Xbox one in Luxembourg

The Xbox One is not region locked, so if you managed to obtain one from any it's released markets you will be fine. Just be aware things like language and connection may be different than you are expecting. Also payments may be an issue, but as you said you have a working paypal/credit card you should be ok.

Source

I have been using Live from Luxembourg for many years. First I was attributed a German account which I had recently transferred to a UK account. What I can say about the One is the following:

• The One and its games are not region locked. You can play all games that are released in any of our EU neighbour countries just fine. The same should hold true for copies from other continents.
• You can freely select any language you want but it is, in parts, tied to the marketplace you are tied to, i.e. if you are tied to the German marketplace you would get some content in German.
• The marketplace dictates what content you can access in regard to applications and DLC and what adds will figure on your console, respectively, what offers are available to you.
• Using Paypal, while it worked previously, will result in your account being banned from purchases. This is due to a new security standard with the One which has since transcended to the 360. If the IP from which you are trying to buy content does not match the region of your Paypal account, the purchase won't go through and on the third unsuccessful try your account won't be able to make further purchases. You will then need to get support on the line and get it unlocked again.
• Similarly for VISA with the difference that you cannot register cards from a region different from your marketplace as the field is greyed out. So for you, if you hold a Portuguese credit/debit card and have a Portuguese account, it could work. But, IP restrictions may apply as highlighted above.
• Codes will be redeemable just fine. I have redeemed a few codes already and personally use, due to what I explained above regarding Paypal, Amazon gift cards to charge currency on my account.

You can circumvent most of the restrictions by using a VPN account to change the region of your IP address. Keep in mind that offers that are free circumvent the authentication of your payment method and will be accessible no matter the method you have added or what region you have chosen to attribute your account to. Note that depending on the region of your account, Gold offers might change to local restrictions or bans on certain games.