1A-1	Reform 1 - Skillsdësch	Milestone	Launch of « Skillsdësch »	Official launch of the “Skillsdësch” process during the meeting of the Tripartite Coordination Committee				Q3	2020	Launch by the Tripartite Coordination Committee of the collaborative round-table process (“Skillsdësch”) to analyse the demand for skills, and to identify the most promising job profiles
1A-2	Reform 1 - Skillsdësch	Milestone	Launch of the vocational trainings (« skillsbridges »)	Official launch of training by opening registrations for interested participants				Q2	2022	Vocational trainings designed under the Skillsdësch process are officially launched by opening them for registration by interested participants
1A-3	Investment 1 - FutureSkills	Milestone	Agreement by partners on the “operational phase”	Signing of agreement				Q1	2021	Signing by the programme partners ( Ministry of Labour, Employment, and Social and Solidary Economy, Chamber of Commerce, House of Training, and Chamber of Employees) of the agreement on the “operational phase” of the “FutureSkills” programme
1A-4	Investment 1- FutureSkills	Target	Participants of FutureSkills aged more than 45 years		Number of persons	0	150	Q4	2021	150 job seekers aged more than 45 years ( 30% of the total of 500 participants) have participated in the “FutureSkills” training
1A-5	Investment 1 - FutureSkills	Target	Participants of FutureSkills		Number of persons	150	440	Q4	2021	A total of 440 job seekers have participated in the “FutureSkills” training
1A-6	Investment 2 – Digital Skills	Milestone	Access to training offered under the “Digital Skills” programme	Access to training in digital skills via the guichet.lu platform				Q2	2021	Access, via the digital platform guichet.lu, to the training in digital skills offered under the “Digital Skills” programme to 40000 employees placed during January–March 2021 in short-time work scheme shall be operational
1A-7	Investment 2 – Digital Skills	Milestone	Launch of the action, invitation of potential beneficiaries	Sending of personalised invitations to 40,000 potential beneficiaries				Q2	2021	40000 potential beneficiaries ( employees placed during January–March 2021 in short-time work scheme) have been invited by a personalised postal letter to participate in the continued training "Digital Skills"
1A-8	Investment 2 – Digital Skills	Target	Completion of the training		Number of persons	0	11700	Q4	2021	A total of 11700 participants have completed the training in digital skills offered via a voucher for the continued training « Digital Skills »

B. COMPONENT 1B: Reinforcement of resilience of health system

This component of Luxembourg’s recovery and resilience plan includes two reforms and two investments aimed at addressing some of the structural problems of the health sector in Luxembourg: the lack of health professionals and the need to increase the efficiency of the health system, notably through its digitalisation. The first reform addresses the governance of the health system and outlines the consultation process with stakeholders and the working programme method to address a number of pre-identified challenges. The objective of the second reform is to redefine and broaden the competences of the different professionals. The investments shall contribute to the digitalisation in the health sector with (i) the implementation of a digital register of health professionals for a better management and anticipation of the healthcare coverage, and the healthcare professionals needed, and (ii) the development of solutions for telemedicine.

This component is a response to the Country-Specific Recommendation of 2020 to improve the resilience of the health system, consisting on ensuring appropriate mobilisation of available health workers, by improving the governance of the system, and e-Health.

B.1. Description of the reforms and investments for non-repayable financial support

Reform 1: Gesondheetsdësch

Luxembourg has launched a consultation process ("Gesondheetsdësch") among the ministries, health insurance managers, doctors and health professional representatives to modernise the governance of the health sector and respond to a number of pre-identified challenges in six thematic work areas. The reforms and investments presented in Luxembourg’s recovery and resilience plan - reforming the competences of health professionals, creating a digital register of health professionals and developing telemedicine solutions, are based on the outcomes of this consultation. The other work streams of this process cover also very important areas related to resilience of the health system (especially enhancing primary care, integrated care, health promotion, sustainable financing of healthcare), but do not translate into commitments in the plan, except for the publication of a work programme for the implementation of the results of the Gesondheetsdësch process.

Reform 2: Reform of regulation of competences of healthcare professionals

This reform aims at recasting the competences of a number of health professionals in order to increase the attractiveness of health professions, create conditions for task-shifting, and respond to the shortage of care practitioners in a context of increasing demand for care. New professional categories among health professionals (such as advanced nurse practitioners and specialised nurses), as well as an intermediate level between nurses and care assistants shall also be created.

The first professions to be targeted by this redefinition of competences are nurses and care assistants. The legislation adopted to this respect shall enter into force by 30 September 2025. The same process shall be carried out for the other health professions (including specialised nurses, therapists, midwives, social workers and dieticians), for which needs shall have been identified in the roadmap to be published by at the latest by 30 June 2024. The legislation adopted to this respect shall enter into force by 31 December 2025.

Investment 1: Single digital register of healthcare professionals

The purpose of this investment is to set up a single digital register for health professions, collecting administrative and professional data, in order to manage data on health professionals in Luxembourg (the number of doctors, their specialities, areas of expertise, their age distribution, their territorial distribution…), forecast needed professions and skills (short to medium-term demographic projections by speciality and geographic areas) and mobilise staff during crises. This tool shall also allow the management of professional licences and shall respond to the legal obligation to keep professional data up to date. The project shall be completed by 31 March 2023.

Investment 2: Telemedicine solution for remote medical follow-up of patients

This investment is directed towards the development of remote medical monitoring (telemedicine) by 31 March 2022. It shall build on a system of teleconsultations implemented during the COVID-19 pandemic by the eHealth agency in March 2020 ('Maela', enabling remote monitoring between doctors, dentists or midwives and patients) and shall involve a more advanced solution ('IdeoPHM'). The new system shall be integrated into the eHealth services deployed on the national eHealth platform. In the interest of digital inclusion of people with low digital skills and the elderly, the Ministry of Health has set up a helpdesk that may be reached via an e-mail address or a telephone. It shall improve accessibility of healthcare and limit the pressure on health professionals, while reducing the need for physical travelling in the context of the COVID-19 pandemic.

