The Grand Duchy of Luxembourg is a constitutional monarchy acting as a parliamentary democracy. Although the head of state is a hereditary Grand Duke from the Nassau-Weilburg dynasty, the sovereign power belongs to the Luxembourg people, as represented through the elected members of Parliament (Chamber of Deputies) and as guaranteed by the Constitution.

The sovereign power in Luxembourg is formally divided into a legislative, an executive and a judicial branch. The democratic principles, i.e. the separation of powers and the participation of the population, are further enshrined in the institutional framework that guarantees a measure of independence to each branch, but at the same time makes consultation between branches mandatory.