Bureau of Economic and Business Affairs
July 5, 2016

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Executive SummaryShare    

Italy’s economy, the eighth largest in the world, is fully diversified, but dominated by small and medium-sized firms (SMEs), which comprise 99.9 percent of Italian businesses. Italy is an original member of the 19-nation Eurozone. Germany, France, the United States, Spain, Switzerland, and the United Kingdom are Italy's most important trading partners, with China continuing to gain ground. Tourism is an important source of external revenue, as are exports of pharmaceutical products, furniture, industrial machinery and machine tools, electrical appliances, automobiles and auto parts, food and wine, as well as textiles/fashion. Italy continues to lag behind many industrialized nations as a recipient of foreign direct investment, and Italy does not have a bilateral investment treaty with the United States.

Italy’s relatively affluent domestic market, proximity to emerging economies in North Africa and the Middle East, and assorted centers of excellence in scientific and information technology research remain attractive to many investors. The government remains open to foreign investments in shares of Italian companies and continues to make information available online to prospective investors. The Italian government’s efforts to implement new investment promotion policies to position Italy as a desirable investment destination were undermined in part by Italy’s ongoing economic weakness and lack of consistent progress on structural reforms that could repair the lengthy and often inconsistent legal and regulatory systems, unpredictable tax structure and layered bureaucracy. However, Italy’s economy has emerged from its longest recession in recent memory and the current government is making progress on its efforts to improve Italy’s investment climate.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index


61 of 167

World Bank’s Doing Business Report “Ease of Doing Business”


45 of 189

Global Innovation Index


31 of 143

U.S. FDI in partner country ($M USD, stock positions)

2014 (last available)

USD 26.7 billion


World Bank GNI per capita

2014 (last available)

USD 34,270


1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Italy welcomes foreign direct investment (FDI). As a European Union (EU) member state, Italy is bound by the Union’s treaties and laws. Under the EU treaties with the United States, Italy is generally obliged to provide national treatment to U.S. investors established in Italy or in another EU member state. Exceptions include access to government subsidies for the film industry (limited to EU member states); capital requirements for banks domiciled in non-EU member countries; and restrictions on non-EU-based airlines operating domestic routes. Italy also has investment restrictions in the shipping sector.

EU and Italian antitrust laws provide local authorities with the right to review mergers and acquisitions over a certain financial threshold. The Italian government may block mergers involving foreign firms if it is determined to be essential to the national economy (e.g., network industries) or if the government of the foreign firm applies discriminatory measures against Italian firms. Foreign investors in the defense or aircraft manufacturing sectors are more likely to encounter resistance from the many ministries charged with approving foreign acquisitions. Finmeccanica, a state-controlled defense conglomerate, operates domestically in these sectors.

Although many former monopoly operators have been partially privatized, the Government of Italy (GOI) retains a controlling interest, either directly or through the state-controlled sovereign wealth fund Cassa Depositi e Prestiti (CDP), in shipbuilder Fincantieri (72.5 percent), postal and financial services provider Poste Italiane (64.7 percent), electricity provider ENEL (25.5 percent), oil and gas major Eni (30 percent), defense conglomerate Finmeccanica (30.2 percent), natural gas infrastructure firm Snam (30.1 percent), as well as electricity transmission provider Terna (29.85 percent). Moreover, while it does not own any shares in former monopoly Telecom Italia (TI), the GOI retains a de facto veto power over ownership and investment decisions thought to pose a danger to national security (golden share), claiming that TI is of strategic importance because it still owns the largest portion of Italy’s telecommunications infrastructure. Government policy in these key economic sectors may take into account the interests of these specific firms.

According to the latest available figures from the Italian Trade Commission (ICE) from December 2011, 8,492 foreign companies operate in Italy, employing 886,254 workers with overall sales of €498.5 billion. According to UNCTD, in 2014, total FDI stock in Italy was 17.4 percent of GDP.

Other Investment Policy Reviews

There has been no OECD, WTO or UNCTAD investment policy review the past three years. However, Italy cooperates with the European Commission and OECD to produce country reports on the economic situation, which may include investment climate issues (links to both: and

Laws/Regulations of Foreign Direct Investment

Italy is bound by EU laws.