B.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion		Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
1B-1	Reform 1 – Strengthening health system resilience — Gesondheetsdësch	Milestone	Kick-off and preparatory phase of the Gesondheetsdësch’ process with the aim to address the six thematic priorities.	Start of the consultation process				Q3	2020	First kick-off meeting and launch of the preparatory phase of Gesondheetsdësch process with the aim to address the six thematic priorities (1. Better complementarity between inpatient and outpatient sectors; 2.Improving relations between patients and care providers; 3. Demography of medical and nursing staff: levers to prevent a shortage; 4. Prevention in the health sector; 5. Use of new technologies in health care; 6. Financing the health system: financial sustainability of the system.
1B-2	Reform 1 – Strengthening health system resilience — Gesondheetsdësch	Milestone	Work programme	Publication of the work programme				Q4	2021	Publication of the work programme to guide the implementation of the "Gesondheetsdësch" programme, with the aim of establishing a structural framework to accommodate policy discussions on the health system. This work programme shall be developed by the six Gesondheetsdësch working groups : WG1: Better complementarity between inpatient and outpatient sectors WG2: Improving relations between patients and care providers WG3: Demography of medical and nursing staff: levers to prevent a shortage WG4: Prevention in the health sector: towards a paradigm shift WG5 : Use of new technologies in health care WG6 : Financing the health system: financial sustainability of the system
1B-3	Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Publication of a roadmap for the implementation of the reform of the responsibilities of health professionals	Publication of a roadmap for the implementation of the reform				Q1	2022	Publication of a roadmap for the implementation of the reform of the responsibilities of health professionals with the aim of redefining in general the competencies, tasks and responsibilities between doctors, nurses, caregivers and other health professions referred to in the list in Article 1 of the 1992 Law.
1B-4	Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Competences, tasks and responsibilities of nurses and nursing assistants	Entry into force of law				Q3	2025	Entry into force of the law on the recasting of the competences, missions and attributions of nurses and nursing assistants
1B-5	Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Competences, tasks and assignments of other health professions (including specialised nurses, therapists, midwives, social workers and dieticians)	Entry into force of law				Q4	2025	Entry into force of the law on the recasting of the competences, missions and attributions of the other health professions (including specialised nurses, therapists, midwives, social workers and dieticians)
1B-6	Investment 1- Strengthening Health System Resilience — Single Digital Register of Health Professions	Target	Making available the new digital register		Number of persons	0	5000	Q4	2022	The single digital register of health professions, which collects relevant administrative and professional information allowing for a better management of health professionals, is operational and has 5 000 registered professionals
1B-7	Investment 2- Strengthening health system resilience — Telemedicine solution for remote medical follow-up of patients	Milestone	“Maela”	The remote-monitoring solution “Maela” allowing remote medical monitoring between health professionals (including doctors and nurses) and patients is operational				Q1	2021	The remote-monitoring solution “Maela” allowing remote medical monitoring between health professionals (including doctors and nurses) and patients shall be operational with 3000 remote monitoring protocols carried out between 23/03/2020 and 07/02/2021.
1B-8	Investment 2- Strengthening health system resilience — Telemedicine solution for remote medical follow-up of patients	Milestone	An integrated solution	The remote monitoring solution "IdeoPHM" replaces "Maela".				Q1	2022	The remote monitoring solution "IdeoPHM" replaces "Maela" and enables remote medical monitoring between health professionals (including doctors and nurses) and patients. The solution is operational and deployed through the national "eHealth" platform.

C. COMPONENT 1C – Increase of supply of affordable and sustainable public housing

The objective of this component of Luxembourg’s recovery and resilience plan is to develop housing and increase the supply of affordable and sustainable housing in Luxembourg.

As part of this component, the ‘Housing Pact 2.0’ reform puts in place a new reference framework for governmental support to municipalities for the creation of new housing projects, through the construction of new buildings or the renovation of the existing building stock. This component also includes an investment measure, which focuses on supporting renewable energy generation as part of the ‘Neischmelz’ project in the municipality of Dudelange (a broader project including the remediation of a former industrial site to create a new urban district, thus increasing the supply of affordable and sustainable housing).

Through the Housing Pact 2.0 measure, this component contributes to addressing the Country-Specific Recommendation addressed to Luxembourg to ‘foster economic policy related to investment on (…) increasing housing supply, including by increasing incentives and lifting barriers to build’ (Country-Specific Recommendation 3 2019). Through the ‘Neischmelz’ project, and through the aspects related to the renovation of buildings in the Housing Pact 2.0, this component also contributes to the green transition, and to addressing Country-Specific Recommendation 3 2020 to ‘focus investment on the green (…) transition, in particular on sustainable (…) buildings, clean and efficient production and use of energy, contributing to a progressive decarbonisation of the economy’.

C.1. Description of the reforms and investments for non-repayable financial support

Reform: Housing Pact 2.0

In Luxembourg, a high degree of private property concentration and little incentives to release land for development limit the ability of public authorities to tackle the chronic under-supply of housing, which continues driving up prices in the face of the strong population growth. Meanwhile, household indebtedness continues to increase and amounts to 170% of GNI in 2018 (most of which is mortgage debt and is unevenly distributed, making the poorer households relatively more vulnerable).

Against this backdrop, this reform shall put in place a ‘Housing Pact 2.0’, as a reference framework to encourage municipalities to mobilise land for construction, and dwellings for renovation, in order to increase social housing in view of the lack of affordable housing; and to encourage the construction of schools and nurseries to cope with the growing population. This scheme builds on the lessons learned from the ‘Housing Pact 1.0’, which has been in force since 2008.

Under the Housing Pact 2.0, each municipality may engage by signing an ‘initial convention’ with the State, which allows the municipality to be assisted by a ‘housing counsellor’. If it does so, the municipality shall then set up and adopt its own municipal strategy for housing development (‘Programme d’action local logement’ or PAL). Municipalities shall then sign an ‘implementation convention’ with the State, which entails an obligation for the municipality to implement the development projects detailed in the PAL, with financial support from the State on the basis of the affordable housing units placed on the rental market in the previous year.

The Housing Pact 2.0 shall take into account the development priorities set out in the sectoral plans and the new national Master Programme for Spatial Planning (PDAT), and to the extent the number of signing municipalities allows, contribute to a coherent land use development at the national level, with a view to sustainably increase the housing supply. The reform aims to place on the market at least 1200 housing units by 2025.

While most municipalities had signed an agreement under the Housing Pact 1.0, this has not resulted in a noticeable increase in the supply of social housing. Compared to its predecessor, the Housing Pact 2.0 shall provide that the financial envelope available for State transfers to municipalities is calculated on the basis of the number of affordable housing units in their territory placed on the rental market during the previous year (either through construction or acquisition and renovation), and no longer on the basis of population growth. In addition, the financial contributions granted to municipalities shall be paid on the basis of the implementation of projects approved under the Housing Pact 2.0 and aimed at achieving its objectives. A closer cooperation between the State and municipalities is a key objective of the reform, aimed at strengthening the public sector capacity to increase meaningfully the public residential stock and scale up the practice of affordable and sustainable rental housing. In this sense, the draft Housing Pact 2.0 provides that between 10% and 30% of each development project shall be dedicated to affordable housing placed on the rental market. The reform offers the opportunity to meaningfully address the trend of house prices inflation, which is also considered one of the main barriers to investment and growth.

Investment: Project “Neischmelz” in Dudelange – renewable energy

This measure consists in supporting sub-projects of the far-reaching project to convert the former industrial ‘Neischmelz’ site, located in the municipality of Dudelange, to develop a new urban district, thereby contributing to addressing Luxembourg’s shortage of affordable housing. More than half of the dwellings created as part of that programme are intended for affordable renting. The overall programme is expected to be completed by 2035.

In this context, the electricity shall be produced by photovoltaic panels installed on the large roofing surface on the rehabilitated old structure. The heat shall be produced either through an innovative deep geothermal energy system or a set of solar thermal panels, depending on the feasibility of the geothermal system being confirmed following further investigations.

Energy system works are not contingent on the progress of operations to rehabilitate the polluted land on the site. Regarding heat production through geothermal energy, a works contract shall be awarded by 31 December 2022 to launch the new test drilling, to confirm the promising results of a first test drilling performed in 2018, and a final decision shall be taken by 30 September 2023 to confirm the development of the geothermal energy system, or to fall back on a solar thermal panel power plant. In either case, work on the heat networks shall be launched by 30 September 2024. By 31 December 2025, if feasibility is confirmed, the two definitive drillings for the geothermal energy system shall be completed; if not, the solar thermal panel-based heating power plant shall be operational. Regarding electricity production, at least 8000 m² of photovoltaic solar panels shall be completed by 31 December 2025.

