Even if submitted at the end of October 2017, the draft of 2018 Budget was debated by the Italian parliament in the first days of the new year. Among the proposals for 2018 are a lower governmental deficit, revenue growth and lower expenditure. This year’s Budget also includes several incentives related to the innovation sector. If you are interested in setting up a company, our Italian company formation advisors can guide you through the procedure.
As the new year has begun, politicians have also prepared the new measures which must meet the forecast of a 1.5% economic growth by the end of 2018. Moreover, the same projection applies for 2019, as the Gross Domestic Product (GDP) is expected to decelerate to 1.3% in 2020.
In order to achieve the 1.5% growth threshold, the Italian government plans on reducing the general deficit to 1.6% from the 2.1% of the GDP registered last year. The lower deficit is expected to improve Italy’s fiscal balance, and even more, it is expected to generate governmental savings of 1 billion euros in 2018 and 2019. The budget balance is also forecast to improve by 0.3% this year and 0.4% in the next two years.
The 2018 Budget also proposes a set of measures meant to improve tax compliance for Italian companies and the introduction of electronic invoices for all types of transactions. The government also plans on establishing stricter rules and verification on VAT and the fuel excise tax.
The budgetary savings will be used for new programs and policies which will help the development of the business environment through incentives for private companies, but also to increase public investment in infrastructure projects. One of the programs to be developed is the Industry 4.0 scheme for innovation.
Italian companies will also benefit from a 50% reduction in social security contributions for a period of 3 years if they hire 35-year old unemployed people with indeterminate labor contracts.
The 2018 Budget is expected to keep Italy on track of a credible fiscal consolidation path.
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