Business Registration

Italy has a business registration website, available in Italian and English, administered through the Union of Italian Chambers of Commerce:

The online business registration process is clear and complete. Foreign companies may use the online process. Before registering a company online, applicants must obtain a certified e-mail address and digital signature, a process that may take up to five days. A notary is required to certify the documentation. The precise steps required for the registration process depend on the type of business being registered. The minimum capital requirement also varies by type of business. Generally, companies must obtain a value-added tax account number (partita IVA) from the Italian Revenue Agency, register with the social security agency Istituto Nazionale della Previdenza Sociale (INPS), verify adequate capital and insurance coverage with the Italian workers’ compensation agency Istituto Nazionale per L’Assicurazione contro gli Infortuni sul Lavoro (INAIL), and notify the regional office of the Ministry of Labor. According to the World Bank Doing Business Index 2016, it takes five procedures and 5.5 days to start a business in Italy. Additional licenses may be required, depending on the type of business to be conducted.

The GOI has an investment promotion agency to promote inward investment, Invitalia. In addition, the Italian Trade Agency (ICE) has set up a “Foreign Investment Department” to assist those wanting to set up a new business in Italy ( In addition, many Italian localities have introduced one-stop shops to serve as a single point of contact for potential investors and provide advice in obtaining necessary licenses and authorizations. These services are available to all investors.

The GOI defines SMEs in line with the EU definition ( Italy provides incentives to certain SMEs (e.g., “innovative SMEs”), which would also be available to qualifying foreign-owned companies.

Industrial Promotion

Italy does not limit its investment attraction efforts to specific industries. Information about available programs is available on the websites listed above.

Limits on Foreign Control

Under the EU treaties with the United States, Italy is generally obliged to provide national treatment to U.S. investors established in Italy or in another EU member state. Exceptions include access to government subsidies for the film industry (limited to EU member states); capital requirements for banks domiciled in non-EU member countries; and restrictions on non-EU-based airlines operating domestic routes. Italy also has investment restrictions in the shipping sector.

EU and Italian antitrust laws provide Italian national local authorities with the right to review mergers and acquisitions over a certain financial threshold. The Italian government may block mergers and acquistions involving foreign firms if it is determined to be essential to the national strategic interest or if the government of the foreign firm applies discriminatory measures against Italian firms. Foreign investors in the defense or aircraft manufacturing sectors are more likely to encounter resistance from the many ministries charged with approving foreign acquisitions.

Privatization Program

The GOI has committed to privatize €16 billion in state-owned assets in 2016 and 2017 (€8 billion in each year). The privatizations fall into two categories: minority stakes in state-owned companies and underutilized real estate holdings. The GOI will sell shares of state-owned companies through the Milan Stock Exchange (Borsa Italiana), while real estate sales are conducted through public bidding processes (typically online). The GOI sold shares in the national postal provider (Poste Italiane) in 2015. By year-end 2017, the GOI plans to sell minority stakes in the national railroad company (Ferrovie dello Stato – FS) and the air traffic controller (ENAV). The GOI solicits and encourages foreign investors to participate in its privatizations. The privatizations are easy to understand, non-discriminatory and transparent.

Screening of FDI

Italy does not actively screen, review or approve FDI. However, EU and Italian antitrust laws provide local authorities with the right to review mergers and acquisitions over a certain financial threshold. The Italian government may block mergers involving foreign firms if it is determined to be essential to the national economy or if the government of the foreign firm applies discriminatory measures against Italian firms. This practice has been rarely used and has not been the subject of complaints from U.S. companies.

Competition Law

The Italian Competition Authority (AGCM) is responsible for reviewing transactions for competition-related concerns. AGCM may examine transactions that restrict competition in Italy as well as the broader EU market. As a member of the EU, Italy is also subject to interventions by the European Commission Competition Directorate (DG COMP).

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

In accordance with EU directives, Italy has no foreign exchange controls. There are no restrictions on currency transfers; there are only reporting requirements. Banks are required to report any transaction over EUR 1,000 due to money laundering and terrorism financing concerns. Profits, payments, and currency transfers may be freely repatriated. Residents and non-residents may hold foreign exchange accounts. In 2016, the GOI raised the limit on cash payments for goods or services to €3,000 (from €1,000). Payments above this amount must be made electronically. Enforcement remains uneven. The rule exempts e-money services, banks and other financial institutions, but not payment services companies.

Italy is a member of the European Monetary Union (EMU), with the euro as its official currency. Exchange rates are floating.

Remittance Policies

There are no limitations on remittances, though transactions above €1,000 must be reported.