C.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number

Related Measure (Reform or Investment)

Milestone / Target

Name

Qualitative indicators
(for milestones)

Quantitative indicators
(for targets)

Indicative timeline for completion

Description of each milestone and target

Unit of measure

Baseline

Goal

Quarter

Year

1C-1

Reform – Housing Pact 2.0

Milestone

Entry into force of the Housing Pact 2.0 Law

Entry into force

2021

Entry into force of the 2.0 Housing Pact Law, with the aim of increasing the supply of affordable and sustainable housing at municipal level. The aim of the Housing Pact is to draw up implementing agreements with the municipalities enabling the implementation of a “Local Housing Action Programme”.

1C-2

Reform – Housing Pact 2.0

Target

Percentage of municipalities signing an initial agreement

Percentage

2023

Signature of the initial agreement with 70 % of the municipalities in Luxembourg.

1C-3

Reform – Housing Pact 2.0

Target

Percentage of municipalities signing an implementation agreement

Percentage

2022

Signature of the implementation agreement with at least 50 % of the municipalities in Luxembourg. This agreement specifies among others the modalities for paying the financial support the municipality is entitled to.

1C-4

Investment 1 – ‘Neischmelz’ project

Milestone

Launch of the new test drilling

Award of the works contract

2022

Award of the works contract, following tender, for the new test drilling to confirm the feasibility of a geothermal energy system on the site.

1C-5

Investment 1 – ‘Neischmelz’ project

Milestone

Decision on the renewable heat production technology selected

Purchase order

2023

Purchase order signed by the Fonds de Logement to project manager, requesting the launch of a new phase of the project, referring to the decision taken on the selection of the renewable heat production technology (geothermal energy/solar thermal energy) based on the results of the new test drilling referred to in milestone 1C-4 above.

1C-6

Investment 1 – ‘Neischmelz’ project

Milestone

Launch of the heat network and heat production plant works

Purchase order

2024

Purchase order signed by the Fonds de Logement to contractor

for the launch of the heat network and heat production plant works.

1C-7

Investment 1 – ‘Neischmelz’ project

Target

Electricity generation for the new district

m²

8000

2025

A total of 8 000 m² of photovoltaic panels installed and made operational.

1C-8

Investment 1 – ‘Neischmelz’ project

Milestone

Heat generation for the new district

Reception of works

2025

Following the purchase order referred to in milestone 1C-6 above, acceptance of works for a total installed heat production capacity for 1000 dwellings.

D. COMPONENT 2A: Decarbonisation of transport

This component of Luxembourg’s recovery and resilience plan aims to contribute to the decarbonisation of the road transport sector (which accounted for 50% of Luxembourg’s emissions in 2018, more than double of the EU average of 21% 1 , in part due to transit transport), in particular by fostering an increased electrification of mobility.

It consists of a reform to promote the purchase of zero- or low-emission vehicles from procuring authorities and entities, and an investment to further deploy a network of charging points for electric vehicles across the country.

This component contributes to addressing the Country-Specific Recommendation addressed to Luxembourg (Country-Specific Recommendation 3 2019 and Country-Specific Recommendation 3 2020)) to ‘focus investment on the green (…) transition, in particular on sustainable transport’.

D.1. Description of the reforms and investments for non-repayable financial support

Reform: Electrification of the fleet of contracting authorities and entities, and of public transport

The Clean Vehicles Directive 2 provides that Member States must ensure that the procurement of light-duty and heavy-duty vehicles by contracting authorities and contracting entities comply with minimum national procurement targets for clean vehicles, over reference periods of five years (at least 38,5% of light-duty vehicles, 45% of clean buses and 10% of heavy-duty vehicles over 2021-2025).

This reform consists of going beyond that obligation by requiring, not only that the minimum targets must be achieved as a national average for all vehicles procured, but must also be achieved by each contracting authority and contracting entity individually.

In addition, the Luxembourg State as a contracting authority has set higher internal objectives for itself, and plans to fully electrify the fleet of buses operated by the public transport operator RGTR by 2030.

Investment: Support scheme for charging points

This investment aims to foster the deployment of a dense, accessible network of charging points for electric vehicles across Luxembourg, by setting up a new scheme to financially support initiatives taken by businesses to develop new charging points. This scheme is meant to complement the existing system to support charging points, in place since July 2020, and which targets initiatives by individuals. The new scheme shall support both publicly accessible charging points, and points which are not accessible to the public (infrastructure for charging fleets of electric vehicles, and recharging at work for employees).

Based on a preliminary study, Luxembourg shall adopt a Law to set up the scheme by 31 March 2022. Project applications are expected to be processed from the first quarter of 2022, and the scheme shall be implemented until 2025.

D.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion		Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
2A-1	Reform: Electrification of the fleet of contracting authorities and entities, and of public transport	Milestone	Grand-Ducal Regulation on the procurement of clean vehicles	Entry into force	-	-	-	Q3	2021	Entry into force of the Grand-Ducal Regulation defining the minimum percentages of clean vehicles (light vehicles, buses, heavy duty vehicles) among vehicles procured by public contracts to be achieved by each contracting authority and contracting entity over the period 2021-2025
2A-2	Investment: Support scheme for charging points	Milestone	Law on the support scheme for charging points	Entry into force	-	-	-	Q1	2022	Entry into force of the law putting in place a support scheme for charging infrastructure for electric vehicles. The support scheme shall be made available for companies, and shall support charging points accessible to the public or not.
2A-3	Investment: Support scheme for charging points	Target	Number of operational charging points	-	‘Supply metric’	0	1300	Q4	2023	Number of charging points (expressed in terms of supply metric) supported by the support scheme, that are made operational. The ‘supply metric’ shall be calculated according to the methodology defined in Transport & Environment (2020) report ‘Recharge EU: how many charge points shall Europe and its Member States need in the 2020s’, however also applying the same weight for non-public charging stations as for semi-public charging stations.
2A-4	Investment: Support scheme for charging points	Target	Number of operational charging points	-	‘Supply metric’	1300	2600	Q2	2025	Number of charging points (expressed in terms of supply metric) supported by the support scheme, that are made operational. The ‘supply metric’ shall be calculated according to the methodology defined in Transport & Environment (2020) report ‘Recharge EU: how many charge points shall Europe and its Member States need in the 2020s', however also applying the same weight for non-public charging stations as for semi-public charging stations.

E. COMPONENT 2B: Protection of environment and biodiversity

This component of Luxembourg’s recovery and resilience plan aims to foster biodiversity and ecosystem protection and conservation in Luxembourg, as a way to strengthen resilience, in particular having in mind the links between human health and ecosystems health. The objectives include restoration of habitats, increasing ecologic continuity, and the resilience and restoration of ecosystems, as well as sustained awareness raising and knowledge sharing.

