After a period in which foreign direct investments
went through a period of uncertainty, the Italian economy has started recovering which led to a steadiness in terms of foreign investors setting up companies
Now, the Italian economy is one of the largest in the world by size, being ranked as the ninth in terms of gross domestic product and the tenth in nominal parity of purchasing power. Italy is also a country heavily oriented to foreign trade, being ranked as the ninth in the world by value of exports and the twelfth by the value of imports.
The Italian industry is dominated by small and medium-sized enterprises, most of them implied in manufacturing or services, while large enterprises are few, phenomenon so-called industrial dualism. Italian companies have responded in part by outsourcing the production in developing countries, in part by focusing on quality production. In addition, from the late '90s Italy has begun to introduce legislation provisions in order to deregulate the labor market, making it more flexible.
The Italian economy in numbers
The attractiveness of the economy for foreign investments in Italy
was traditionally limited, despite the country's advantages, such as a large domestic market and a skilled workforce.
The last several years have been very good for the Italian economy, as recent numbers indicate the investment flow in Italy rose to approximately 30 billion USD in 2016, and thus the country became the 15th largest foreign direct investments (FDI) recipient in the world. During the same year, Italy surpassed large economies in Europe, such as France and Spain.
The most powerful investment sectors in Italy
- real estate, as in recent years Italians are interested in buying a second home or a holiday home and immigrants willing to remain in Italy search for real estate properties in order to settle here;
, which is the most profitable domain in Italy. The country is the fifth most visited country in the world, with 46.1 million of international tourists.
- food industry: Italy has a remarkable culinary tradition and lately surveys have shown that tourists are attracted to spend the holiday in Italy also because of the great food and specialties offer.
Foreign direct investment incentives in Italy
Over the years, the Italian government had created various sets of regulations which provide an attractive FDI environment. Among these are:
- tax deductions
for investments in research and development activities, which can reach up to 50% of the income tax;
- investment grants which can reach up to 65% of the costs related to buying various assets;
- tax deductions for companies employing workers on a permanent basis;
- a patent box which provides for tax exemptions related to the creation of intellectual property, such as patents, know-how and trademarks;
- various tax incentives for startups and innovative companies.
Several tax cuts were announced at the end of 2017 which should be enforced starting with 2018.
The real estate industry in Italy
Italy is one of the European countries with the most beautiful landscapes and histories. These characteristics attract a great number of investors and private foreign citizens seeking to buy real estate for commercial or touristic, respectively for residential purposes. Foreign investors interested in investing in real estate can purchase properties at very convenient prices, while private citizens are mainly attracted by the highly quality of life and low living costs.
Tourism- one of the most appealing industries in Italy
The real estate
and the tourism industry
are closely related as the first one has enabled large foreign investors to set up hotels
and other accommodation facilities in Italy. The number of travel agencies
has grown a lot during the last few years, however there is still room for other investment possibilities
, as the market has not reached its full potential yet. Foreign investors seeking to invest in tourism in Italy
can direct their attention towards opening an online travel agency in Italy.
The food industry in Italy
Italy is renowned for its delicious pasta and great-tasting wines, and in 2016 the food and beverages industry
remains one of the most attractive
. At the beginning of the year, several Asian investors have shown their interest in importing food products from Italy which has brought significant incomes to operators in this industry.
Recent laws on foreign investment in Italy
In 2015, the Government has enabled several schemes
which are still very attractive to foreign investors
. Among these the liberalization of the energy and telecommunications sectors, which allows private players to enter the Italian market, and the privatization of the public transportation system which was also benefic in terms of attracting foreign investments
. According to the Italian Company Act
, foreign investors have the same rights of establishing companies like local ones, while the foreign investment legislation
allows foreign enterprisers in set up businesses in any industry, apart from several sectors, such as oil and gas.
Assistance for foreign investors in Italy
The Government encourages foreign investments
not only through its laws, but also through grants and investment schemes
which are renewed or replaced periodically in order to make them more attractive. At the moment, the Government supports foreign investments
in the following economic sectors:
The authorities also support entrepreneurs interested in investing in Southern Italy (Rome, Sicily and Sardinia).
Investment benefits in Italy
The following grants are available for foreign investments made in Italy:
- deductions of up to 50% of the employees’ salaries, purchase of equipment and intellectual property rights for investments in the research and development (R&D) sector;
- tax exemptions for up to 10 years for companies investing in disadvantaged areas (such as Southern Italy);
- grants up to 65% for investing in fixed assets in disadvantaged areas.
The Government also assists companies exporting products
through low interest loans for up 85% of the amount of the exported goods. It also useful to know that Italy has two free trade zones: Venice and Trieste which offer additional tax benefits.