The tiny European country has improved its position as a post-Brexit business destination by reforming its fiscal rules and digital environment.

LUXEMBOURG — Plenty of people have reason to bemoan Britain’s retreat from the European Union. But for others, Brexit could spell opportunity. And perhaps nowhere is that truer than in Luxembourg, with its booming financial center focused on investment funds management services and financial technology, or FinTech, as it’s sometimes called.

The Brexit effect may, in fact, have already begun for the tiny Grand Duchy. In January, Japan’s Rakuten Europe Bank launched its trading activities in Luxembourg. Two Chinese banks — China Everbright Bank and the Shanghai Pudong Development Bank — also have plans to set up shop in this nerve center of asset management in the EU. And in October, Britain’s M&G Investments applied with the CSSF, the financial sector supervisor, for permission to start a fund distribution firm there.

This isn’t to say that companies are stampeding their way into Luxembourg. But there does seem to be renewed international interest in the country as a financial center.

How exactly the Brexit plays out is still very much an open question. But the shifting status of London vis-à-vis the EU will no doubt push some companies toward the continent. Dozens of banks are thought to have already applied for their EU “work permits” with CSSF. And of all the possible landing sites, Luxembourg “is particularly well placed to offer practical solutions,” says Tom Théobald, a deputy-head of Luxembourg for Finance (LFF), a public-private agency that develops Luxembourg’s financial sector.

“London will keep its status as an international financial center,” he adds. “But it will have to learn to work like the Swiss banks, with national seats and management platforms beyond its borders.”

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