The component consists in one measure, which comprises some elements of reform and some elements of investments, to support municipalities’ efforts in natural environment and biodiversity conservation actions. The measure proposes an action plan that prepares municipalities to address the challenges of biodiversity decline and ecosystem degradation.

While Country-Specific Recommendations addressed to Luxembourg do not refer to natural environment and biodiversity as a specific challenge for the country, this component generally contributes to the Country-Specific Recommendation 3 2020 of ‘focusing investment on the green (…) transition’.

E.1. Description of the reforms and investments for non-repayable financial support

Reform and investment: ‘Naturpakt’

The proposed measure aims to put in place a national reference framework and support scheme to encourage municipalities to increasingly engage in natural environment and biodiversity protection actions. For this, the measure consists of establishing a so-called ‘Naturpakt’, which provides a legal, financial, technical and consultative reference framework for municipalities. The ‘Naturpakt’ is strongly inspired by the ‘Climate Pact’ already in place in Luxembourg to promote greenhouse gas emissions reduction actions by municipalities.

The ‘Naturpakt’ makes it possible for the State to financially support municipalities’ efforts. Municipalities willing to engage must first of all sign a ‘Naturpakt contract’ with the State, whereby they commit to implement actions on their territory, for the period until 2030. The possible categories of actions and actions themselves are listed in a ‘catalogue’ published by the State – they stem from the national strategies for natural environment protection and conservation, including in relation to nature protection, hydrographic districts management and adaptation to climate change. The publication of the catalogue respecting the principle of ‘do no significant harm’ shall be the first milestone. Municipalities having signed the ‘Naturpakt contract’ benefit from the assistance of a counsellor funded in the context of the ‘Naturpakt’ scheme, and receive a yearly participation subsidy. Furthermore, the State covers additional costs in relation to the implementation of the ‘Naturpakt’, such as the costs of the technical assistance and audits.

In the first year after having signed the ‘Naturpakt contract’, and at least every three years thereafter, municipalities undergo an audit to determine their level of performance against the actions listed in the catalogue. Municipalities presenting a level of performance above a certain threshold (40% of all the actions listed in the catalogue) receive a certification (called ‘Naturpakt Gemeng’), along with financial subsidies, calculated taking into account the performance (which is required to increase overtime once a certification has been reached), the area of the municipality, and the year of certification.

The Facility is expected to support the launch of this measure, by supporting the first 30 municipalities signing the ‘Naturpakt contract’, and the first 15 municipalities receiving the certification, over the 2021-2025 implementation period.

E.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion			Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
2B-1	Reform and investment: ‘Naturpakt’	Milestone	Finalisation of the catalogue of measures	Publication	-	-	-	Q3		2021	Publication of the adopted catalogue of measures relating natural environment and biodiversity policies in the context of the ‘Naturpakt’, that is in line with the DNSH principle.
2B-2	Reform and investment: ‘Naturpakt’	Milestone	‘Naturpakt’ Law	Entry into force	-	-	-	Q4		2021	Entry into force of the Law establishing a ‘Naturpakt’ allowing municipalities to sign a ‘Naturpakt contract’ with the State, whereby they commit to implementing natural environment and biodiversity protection actions on their territory for the period until 2030, and receive a certification and associated financial subsidies once they present a sufficient level of performance in the light of a catalogue of measures relating to natural environment and biodiversity policies.
2B-3	Reform and investment: ‘Naturpakt’	Milestone	Initial audit of performance completed	Publication of audit reports	-	-	-	Q1		2023	Publication of the first phase audit report on the performance of municipalities in relation to implemented measures as prescribed by the ‘Naturpakt’ catalogue of measures, for each municipality that has signed the ‘Naturpakt contract’ before the end of Q1 2022.
2B-4	Reform and investment: ‘Naturpakt’	Target	Signature of ‘Naturpakt contracts’ by 30 municipalities	-	Number	0	30	Q1		2024	A total of 30 municipalities have signed a ‘Naturpakt contract’ with the State.
2B-5	Reform and investment: ‘Naturpakt’	Target	‘Naturpakt’ certification of 15 municipalities	-	Number	0	15	Q1		2025	A total of 15 municipalities certified under the ‘Naturpakt’, based on a positive audit assessment that each municipality has achieved a performance level of 40% of the maximum achievable score on the basis of the ‘Naturpakt’ catalogue of measures.

F. COMPONENT 3A: Promotion of data-based economy

The security of personal data is a major challenge for society since economic and social agents are increasingly relying on digital communications. This component of Luxembourg’s recovery and resilience plan, “Promoting a data-driven economy”, is meant to address this challenge. Its objective is to develop an ultra-secure communication infrastructure based on quantum technology with the aim of enhancing security of sensitive data communication. This component also aims at creating a new technological ecosystem in Luxembourg, intended to create jobs and attract scientific experts in the field.

In that context, the Quantum Communication Infrastructure (QCI) deployed shall have a terrestrial part, able to connect two points with a maximum distance of 100km, and a satellite part, able to connect two points if located more than 100km apart.

The component is meant to contribute to addressing the Country-Specific Recommendations received by Luxembourg in 2019 and 2020, which recommend steering investment-related economic policy to encourage digitalisation and innovation. The component also contributes to the digital transition.

F.1. Description of the reforms and investments for non-repayable financial support

Reform 1: Fostering the creation of a new technological ecosystem in Luxembourg

The development and deployment of Quantum communication technology is still in an experimental stage. The proposed reform is aimed at stimulating the development of a new ecosystem in Luxembourg in relation to this new technology, encouraging the participation of the private companies and researchers. This measure shall support innovation in quantum communications with the aim of reforming existing communication technologies and integrating the national infrastructure into the EuroQCI project. Obtaining experience in this technology shall equip Luxembourg to train and attract highly qualified people and stimulate innovative companies in this field.

In addition, the Quantum Communication Infrastructure (QCI) shall allow the exchange of information in a secure way by preventing a third party of intercepting the message without being noticed. This shall promote the highest level of data protection and privacy.

Investment 1: Development and deployment of testing infrastructure and ultra-secure connectivity solutions

This investment consists in developing and deploying the necessary research infrastructure to gain knowledge and experience in the field of quantum technology-based communication. To do so, the LuxQCI lab shall be created in collaboration with the Research Institute SnT. The creation of this lab shall provide the necessary expertise to the scientific community and consortium partners to develop and operate a quantum communication infrastructure. Two demonstrations shall be performed to gain experience regarding the technology. A first demonstration through the terrestrial network is expected to take place by 31 March 2023, whereas a first demonstration through the satellite is expected to take place by 30 September 2024.

