That’s according to figures published by Nato on 10 July (PDF).
The grand duchy is expected to spend $391m this year (0.55% of GDP), up from $234m in 2013 (0.38%).
Nato guidelines call for alliance members to spend 2% of GDP of defence.
Other proportionally low spenders are Belgium, Spain and Slovenia. The top spenders are the US, followed by Greece, Estonia and the UK.
After seeing the numbers, Lucian Kim, Moscow correspondent with the US public service broadcaster NPR, tweeted: “Donald Trump will be very upset with Luxembourg.”