According to the Financial Action Task Force, Italy has a strong legal and institutional framework to fight money laundering and terrorist financing and authorities have a good understanding of the risks the country faces. There are areas where improvements are needed such as its money laundering investigative and prosecutorial action on risks associated with self-laundering, standalone money laundering, and foreign predicate offences, and the abuse of legal persons.

3. Expropriation and CompensationShare    

The Italian constitution permits expropriation of private property for "public purposes," defined as essential services or measures indispensable for the national economy, with fair and timely compensation.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Italian law is based on Roman law and on French Napoleonic code law. The Italian judicial system consists of a series of courts and a body of judges employed as civil servants. The system is unified, every court being part of the national network. Though notoriously slow, the Italian civil legal system meets the generally recognized principles of international law, with provisions for enforcing property and contractual rights. Italy has a written and consistently applied commercial and bankruptcy law. Foreign investors in Italy can choose among different means of dispute resolution, including legally binding arbitration.

In January 2012, the government introduced new “business tribunals” in each of Italy’s 20 Regions intended to expedite the resolution of shareholder disputes, intellectual property disputes and other corporate matters, but not to adjudicate business disputes such as contract disputes. These courts are resolving the majority of their cases within one year, much more quickly than general civil courts. The government also introduced measures designed to streamline the legal system, and to promote alternative dispute resolution techniques, such as mediation and the decriminalization of minor offenses. The World Justice Project’s 2015 Rule of Law Index scored Italy as 19th out of the 24 countries in the Western Europe and North America Region, unchanged from the previous year.

In 2014, the government introduced a package of justice reforms intended to reduce the backlog of civil cases and speed newly filed cases to conclusion. These reforms included a new emphasis on alternative dispute resolution and methods to make collecting judgments easier. In a positive sign, a civil court in Torino halved the average duration of its civil cases by implementing new internal practices: assigning one judge to the case, thus increasing accountability, and requiring judges to transfer incomplete cases to a colleague if going on an extended leave. The judge responsible for these changes now serves as a legal reform advisor to the Presidency of the Council of Ministers and is working to expand these changes nationwide. In 2016, the government introduced a new package of justice reforms intended to build on the 2014 efforts. The 2016 reforms will expand the jurisdiction of the business tribunals to hear commercial contract disputes and increase the use of arbitration. The 2016 reforms should be implemented by year-end 2016.

Italy is a member state to the World Bank's International Centre for the Settlement of Investment Disputes (ICSID convention). Italy has signed and ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Italian law recognizes and enforces foreign court judgments.


Italy’s bankruptcy regulations are somewhat analogous to U.S. Chapter 11 restructuring, and allow firms and their creditors to reach a solution without declaring bankruptcy. In recent years, the judiciary’s role in bankruptcy proceedings has been reduced in an attempt to simplify and expedite proceedings. In August 2015, the Italian parliament passed a package of changes to the bankruptcy law, including measures to ease access to interim credit for bankrupt companies and restructure debts. Implementing regulations are expected by the end of 2016. In the World Bank’s Doing Business Report 2016, Italy ranks 23rd out of 189 economies in the category of Ease of Resolving Insolvency.

Investment Disputes

Italy has had very few investment disputes involving a U.S. person in the last 10 years. Post identified less than five such active disputes at the time of the drafting of this report.

International Arbitration

Italy is a party to the following international treaties relating to arbitration:

  • The 1927 Geneva Convention on The Execution of Foreign Arbitral Awards (entered into force on 12 February 1931);
  • The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (entered into force on 1 May 1969);
  • The 1961 European Convention on International Commercial Arbitration (entered into force on 1 November 1970) and;
  • The 1965 Washington Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (entered into force on 28 April 1971).

Italy’s Code of Civil Procedure (Book IV, Title VIII, Sections 806-840) governs arbitration in Italy, including the recognition of foreign arbitration awards. Italian law is not based on the UNCITRAL Model Law; however, many of the principles of the Model Law are present in Italian law.

Parties are free to choose from a variety of Alternative Dispute Resolution methods, including mediation, arbitration, and lawyer-assisted negotiation.

ICSID Convention and New York Convention

Italy is a member state to the World Bank's, International Centre for the Settlement of Investment Disputes (ICSID convention). Italy has signed and ratified the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Italian civil law (Section 839) provides for and governs the enforcement of foreign arbitration awards in Italy.