F.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion		Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
3A-1	Reform 1 – Boosting the creation of a new ecosystem in Luxembourg	Milestone	Terrestrial network and space component	Establishment of connection				Q1	2023	Successful connection of the space and terrestrial segments of the Quantum Communication Infrastructure through the integration of a terrestrial and space-based Key Management System (KMS) using simulation of Space Quantum Key Distribution (QKD) reported in the minutes of the Steering Committee and a report by the consortium
3A-2	Reform 1 –Boosting the creation of a new ecosystem in Luxembourg	Target	Quantum Key Distribution		Number	0	2	Q2	2022	Successful connection of 2 sites in the framework of LuxQCI Lab through the establishment of a terrestrial network
3A-3	Investment 1-Development and deployment of test infrastructure and ultra-secure connectivity solutions	Milestone	LuxQCI Laboratory	Entry into operation of LuxQCI Laboratory				Q3	2021	LuxQCI Lab, intended to gain the expertise needed to develop and operate a quantum communication infrastructure, shall be operational.
3A-4	Investment 1 -Development and deployment of test infrastructure and ultra-secure connectivity solutions	Milestone	Cross-border connection	Establishment of connection				Q1	2023	Cross-border connection established for the demonstration of a land-based quantum key distribution system formalised in an agreement between the third country concerned and Luxembourg.
3A-5	Investment 1 - Development and deployment of test infrastructure and ultra-secure connectivity solutions.	Milestone	Cross-border connection for a demonstration using the satellite	Establishment of connection				Q3	2024	Cross-border demonstration of a quantum distribution system through a satellite connection formalised in an agreement between the third country concerned and Luxembourg.

G. COMPONENT 3B: Modernisation of public administration

The COVID-19 pandemic and the containment measures have demonstrated the urgent need to further develop adequate interoperable digital solutions for public services and administrations. This component is aimed at addressing this challenge, by increasing the effectiveness and efficiency of public administrations and their services through their digitalisation, taking into account the current challenges, needs and expectations of citizens and government officials.

The component of Luxembourg’s recovery and resilience plan is intended to respond to the Country-Specific Recommendations addressed to Luxembourg in 2019 and 2020, which recommended fostering innovation and digitalisation, in particular in the business sector, as well as guiding investment-related economic policy to encourage digitalisation and innovation. The component also contributes to the digital transition.

G.1. Description of the reforms and investments for non-repayable financial support

Investment 1: Electronic document management, Case Management

Investment 1 aims to implement a central platform with the necessary functionalities to cover document management in public administrations as well as document exchanges between the administrations and the citizens and businesses. It shall also offer a repository for electronic document management and case management. To do so, a first basic platform named “GED Factory” shall be implemented by the Government IT Centre (CTIE). All public administrations willing to participate in the project shall receive technical support by CTIE to identify their specific needs.

Investment 2: Development of MyGuichet – Project 1/3 – Virtual appointments

The main objective of this investment is to enable public administrations to offer virtual appointments and to establish access to different functionalities via video conference appointments. This shall save time by avoiding travel for citizens and businesses and shall facilitate administrative procedures for people with reduced mobility. The Luxembourg authorities shall deploy the necessary infrastructure for administrative procedures through videoconference.

Investment 2: Development of MyGuichet – Project 2/3 – Various Citizen to Government (C2G) and Business to Government (B2G) procedures

Investment 2 is aimed at introducing 12 new online services – aligned with the priorities of the Single Digital Gateway Regulation – to expand the digital offer to citizens and businesses and simplifying different administrative processes. For instance, a Business to Government approach is going to be introduced regarding employees’ tax deduction so citizens can have access to this information through MyGuichet. Another service which shall be implemented is the introduction of a Citizen to Government approach to facilitate the application of hunting permits through MyGuichet.

Investment 2: Development of MyGuichet – Project 3/3 – Mobile app MyGuichet.lu

The goal of this investment is to transfer the functionalities offered in MyGuichet.lu to a mobile application. This mobile application will be available to the general public and aims at improving the effectiveness of the procedures for citizens and businesses. The application shall provide access to desktop functions such as procedures with the public administration, from a personal mobile. Another function that this app will provide is the possibility of scanning documents. Thus, the smartphone shall be able to replace a scanner.

Investment 3: eADEM

The labour market is undergoing major changes in Luxembourg. Against that backdrop, the Agency for the Development of Employment (ADEM) in Luxembourg must adapt to have the capacity to respond effectively to the ongoing job transformation patterns. The objective of this investment is to digitalise ADEM by upgrading its IT resources, which shall increase the efficiency of ADEM in dealing with its clients and beneficiaries. To do so, an external consultant shall be hired to identify the needs of the Agency as well as to define the functionalities needed, which is necessary to develop the necessary IT tool to create eADEM.

This new tool shall generate different outcomes:

·It shall facilitate and speed up the work deployed by ADEM staff by increasing their productivity in a context of higher unemployment due to the COVID-19 pandemic.

·It shall also improve the efficiency of the Agency in relation to opening personalised accounts, instruction, execution and control of financial assistance to beneficiaries by the digitalisation of the process. The IT system shall also digitalise mechanisms to match job seekers and businesses at a faster pace.

The eADEM project shall contribute to a more transparent, efficient and resilient labour market.

Investment 4: National platform for public survey management

Investment 4 shall support the development of a national platform for the management of public surveys procedures, which consists of an Internet portal, a back-office and a MyGuichet.lu assistant. The objective of this investment is to centralise the publication of public surveys, which shall simplify their access and visibility. It shall also simplify the submission of a contribution which shall increase citizen’s participation. The investment aims at digitalising all steps of those processes, while a physical solutions shall remain available.

G.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name	Qualitative indicators (for milestones)	Quantitative indicators (for targets)			Indicative timeline for completion		Description of each milestone and target
					Unit of measure	Baseline	Goal	Quarter	Year
3B-1	Investment 1 – Electronic Document Management and Case Management	Milestone	Entry into operation of a central platform for electronic document management and case management.	Entry into operation of a complete platform				Q4	2021	A central platform allowing for electronic management of documents and exchanges of documents between public administrations shall be operational, improving document management by public administrations.
3B-2	Investment 1 – Electronic Document Management and Case Management	Target	GED and Case Management within governmental entities		Number	0	5	Q4	2024	A new individualised electronic document management and case management solution enters into operation within five government entities to improve their document management. The solution shall be individualised to meet the needs of each entity. The deployment of these individualised solutions shall be done by the Government IT Centre (CTIE).
3B-3	Investment 1 – Electronic Document Management and Case Management	Target	Specific modules		Number	0	3	Q4	2024	Three specific modules are available in the platform, corresponding to the automation of standard procedures
3B-4	Investment 1 – Electronic Document Management and Case Management	Target	Entry into operation of two interconnectors between bodies (cross-tenants) to allow the implementation of workflow and case management between different state entities.		Number	0	2	Q2	2024	Entry into operation of two interconnections between instances (cross-tenants workflow). The objective shall be to allow for workflow and case management by different government entities, even where each of them has its own specific instance of the document management
3B-5	Investment 2 - Development of MyGuichet- Project 1/3: Virtual appointment	Milestone	Phase 1 of the Exchange via videoconference	Implementation of the necessary infrastructure to make available virtual appointments				Q2	2022	Implementation of an infrastructure project enabling two persons to exchange via videoconference with their web browsers. This concerns virtual appointments between citizens or businesses and the public administration. shall
3B-6	Investment 2 - Development of MyGuichet- Project 1/3: Virtual appointment	Milestone	Phase 2 of the Exchange via videoconference	Introduction of the virtual appointments within MyGuichet.lu				Q4	2022	Availability of the videoconference appointments functionality into MyGuichet.lu (adjustment of the appointment process, adaptation of the appointments list screen, development of the waiting room, adaptation of the personal spaces to view the appointments made).
3B-7	Investment 2 - Development of MyGuichet- Project 2/3: Various C2G and B2G approaches	Target	12 new services		Number	0	12	Q4	2022	Implementation and availability of 12 new services for citizens and businesses, accessible via MyGuichet.lu
3B-8	Investment 2 - Development of MyGuichet - Project 3/3: APP Mobile MyGuichet.lu	Milestone	Deployment of a mobile version of MyGuichet (restricted audience)	Mobile version of MyGuichet available for a restricted audience				Q2	2021	Deployment of a mobile version of MyGuichet operational and available for a restricted scope of users
3B-9	Investment 2 - Development of MyGuichet - Project 3/3: APP Mobile MyGuichet.lu	Milestone	Deployment of a mobile version of MyGuichet.lu to the general public	Mobile version of MyGuichet available for the general public				Q3	2021	Deployment of a mobile version of MyGuichet.lu available to the general public
3B-10	Investment 3 - ‘eADEM’	Milestone	Creation of ADEM 2025 Strategy for the analytical phase	Adoption of ADEM Strategy 2025				Q4	2021	ADEM 2025 Strategy and a medium-term work programme adopted. The objective shall be to mobilise the staff of ADEM (Agence pour le développement de l´emploi) to tackle the operational and digital transformation challenges brought about by ‘eADEM’ .
3B-11	Investment 3 - ‘eADEM’	Milestone	Implementation of eADEM	Entry into operation of eADEM system				Q4	2024	The first version of the eADEM system is operational.
3B-12	Investment 3 - ‘eADEM’	Milestone	Creation and implementation of two linked systems to eADEM	Entry into operation of the systems linked to eADEM				Q4	2024	Digital assistants of the MyGuichet Portal linked to eADEM, are available to the public.
3B-13	Investment 4 – National platform for the management of public investigations	Milestone	Creation of a national platform for the management and publication of public surveys and related documents	Creation of a national platform				Q1	2021	A national platform shall be available to all public administrations organising public surveys with the key functionalities, including the management and publication of public surveys and related documents and the possibility for the general public to submit an online contribution.
3B-14	Investment 4 – National platform for the management of public surveys	Target	Integration process of the national platform		Number	0	90	Q4	2023	A total of 90 municipalities have access to the national platform for the management of public surveys and are able to use it as organisers of public surveys

