Luxembourg is a signatory of the Council of Europe’s charter on local autonomy, which supports local self-government, and the political, administrative and financial independence of local authorities.

In its latest review of Luxembourg’s implementation of the charter, the council concluded that Luxembourg fully recognises and respects the principle of local autonomy, and the right of communes to manage their own affairs.

However, it also recommended that the division of powers between the national government and local authorities must be better divided. For example, the interior ministry oversees hiring processes of civil servants.

Communes in Luxembourg manage local administrative services, but they also fund primary schools, maintain local roads and have authority over land-use planning. This makes them strategic partners to tackle issues such as housing and transport but also economic development. The Differdange and Sanem communes in 2018, for example, blocked plans for a rockwool factory over pollution fears.

The municipalities’ budgets are in part financed through the state as well as local tax revenue. Their independence is enshrined in the constitution, which under recent changes also states that they must receive the funds necessary to fulfil their missions. A 2021 balance sheet showed funds of €2.39bn for 102 municipalities.

The council’s report also strengthens demands by Syvicol, a union of cities and municipalities in Luxembourg, which has long pushed to be formally recognised as a player in government and parliament talks and negotiations.

While Syvicol publishes opinions on draft laws, there is no systematic or mandatory consultation, the council said. A reform of laws regulating the relationship between the government and communes started in 2020 but should be sped up, the council said.