Duration of Dispute Resolution – Local Courts

In the World Bank’s Doing Business Report, Italy ranks 111 out of 189 economies in the category of Enforcing Contracts, averaging 1,120 days to resolve the typical contract case. Judges grant often lengthy continuances.

5. Performance Requirements and Investment IncentivesShare    


The GOI is a Party to the World Trade Organization (WTO) Trade-Related Investment Measures (TRIMs) obligations. Foreign investors face specific performance requirements only in the telecommunications sector.

Investment Incentives

The GOI offers modest incentives to encourage private sector investment in targeted sectors (e.g., innovative companies) and economically depressed regions, particularly southern Italy. The incentives are available to eligible foreign investors as well. Incentives include grants, low-interest loans, deductions and tax credits. Some incentive programs have a cost cap, which may prevent otherwise eligible companies from receiving the incentive benefits once the cap is reached. The GOI applies cost caps on a non-discriminatory basis, typically based on the order that applications were filed.

Italy provides an incentive for investments by SMEs in new machinery and capital equipment (“New Sabatini Law”), available to eligible companies regardless of nationality. This investment incentive provides financing, subject to an annual cost cap. Sector-specific investment incentives are also available in targeted sectors.

The Italian tax system does not discriminate between foreign and domestic investors. Corporate income tax (IRES) rates are 27.5 percent. In addition, companies may be subject to a regional tax on productive activities (IRAP) at a 3.9 percent rate. The World Bank estimates Italy’s total tax rate at 64.8 percent of commercial profits in 2015, the highest rate in the EU. As of March 2015, employers may also claim an IRAP deduction for each permanent new hire.

Several U.S. multinationals have sought U.S. Embassy assistance in dealing with Italy’s tax enforcement, with some expressing concerns that the Italian Revenue Agency targeted large companies. According to the companies, Italian tax investigations may focus on corporate accounting practices deemed legitimate in other EU Member States, creating inconsistencies and uncertainty.

Research and Development

The Minister of Education, University and Research (MIUR) has identified, funded, and signed Framework Program Agreements with eight "National Technology Clusters," public-private partnerships, including companies, universities and research institutions focused on strategic sectors (Intelligent Factory, Green Chemistry, Life Sciences, Transport and Shipping, Agrifood, Aerospace, Technology for Smart Communities and Smart Living Technologies). The Clusters facilitate cooperation between public and private researchers and venture capitalists, support the research and development of key technologies, strengthen industrial research activities, and promote innovation in small- and medium-sized enterprises.

U.S.-owned and other foreign firms operating in Italy are able to participate in GOI-financed research and development programs. However, R&D initiatives funded by the EU may be subject to additional restrictions (administered by the EU).

Performance Requirements

Italy does not mandate local employment. Non-EU nationals who would like to establish a business in Italy must have a valid residency permit or be nationals of a country with reciprocal arrangements. For a list of countries with reciprocal arrangements, please see:

Work permits and visas are readily available and do not inhibit the mobility of foreign investors. As a member of the Schengen Area, Italy typically allows short-term visits (up to 90 days) without a visa. The Italian Ministry of Foreign Affairs has specific information about visa requirements:

As a member of the EU, Italy does not follow forced localization policies in which foreign investors must use domestic content in goods or technology.

6. Protection of Property RightsShare    

Real Property

According to the World Bank, Italy ranks 24th worldwide for the ease of registering property down two positions from 2015. Real property registration takes an average of 16 days, requires four procedures and costs an average of 4.4 percent of the value of the property. Real property rights are enforced in Italian courts. Mortgages and judgment liens against property exist in Italy and the recording system is reliable. Although Italy does not publish official statistics, post estimates that less than 10 percent of the land in Italy does not have clear title.

Intellectual Property Rights

Italy was removed from the Watch List in USTR’s 2014 Special 301 Report, primarily due to the Italian Communications Authority’s (AGCOM’s) December 12, 2013 issuance of a new regulation to combat digital copyright theft. The regulation, which entered into force on

March 31, 2014, provides AGCOM with the administrative authority to block domestic sites and access to international sites offering illegal content. This streamlined procedure to address illegal content has greatly reduced the need to go through a lengthy court process. In the two years since its inception, this regulation has effectively allowed AGCOM to block access to pirate websites and has seen an increase in sites voluntarily cooperating with rights holders to remove copyrighted material. Italy has remained off of the Special 301 report and continues to monitor and take down pirated materials.