H. COMPONENT 3C: Promotion of a transparent and fair economy

This component of Luxembourg’s recovery and resilience plan contains a measure related to the modernisation of corporate taxation, namely a law prohibiting deductions for corporate income tax purposes of interests and royalties paid to related undertakings established in jurisdictions included on the EU list of non-cooperative jurisdictions for tax purposes.

As a complement to that measure, the component indicates that Luxembourg will carry out an impact assessment of the above-mentioned law, ‘with a view to informing the discussion on an extension of the measure to third jurisdictions other than those included in the EU list on non-cooperative tax jurisdictions’.

The component further indicates that Luxembourg will continue to adopt a constructive attitude in ongoing and upcoming discussions on the modernisation of the EU and international fiscal system applicable to companies, in particular as part of the OECD Inclusive Framework in the context of the initiatives announced in the recent Commission Communication “Business Taxation for the 21st Century”.

This component also contains measures on the fight of money laundering and terrorist financing, which are expected to contribute to the country-specific recommendation to ensure effective supervision and enforcement of the anti-money laundering framework as regards professionals providing trust and company services, and investment services.

H.1. Description of the reforms and investments for non-repayable financial support

Reform 1: Modernisation of corporate taxation

This reform consists of a legislative measure prohibiting deductions for corporate income tax purposes of interests and royalties paid to related undertakings established in jurisdictions included on the EU list of non-cooperative jurisdictions for tax purposes. This reform implements an agreement reached at the EU Council in December 2019.

Reform 2: Fight of money laundering and terrorist financing

This reform consists of four intertwined sub-measures and pursues two main objectives. First, to strengthen the framework for fighting money laundering (ML) and terrorist financing (TF) that is applicable to professionals providing trust and company services, and investment services. The second objective consists in a better identification, assessment, and understanding of ML/TF risks.

The first sub-measure consists in a reinforcement of the national provisions on the fight against ML and TF that is applicable to professionals providing services to companies and trusts, and investment services. Besides transposing certain provisions of the fifth Anti-Money Laundering Directive 3 , the Act of 25 March 2020 reinforces and further harmonises the supervision and sanctioning powers of the supervisory authorities, and self-regulatory bodies in charge of supervision of trust and company service providers and investment services in the field of ML and TF. The related grand-ducal decree of 14 August 2020 clarifies certain provisions applicable to the trust and company service providers.

The second sub-measure consists in deepening the identification, assessment, and understanding of ML/TF risks, including the risks related to professionals providing services to companies and trusts, and investment services. To that end, the National Risk Assessment of ML/TF conducted in 2018 has been updated to further calibrate the preventive and mitigating measures, and the allocation by the State, the supervisory authorities, and self-regulatory bodies of resources to the fight against ML/TF. Furthermore, a Vertical Risk Assessment of Terrorist Financing has been launched to deepen the understanding of the jurisdictions in which TF takes place, while focusing on the sectors considered to be the most vulnerable to TF. Finally, the Sectoral Risk Assessment of Legal Persons and Legal Arrangements, required under criterion 24.2 of recommendations of the Financial Action Task Force, shall allow to develop new measures mitigating the possibly identified residual risks.

As a third sub-measure, the Luxembourg Business Register, as the body administering the Register of Beneficial Owners and the Trade and Company Register, shall undergo an extensive transformation with a view of extending its sanctioning, controlling, and executive powers, and facilitating the use of its data for the assessment of ML/TF risks. The transformation will concern the procedures, the organisation, and the capacities including the digital capacities of the Luxembourg Business Register so that the latter is the primary source of essential data on legal entities for all users concerned.

Lastly, the fourth sub-measure will consist in a study reviewing the current legal regime applicable to trust and company service providers and, informed by this study, the submission of a law consolidating that framework which shall enter into force by September 2023. The law is expected to revise the current supervision regime, improve the centralised collection of data of the activities performed by the services providers, and to clarify the applicable sanction mechanisms.

H.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

Sequential Number

Related Measure (Reform or Investment)

Milestone / Target

Name

Qualitative indicators
(for milestones)

Quantitative indicators
(for targets)

Indicative timeline for completion

Description of each milestone and target

Unit of measure

Baseline

Goal

Quarter

Year

3C-1

Reform 1 – Modernisation of corporate taxation

Milestone

Act of 10 February 2021 amending the amended act of 4 December 1967 on income tax (formerly draft act No°7547)

Entry into force of act

-

-

-

Q1

2021

Entry into force of the Act of 10 February 2021 amending the amended act of 4 December 1967 on income tax (formerly draft act No°7547) introducing for corporate income tax purposes non-deductibility of interests and royalties paid to related undertakings established in non-cooperative tax jurisdictions

3C-2

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Act of 25 March 2020 on AML

Entry into force of act

Q1

2020

Entry into force of the Act of 25 March 2020 amending the amended act of 12 November 2004 on the fight against money laundering and terrorist financing

3C-3

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Grand-ducal decree of 14 August 2020 on AML

