Company Formation Italy



Foreign Investments in Italy

Updated on Thursday 14th April 2016

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foreign_investments.jpgThe foreign investments in Italy have an important role in the country's economy, attracting over one million employees and a turnover of about 450 billion Euros, also having a strong contribution to the development of innovation by investments in research.


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 advantages of Italian economy


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 recent global crisis has affected the country's FDI position, dropping down from 29 billion Euros in 2007 to 8 billion Euros in 2008, before returning to 14 billion Euros in 2009, but again to 9 billion Euros in 2010.


From the historical point of view, the attractiveness of the economy for foreign investment in Italy has been limited in comparison to other European countries. Italy's performance in attracting FDI has been particularly poor in the period 1990-2000 , when the country's cumulative FDI inflows were only 13% of those in the United Kingdom, 17% in Germany, 21 % of those in France and 35 % of that of Spain.


However, since 2000 , the stock of foreign investments in Italy has recorded substantial growth, as this country has become more interesting for investors willing to develop a business from abroad.


Measures taken by the Italian gouvernment


The government encourages foreign investments in Italy by several measures taken in order to support entrepreneurs from abroad: tax benefits, investment loans with a smaller rate of interest, state guarantee for exports, as well as other financial facilities. In this sense, there are several criteria for obtaining financial aid for foreign investments in Italy: the location in which the foreign entrepreneur is willing to develop a new business, the size of the investment, the economical sector in which the business will be established. In addition, the state grants certain tax exemptions for a period of ten years for entrepreneurs developing a company, no matter of company type chosen, in an area affected by unemployment.


The main sectors which offer great investment opportunities are:


- 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;

- tourism, which is the most profitable domain in Italy. The country was, in 2011, 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.


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