Although Italy does not release data on a regular basis, an October 2014 government report said that between 2008 and 2013, Italian authorities made 99,748 seizures of counterfeit products, totaling 334 million pieces, with a value of €3.8 billion ($4.25 billion).

Italian IPR advocates have noted that the Government of Italy has enacted new reforms to the judicial system that decriminalizes many IPR violations. Part of a larger effort to reform the judicial system and clear out a lengthy backlog of cases, the reforms allow local magistrates to use discretionary authority for prosecution of crimes which provide for a jail sentence of five years or less. As most IPR crimes fall under this sentencing limit, some stakeholders are concerned that IPR violators will not face penalties for infringements.

Copyrighted works sold in Italy generally must bear a sticker issued by SIAE, Italy's royalty collection agency operating under loose authority from the Ministry of Culture. Business software is exempted although obtaining this exemption requires extensive paperwork. The music and film industries assert the system has become overly burdensome and costly, and has failed to provide adequate protection from piracy.

Italy is a member of the Paris Union International Convention for the Protection of Industrial Property (patents and trademarks), to which the United States and about 85 other countries adhere. U.S. citizens generally receive national treatment in acquiring and maintaining patent and trademark protection in Italy. After filing a patent application in the United States, a U.S. citizen is entitled to a 12-month period within which to file a corresponding application in Italy and receive rights of priority. Patents are granted for 20 years from the effective filing date of application and are transferable. U.S. authors can obtain copyright protection in Italy for their work first copyrighted in the United States, merely by placing on the work, their name, date of first publication, and the symbol (c).

Italy does not appear on USTR’s notorious market report.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at

Resources for Rights Holders

Embassy point of contact:

Local lawyers list:

7. Transparency of the Regulatory SystemShare    

Italy is subject to single market directives mandated by the EU, which are intended to harmonize regulatory regimes among EU countries.

Italy is slowly tackling some of the red tape and other obstacles that have hampered business in the past. The World Bank’s 2016 edition of its “Doing Business” guide ranks Italy 45th out of 189 countries, (up 11 places from last year and 20 places from two years ago) for ease of doing business. A “liberalization” decree in 2012 provided limited incentives for entrepreneurs under age 35 starting a new businesses, including cutting the registration fee to one euro and reducing filing requirements. The government issued a broader simplification decree in 2012 that eliminated 15 obsolete laws to reduce the amount of red tape and fees required for anyone seeking to open a business. In 2012, the government passed a decree providing tax credits for startups and incubators, as well as for private infrastructure investment. The decree also authorized creation of a new “Desk Italia” that provides a single contact point at the Ministry of Economic Development to attract FDI and support investors willing to invest in Italy. Desk Italia was subsequently followed by Destinazione Italia, a package of measures designed to simplify and improve the investment climate via a combination of both parliamentary actions and administrative procedures in cooperation with local Chambers of Commerce, regional authorities, the Institute for Foreign Trade (ICE) and Invitalia, Italy’s agency to promote inward investment and economic development, owned by the Italian Ministry of Economic Development.

The government gives notice of draft regulations; there is a public comment process. The notice includes a general analysis of the proposed regulation, the draft regulation, and some specific questions on the approach taken by the regulators in drafting the proposal.

8. Efficient Capital Markets and Portfolio InvestmentShare    

The GOI welcomes foreign portfolio investments, which are generally subject to the same reporting and disclosure requirements as domestic transactions. Financial resources flow relatively freely in Italian financial markets and capital is allocated mostly on market terms. Foreign participation in Italian capital markets is not restricted. In practice, many of Italy’s largest publicly-traded companies have foreign owners among their primary shareholders. While foreign investors may obtain capital in local markets and have access to a variety of credit instruments, access to equity capital is difficult. Italy has a relatively underdeveloped capital market and businesses have a long-standing preference for credit financing. The limited venture capital available is usually provided by established commercial banks and a handful of venture capital funds.