Entry into force of grand-ducal decree

Q3

2020

Entry into force of the Grand-ducal decree of 14 August 2020 amending the Grand-ducal decree of 1 February 2010 specifying certain provisions of the amended Act of 12 November 2004 on the fight against money laundering and terrorist financing

3C-4

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Vertical risk assessment in the area of terrorist financing

Publication of risk assessment

Q2

2021

Publication, upon the adoption by the ML/TF Prevention Committee of the Vertical Risk Assessment of Terrorist Financing, a risk assessment of the threats Luxembourg faces of being a conduit for terrorist financing

3C-5

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Sectoral risk assessment of legal persons

Publication of risk assessment

Q4

2021

Publication of a Sectoral Risk Assessment of Legal Persons

3C-6

Reform 2 – Fight of money laundering and terrorist financing

Milestone

2020 update of National Risk Assessment

Publication of risk assessment

Q4

2020

Publication of the 2020 update of the National Risk Assessment of Money Laundering and Terrorist Financing

3C-7

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Transformation of Luxembourg Business Register

Finalisation of transformation project (legislation, operating model, additional capacities)

Q4

2023

Finalisation of the project to transform the Luxembourg Business Register (elaboration of a first draft act, deployment of an operating model based on recommendations of the consultant, and deployment of additional capacities)

3C-8

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Finalisation of the study on the reinforcement of the regime applicable to trust and company service providers

Finalisation of a study

Q4

2021

Finalisation of the study on the reinforcement of the regime applicable to trust and company service providers

3C-9

Reform 2 – Fight of money laundering and terrorist financing

Milestone

Entry into force of the act reinforcing the regime applicable to trust and company service providers

Entry into force of a legislative act

Q3

2023

Entry into force of the act reinforcing the regime applicable to trust and company service providers

I. AUDIT AND CONTROL

I.1. Description of the reforms and investments for non-repayable financial support

A repository system for recording and storing all relevant data related to the implementation of the recovery and resilience plan - the achievement of milestones and targets, data on final recipient, contractors, subcontractors and beneficial owners - shall be operational before the first payment request is submitted. Before the first payment request, Luxemburg shall also submit a dedicated audit report confirming the effectiveness of the minimum functionalities of the repository system.

In addition, before the first payment request is submitted, Luxembourg shall finalise the implementation of further procedures for the protection of the EU financial interests as described in Part III, Chapter 4 on Implementation, subchapter x and Chapter 6 on Audit and Controls sub-chapter xi of the Plan. The management declaration and the summary of audits accompanying the payment request should confirm their status of implementation and identify any related weaknesses found and corrective actions taken or planned.

I.2. Milestones, targets, indicators, and timetable for monitoring and implementation for non-repayable financial support

2.Estimated total cost of the recovery and resilience plan

The estimated total cost of the recovery and resilience plan of Luxembourg is EUR 93 354 077.

SECTION 2: FINANCIAL SUPPORT

1.Financial contribution

1.1.First Instalment (non-repayable support):

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name

1	AC-1: Monitoring and implementation of the plan	Milestone	Repository system for Audit and Controls: information for monitoring implementation of RRF
2	3C-2: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Act of 25 March 2020 on AML
3	1A-1: Reform 1 - Skillsdësch	Milestone	Launch of « Skillsdësch »
4	1B-1: Reform 1 –Strengthening health system resilience — Gesondheetsdësch	Milestone	Kick-off and preparatory phase of the ‘Gesondheetsdësch’ process with the aim to address the six thematic priorities.
5	3C-3: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Grand-ducal decree of 14 August 2020 on AML
6	3C-6: Reform 2 – Fight of money laundering and terrorist financing	Milestone	2020 update of National Risk Assessment
7	1A-3: Investment 1 - FutureSkills	Milestone	Agreement by partners on the “operational phase”
8	1B-7: Investment 2-Strengthening health system resilience — Telemedicine solution for remote medical follow-up of patients	Milestone	“Maela”
9	3B-13: Investment 4 – National platform for the management of public investigations	Milestone	Creation of a national platform for the management and publication of public surveys and related documents
10	3C-1: Reform 1 – Modernisation of corporate taxation	Milestone	Act of 10 February 2021 amending the amended act of 4 December 1967 on income tax (formerly draft act No°7547)
11	1A-6: Investment 2 – Digital Skills	Milestone	Access to training offered under the “Digital Skills” programme
12	1A-7: Investment 2 – Digital Skills	Milestone	Launch of the action, invitation of potential beneficiaries
13	3B-8: Investment 2 - Development of MyGuichet - Project 3/3: APP Mobile MyGuichet.lu	Milestone	Deployment of a mobile version of MyGuichet (restricted audience)
14	3C-4: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Vertical risk assessment in the area of terrorist financing
15	1C-1: Reform – Housing Pact 2.0	Milestone	Entry into force of the Housing Pact 2.0 Law
16	2A-1: Reform: Electrification of the fleet of contracting authorities and entities, and of public transport	Milestone	Grand-Ducal Regulation on the procurement of clean vehicles
17	2B-1: Reform and investment: ‘Naturpakt’	Milestone	Finalisation of the catalogue of measures
18	3A-3: Investment 1-Development and deployment of test infrastructure and ultra-secure connectivity solutions	Milestone	LuxQCI Laboratory
19	3B-9: Investment 2 - Development of MyGuichet - Project 3/3: APP Mobile MyGuichet.lu	Milestone	Deployment of a mobile version of MyGuichet.lu to the general public
20	1A-4: Investment 1- FutureSkills	Target	Participants of FutureSkills aged more than 45 years
21	1A-5: Investment 1 - FutureSkills	Target	Participants of FutureSkills
22	1A-8: Investment 2 – Digital Skills	Target	Completion of the training
23	1B-2: Reform 1 –Strengthening health system resilience — Gesondheetsdësch	Milestone	Work programme
24	2B-2: Reform and investment: ‘Naturpakt’	Milestone	‘Naturpakt’ Law
25	3B-1: Investment 1 – Electronic Document Management and Case Management	Milestone	Entry into operation of a central platform for electronic document management and case management.
26	3B-10: Investment 3 - ‘eADEM’	Milestone	Creation of ADEM 2025 Strategy for the analytical phase
27	3C-5: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Sectoral risk assessment of legal persons
28	3C-8: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Finalisation of the study on the reinforcement of the regime applicable to trust and company service providers
29	AC-2: Monitoring and implementation of the plan	Milestone	Protection of EU financial interests
		Instalment Amount	EUR 29 858 611

1.2.Second Instalment (non-repayable support):

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name

1	1B-3: Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Publication of a roadmap for the implementation of the reform of the responsibilities of health professionals
2	1B-8: Investment 2-Strengthening health system resilience — Telemedicine solution for remote medical follow-up of patients	Milestone	An integrated solution
3	2A-2: Investment: Support scheme for charging points	Milestone	Law on the support scheme for charging points
4	1A-2: Reform 1 - Skillsdësch	Milestone	Launch of the vocational trainings (« skillsbridges »)
5	3A-2: Reform 1 –Boosting the creation of a new ecosystem in Luxembourg	Target	Quantum Key Distribution
6	3B-5: Investment 2 - Development of MyGuichet- Project 1/3: Virtual appointment	Milestone	Phase 1 of the Exchange via videoconference
7	1B-6: Investment 1-Strengthening Health System Resilience — Single Digital Register of Health Professions	Target	Making available the new digital register
8	1C-3: Reform – Housing Pact 2.0	Target	Percentage of municipalities signing an implementation agreement
9	1C-4: Investment 1 – ‘Neischmelz’ project	Milestone	Launch of the new test drilling
10	3B-6: Investment 2 - Development of MyGuichet- Project 1/3: Virtual appointment	Milestone	Phase 2 of the Exchange via videoconference
11	3B-7: Investment 2 - Development of MyGuichet- Project 2/3: Various C2G and B2G approaches	Target	12 new services
		Instalment Amount	EUR 24 413 757

