Making an investment in Italy

Learn more about investing in Italy in IL Postcards.

The Italian Investment Climate
A founding member of the European Union, Italy is a full participant in the Single Market, which makes investing in Italy an appealing option to some foreigners. Italy is also a member of the Group of Seven (G7, or G8 if you include Russia), the Organization for Economic Cooperation & Development (OECD), the International Monetary Fund (IMF), the United Nations, the World Trade Organization, and NATO. Italy's strength is primarily derived from family-owned small to medium-sized companies whose presence seems most effective on the local and regional level. Major international Italian companies use the stock markets and a program has been implemented to privatize state assets. However if you want to invest in Italy, its is important to realize the majority of Italian companies are not driven by share price.  The outlook is enthusiastically European and the strongest commercial links are with Germany.

The economy is basically divided into a highly developed industrial north where private companies dominate, and a less developed agricultural south.  The entrenched public sector, the largest in the EU, accounts for around 40% of the economy.  Italy has an open attitude toward foreign investment, and there are a number of development agencies on both the national and regional level as well as numerous trade associations that provide help in approaching potential Italian investment partners. However, bureaucracy at all levels-local, regional, and national-is notorious for delays and inefficiencies that can make investing in Italy frustrating. And, as the U.S. Country Commercial Guide for Italy states, "bureaucratic requirements can be burdensome."  Admittedly, the national government does have a policy aimed at reducing bureaucracy.  The plan is to devolve many statutory responsibilities for business to local and regional levels, but the intransigent public sector is resistant to change. This is making the policy quite difficult to implement.  Taxes remain high: the ordinary corporate tax rate is currently 33%. The Italian government plans to reduce this further but foreign investment flows into Italy are weak.

Business start-ups
Foreigners are free to invest in Italy. Except for certain restrictions and prohibitions in the defense sector, such as aircraft manufacturing, there are no local industries closed to private enterprise.  Except for in a few instances, foreign investors are treated the same as nationals.  You can avail of grants and subsidies.  As a general rule, incentives offered by the Italian government vary depending on the industry sector, the size of the company, and the area/location in which the investment is to be located. The principal types of incentives are:

? Cash grants, low-interest rate loans, leasehold contracts with particular benefits
? Corporate income tax exemptions
? Exemptions from social security contributions

Reclaim up to 60% of your investment in Italy
The Government development agency, Sviluppo Italia, and its subsidiary, Invest in Italy, aim to assist foreign investors. They offer a whole range of free services and help people to establish a business, from the first contacts right through to implementation. Financial sweeteners are on offer to encourage investment in the economically disadvantaged Mezzogiorno (the south of Italy), where unemployment hovers around 20%. Up to 60% of the amounts invested in southern Italy can be clawed back by means of a simple automatic tax credit mechanism. Taxes due as corporate taxation, VAT, and social charges can be offset against grants available to investors operating in the south.

Learn more about investing in Italy in IL Postcards.

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