Italy’s regulatory system adequately encourages and facilitates portfolio investment. Italy’s financial markets are regulated by the Italian securities regulator (CONSOB), Italy’s central bank (the Bank of Italy) and the Institute for the Supervision of Insurance (IVASS). CONSOB supervises and regulates Italy’s securities markets (e.g., the Milan Stock Exchange). The Bank of Italy supervises banks and other financial institutions, with the European Central Bank (ECB) assuming supervisory responsibilities for the largest Italian banks in 2015. IVASS supervises and regulates insurance companies. Liquidity in the primary markets (e.g., the Milan exchanges) is sufficient to enter and exit sizeable positions, though Italian capital markets are small by international standards. Liquidity may be limited for certain less-frequently traded investments (e.g., bonds traded on the secondary and OTC markets). Liquidity measures, turnover and trading information for the Milan Stock market can be found here:

In general, Italian policies generally facilitate the flow of financial resources to markets. Dividends and royalties paid to non-Italians may be subject to a withholding tax, unless covered by a tax treaty. Dividends paid to permanent establishments of non-resident corporations in Italy are not subject to the withholding tax. A full list of countries subject to tax treaties can be found on the Revenue Agency website:

In 2009, the United States and Italy enacted an income tax agreement to prevent double-taxation of each other’s nationals and firms, and to improve information sharing between tax authorities.

On January 10, 2014 representatives of the governments of Italy and the United States in Rome signed an intergovernmental agreement to implement provisions of U.S. law known as FATCA (Foreign Account Tax Compliance Act). The FATCA intergovernmental agreement (IGA) allows for the automatic exchange of information between tax authorities and reflects an agreement negotiated between the United States and five European Union countries (France, Germany, Italy, Spain, and the United Kingdom). The automatic exchange of information takes place on the basis of reciprocity, and includes accounts held in the United States by persons resident in Italy and those held in Italy from U.S. citizens and residents. FATCA officially entered into force in Italy on July 8, 2015.

In 2015, the GOI signed tax information exchange agreements (TIEAs) with Switzerland, Lichtenstein, the Vatican, Andorra, the Cayman Islands and Monaco removing these countries from Italy’s black list of tax avoidance countries. Italy also removed Guernsey, Jersey, Mauritius, the Isle of Man, Malaysia, Singapore and the Philippines from its black list in 2015.

Italy imposed a financial transactions taxes (FTT, a.k.a. Tobin Tax) beginning in 2013. Financial trading is taxed at 0.1 percent in regulated markets and 0.2 percent in unregulated markets. The FTT applies to daily balances rather than to each transaction. The FTT applies to trade in derivatives, with fees ranging from €0.025 to €200. Also, high frequency trading is subject to a 0.02 percent tax on trades occurring every 0.5 seconds or faster (e.g., automated trading). The FTT does not apply to “market makers,” pension and small-cap funds, transactions involving donations or inheritances, purchases of derivatives to cover exchange/interest-rate/raw-materials (commodity market) risks, and financial instruments for companies with a capitalization of less than €500 million.

The GOI has sought to curb widespread tax evasion by improving enforcement and changing popular attitudes. GOI actions include a public communications effort to reduce tolerance of tax evasion; increased and very visible financial police controls on businesses (e.g., raids on businesses in vacation spots at peak holiday periods); and audits requiring individuals to document their income. The GOI is also engaged in limiting tax avoidance. In February 2014, Italy’s Parliament approved the enabling legislation for a package of tax reforms, many of which entered into force in 2015. The tax reforms aim to institutionalize OECD best practices to encourage taxpayer compliance, including by reducing the administrative burden for taxpayers through the increased use of technology such as e-filing, pre-completed tax returns, and automated screenings of tax returns for errors and omissions prior to a formal audit. The reforms also offer additional certainty for taxpayers through programs such as cooperative compliance and advance tax rulings (i.e., binding opinions on tax treatment of transactions in advance) for prospective investors.

The GOI and the Bank of Italy have accepted and respect IMF obligations, including Article VIII.

Credit is allocated on market terms, with foreign investors eligible to receive credit in Italy. In general, credit in Italy remains largely bank-driven. In practice, foreigners may encounter limited access to finance, as Italian banks may be reluctant to lend to prospective borrowers (even Italians) absent a preexisting relationship. Although a wide array of credit instruments are available, bank credit remains constrained following the financial crisis. Credit conditions have begun to loosen in 2016.

Money and Banking System, Hostile Takeovers

The Italian banking system weathered the 2007-2013 financial crisis without resorting to government intervention. Italy’s central bank, the Bank of Italy (BOI), is a member of the Eurosystem and the European Central Bank (ECB). In addition to ECB supervision of larger Italian banks, BOI maintains strict supervisory standards. The banking system remains sound and capital ratios exceed ECB thresholds though banks’ profit margins have suffered since 2011 as a result of tightening European supervisory standards and requirements to increase banks’ capital. The recession brought a pronounced worsening of the quality of banks’ assets, which further dampens banks’ profitability. The ratio of non-performing loans (NPLs) on total outstanding loans increased significantly, especially for lending to non-financial firms. NPLs have more than doubled since the crisis to reach €200 billion and accounted for 10.1 percent of all loans as of July 2015. The BOI expects NPLs to peak in 2016.