1.3.Third Instalment (non-repayable support):

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name

1	2B-3: Reform and investment: ‘Naturpakt’	Milestone	Initial audit of performance completed
2	3A-1: Reform 1 – Boosting the creation of a new ecosystem in Luxembourg	Milestone	Terrestrial network and space component
3	3A-4: Investment 1 -Development and deployment of test infrastructure and ultra-secure connectivity solutions	Milestone	Cross-border connection
4	1C-5: Investment 1 – ‘Neischmelz’ project	Milestone	Decision on the renewable heat production technology selected
5	3C-9: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Entry into force of the act reinforcing the regime applicable to trust and company service providers
6	1C-2: Reform – Housing Pact 2.0	Target	Percentage of municipalities signing an initial agreement
7	2A-3: Investment: Support scheme for charging points	Target	Number of operational charging points
8	3B-14: Investment 4 – National platform for the management of public surveys	Target	Integration process of the national platform
9	3C-7: Reform 2 – Fight of money laundering and terrorist financing	Milestone	Transformation of Luxembourg Business Register
		Instalment Amount	EUR 18 626 256

1.4.Fourth Instalment (non-repayable support):

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name

1	2B-4: Reform and investment: ‘Naturpakt’	Target	Signature of ‘Naturpakt contracts’ by 30 municipalities
2	3B-4: Investment 1 – Electronic Document Management and Case Management	Target	Entry into operation of two interconnectors between bodies (cross-tenants) to allow the implementation of workflow and case management between different state entities.
3	1C-6: Investment 1 – ‘Neischmelz’ project	Milestone	Launch of the heat network and heat production plant works
4	3A-5: Investment 1 - Development and deployment of test infrastructure and ultra-secure connectivity solutions.	Milestone	Cross-border connection for a demonstration using the satellite
5	3B-2: Investment 1 – Electronic Document Management and Case Management	Target	GED and Case Management within governmental entities
6	3B-3: Investment 1 – Electronic Document Management and Case Management	Target	Specific modules
7	3B-11: Investment 3 - ‘eADEM’	Milestone	Implementation of eADEM
8	3B-12: Investment 3 - ‘eADEM’	Milestone	Creation and implementation of two linked systems to eADEM
		Instalment Amount	EUR 12 649 505

1.5.Fifth Instalment (non-repayable support):

Sequential Number	Related Measure (Reform or Investment)	Milestone / Target	Name

1	2B-5: Reform and investment: ‘Naturpakt’	Target	‘Naturpakt’ certification of 15 municipalities
2	2A-4: Investment: Support scheme for charging points	Target	Number of operational charging points
3	1B-4: Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Competences, tasks and responsibilities of nurses and nursing assistants
4	1B-5: Reform 2 – Strengthening Health System Resilience — Reforming the remits of health professionals	Milestone	Competences, tasks and assignments of other health professions (including specialised nurses, therapists, midwives, social workers and dieticians)
5	1C-7: Investment 1 – ‘Neischmelz’ project	Target	Electricity generation for the new district
6	1C-8: Investment 1 – ‘Neischmelz’ project	Milestone	Heat generation for the new district
		Instalment Amount	EUR 7 805 947

SECTION 3: ADDITIONAL ARRANGEMENTS

1.Arrangements for monitoring and implementation of the recovery and resilience plan

The monitoring and implementation of the recovery and resilience plan of Luxembourg shall take place in accordance with the following arrangements.

The Directorate for Economic and Budgetary Affairs within the Ministry of Finance shall have overall responsibility for the implementation of the plan and act as a managing department and a single point of contact for the Commission. This service shall also be responsible for drawing up the payment requests and management declarations and shall coordinate and monitor the implementation of the plan. It shall also collect the data on the indicators as submitted by the final recipients, and carry out the management verifications.

The managing department shall be responsible for aggregating all the information relating to the indicators for which it shall also carry out a consistency check and, more generally, a quality control. The managing department shall also be responsible for communicating and making use of these monitoring data, both in the coordination committees and in the annual implementation report.

The managing department shall carry out checks (including on-the-spot) on the administrative, financial, technical and physical aspects of the operations, in all stages of the management of a measure included in the recovery and resilience plan. Such checks shall be carried out when financing sheets are examined, during the implementation and monitoring of the measures, when applications for reimbursement of grants to final recipients are submitted and when payments are made to final recipients.

In addition, specific measures shall be implemented to check compliance with the rules relating to public procurement, to prevent corruption, and to protect financial interests of the EU.

The General Finance Inspectorate (IGF) shall be the audit authority for the recovery and resilience plan.

The audit authority shall follow an audit approach based on the following principles: annual system audit (covering the system in place for the reporting of the milestones and targets and covering also the internal control system for preventing, detecting and correcting fraud, conflict of interest, corruption and double financing) and annual audits of operations (based on an adequate sample).

The data relating to final recipients shall be collected as soon as they enter the operation, which is done either by entering data directly by the managing department or by importing data via an import Excel file. The data collected in this manner shall then be entered either directly into the information system or imported via files.

2.Arrangements for providing full access by the Commission to the underlying data

The Directorate for Economic and Budgetary Affairs within the Ministry of Finance, as the central coordinating body for Luxembourg’s recovery and resilience plan and its implementation, is responsible for overall coordination and monitoring of the plan. In particular, it acts as a coordinating body for monitoring progress on milestones and targets, for monitoring and, where appropriate, implementing control activities and as a single point of contact for the Commission. This service shall also be responsible for drawing up the payment requests and management declarations. It shall coordinate the reporting of milestones and targets, relevant indicators, but also qualitative financial information and other data, such as the data on the indicators as submitted by the final recipients through a dedicated IT system, and carry out the management verifications. The General Finance Inspectorate (IGF) shall be the audit authority for the recovery and resilience plan.

In accordance with Article 24(2) of Regulation (EU) 2021/241, upon completion of the relevant agreed milestones and targets in Section 2.1 of this Annex, Luxembourg shall submit to the Commission a duly justified request for payment of the financial contribution. Luxembourg shall ensure that, upon request, the Commission has full access to the underlying relevant data that supports the due justification of the request for payment, both for the assessment of the request for payment in accordance with Article 24(3) of Regulation (EU) 2021/241 and for audit and control purposes.

(1) Source: European Environment Agency, greenhouse gases data viewer

(2)

Directive (EU) 2019/1161 of the European Parliament and of the Council of 20 June 2019 amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles. OJ L 188, 12.7.2019, p. 116–130

(3) Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, OJ L 156, 19.6.2018, p. 43-74.