ILGA-Europe - celebrating 10 years - has analysed the laws and policies governing LGBT+ people in 49 European countries over the past 12 months.
ILGA-Europe (International Lesbian, Gay, Bisexual, Trans and Intersex Association) publishes an annual index that provides an overview of the social and legal climate and human rights situation for LGBT+ people across Europe.
Luxembourg ranks third, with 70.4%, behind Malta (90.3%) and Belgium (73.1%).
The index brings together dozens of criteria, spanning concerns around equality, family issues and hate speech to legal gender recognition, freedom of expression and asylum rights. Rankings are based on the impact of each country's laws and policies on the lives of LGBTI people. ILGA-Europe used these measures for the first time in 2009 and have been extending them since.
On a scale where zero indicates gross violations of human rights and 100% represents the highest degree of equality before the law, a measurement tool created by ILGA-Europe, Azerbaijan scored only 3%, according to Rainbow Europe.
The former Soviet Republic state - host of the 2012 Eurovision Song Contest - earned points only in 3 of the 69 individual categories, covering areas such as labour law and marriage equality.
A direct comparison with last year's results is not possible as ILGA-Europe has changed the total number of categories to give more weight to laws and policies covering civil society and asylum.
However, the top-ranked countries this year, including Malta, Luxembourg, and Finland (fourth), have bridged gaps in transgender and intersex rights, said Evelyne Paradis, Executive Director of ILGA-Europe.
Regardless of the change in criteria, countries that continue to perform well and return to the top are those who understood long ago that the agenda does not only include marriage equality, so Paradis at the Thomson Reuters Foundation.
Germany, France and Norway also saw their scores decline in the last 12 months.
Earlier this year Luxembourg was ranked 4th internationally in the Spartacus Gay Travel Index.