Italian banks remain exposed to sovereign risk, as Italian banks increased their holdings of Italian government bonds to €389 billion in 2015. Weak demand and risk aversion by banks continue to constrain lending, with banks tightening lending criteria. The latest business surveys show that credit conditions are easing, but availability of credit remains constrained, especially for smaller firms. Although banks loans to households returned to growth at the end of 2015, Italian bank lending to businesses was essentially unchanged from a year earlier, after falling by 5.3 percent in 2014.

The banking system in Italy has consolidated significantly since the financial crisis, but there are too many Italian banks and the GOI is taking steps to encourage consolidation and facilitate acquisitions by outside investors. As of September 2015, there were 646 banks in Italy, 26 fewer than a year earlier. In 2015, the GOI approved a reform of Italy’s 37 cooperative banks (popolari), which together account for approximately 25 percent of Italian bank loans. The reform requires cooperative banks with annual revenue above €8 billion to convert to joint-stock companies within 18 months. For the 10 cooperatives banks covered by the reform, this will end the “one shareholder one vote” governance that allowed small stakeholders to remain in control of the largest cooperative banks. The Italian banking sector remains overly concentrated on physical bank branches for delivering services, further contributing to sector-wide inefficiency and low profitability. Electronic banking is available in Italy, but adoption remains below Eurozone averages.

The London Stock Exchange owns Italy’s only stock exchange: the Milan Stock Exchange (Borsa Italiana). The exchange is relatively small -- 356 listed companies and a market capitalization of only 34.8 percent of GDP in 2015. Although the exchange remains primarily a source of capital for larger Italian firms, Borsa Italiana created “AIM Italia” in 2012 as an alternative exchange with streamlined filing and reporting requirements to encourage SMEs to seek equity financing. Additionally, the GOI recognizes that Italian firms remain overly reliant on banks for financing and have initiated some programs to encourage alternative forms of financing, including through venture capital and corporate bonds.

The Italian Companies and Stock Exchange Commission (CONSOB), is the Italian securities regulatory body.

Most non-insurance investment products are marketed by banks, and tend to be debt instruments. Italian retail investors are conservative, valuing the safety of government bonds over most other investment vehicles. Less than ten percent of Italian households own Italian company stocks directly. Several banks have established private banking divisions to cater to high-net-worth individuals with a broad array of investment choices, including equities and mutual funds.

There are no restrictions on foreigners engaging in portfolio investment in Italy. Financial services companies incorporated in another EU member state may offer investment services and products in Italy without establishing a local presence.

Any investor (Italian or foreign) acquiring a stake in excess of two percent of a publicly traded Italian corporation must inform CONSOB, but does not need its approval. Any Italian or foreign investor seeking to acquire or increase its stake in an Italian bank equal to or greater than ten percent must receive prior authorization from the Bank of Italy (BOI). Acquisitions of holdings that would change the controlling interest of a banking group must be communicated to the BOI at least 30 days in advance of the closing of the transactions. IVASS approval and advance authorization are required for any significant acquisition in ownership, portfolio transfer or merger of insurers or reinsurers. Regulators retain the discretion to reject proposed acquisitions on prudential grounds (e.g., insufficient capital in the merged entity).

9. Competition from State-Owned EnterprisesShare    

The Italian government has in the past owned and operated a number of monopoly or dominant companies in certain strategic sectors. However, beginning in the 1990s and through the early 2000s, the government began to privatize most of these state-owned enterprises.

Notwithstanding this privatization effort, the Government of Italy (GOI) retains 100 percent ownership of the national air traffic controller (ENAV), the national railroad company (Ferrovie dello Stato) and road network company (ANAS). The GOI holds a 99.56 percent share of RAI, the national radio and television broadcasting network. In addition, the GOI holds a controlling interest, either directly or through the state-controlled sovereign wealth fund Cassa Depositi e Prestiti (CDP), in shipbuilder Fincantieri (72.5 percent), postal and financial services provider Poste Italiane (64.7 percent), electricity provider ENEL (25.5 percent), oil and gas major Eni (30 percent), defense conglomerate Finmeccanica (30.2 percent), natural gas infrastructure firm Snam (30.1 percent), as well as electricity transmission provider Terna (29.85 percent). Moreover, while it does not own any shares in former monopoly Telecom Italia (TI), the GOI retains a de facto veto power over ownership and investment decisions thought to pose a danger to national security (golden share), claiming that TI is of strategic importance because it still owns the largest portion of Italy’s telecommunications infrastructure.

The GOI also owns a controlling interest in the national development bank and sovereign-wealth fund Cassa Depositi e Prestiti, which invests in public sector projects and in companies of public interest such as electricity transmission operator Terna and gas distributor Snam. However, the companies are operating in a competitive environment (domestically and internationally) and are increasingly responsive to market-driven decision-making rather than GOI demands. In addition, many of the state-controlled entities are publicly traded, which provides additional transparency and corporate governance obligations, including equitable treatment for non-governmental minority shareholders.

State-controlled entities are subject to the same tax treatment and budget constraints as fully private firms. Additionally, industries with state-controlled entities remain open to private competition.

A full list of GOI shareholdings is available at:

In terms of employment, Poste Italiane is Italy’s largest SOE, with 142,000 employees nationwide in 2015. Italy’s largest SOEs ranked by market capitalization in 2015 were Eni (with $177 billion in assets worldwide), ENEL ($201.6 in assets) and Finmeccanica.

As an EU member, Italy is covered by EU government procurement rules.

OECD Guidelines on Corporate Governance of SOEs

The GOI appoints the top management and members of the board for companies in which it holds a controlling interest. Once appointed, SOE management is not directly accountable to Italian government officials. SOEs are generally managed at arm’s length as private-sector entities, to comply with EU state aid rules. The GOI does not intervene with the day-to-day operations of SOEs and adopts a more passive role as a portfolio investor for its minority shareholdings.

As Italy’s national development bank, CDP has the mission of supporting Italian economic growth through long-term investments (e.g., funding of national infrastructure projects). To carry out this mission, CDP often takes a more active role in furthering and implementing GOI industrial policies than do other SOEs. Since 2004, CDP has not been part of the Government of Italy’s national accounts. To maintain its status as a separate non-public entity, all CDP transactions must ensure a return on investment for its shareholders.

Sovereign Wealth Funds

GOI launched the Italian Strategic Fund (Fondo Strategico Italiano - FSI) in 2011. FSI is wholly owned by the GOI, through CDP (80 percent ownership) and the Bank of Italy (20 percent ownership). As of 2015, FSI had €6 billion in capital, with €3.7 billion of this invested in 11 portfolio companies. FSI generally adopts a passive role by purchasing minority interests as a non-managerial investor. It does not hold a majority stake in any of its portfolio companies. FSI invests solely in Italian companies with the goal of furthering the expansion of companies in growth sectors. FSI provides information on its funding, investment policies, criteria and procedures on its website ( FSI is open to capital investments from outside institutional investors, including foreign investors. As of March 2016, FSI has signed co-investment agreements with Qatar Holding, the Kuwait Investment Authority (KIA), China Investment Corporation (CIC), RDIF (a Russian fund) and the Korea Investment Corporation. FSI is a member of the International Working Group of Sovereign Wealth Funds and follows the Santiago Principles. FSI hosted the 2015 meeting of the International Working Group in Milan.

10. Responsible Business Conduct (RBC)Share    

There is a general awareness of expectations and standards for responsible business conduct. Enforcement is generally fair, through the slow pace of civil justice may delay individuals’ ability to seek effective redress for adverse business impacts. In addition, EU laws and standards on RBC apply in Italy. In the event that Italian courts fail to protect an individual’s rights under EU law, it is possible to seek redress to the European Court of Justice (ECJ).

CONSOB has enacted corporate governance, accounting, and executive compensation standards to protect shareholders. Information on corporate governance standards is available at:

Independent NGOs are able to do their work freely in Italy. Additionally, Italy’s three largest trade union confederations actively promote and monitor RBCs. They serve on the advisory body to Italy’s National Contact Point (NCP). Unions are able to work freely in Italy.

Since 2000, when it signed the Declaration on International Investment and Multinational Enterprises, Italy has supported and encouraged compliance with the OECD’s Guidelines for Multinational Enterprises (“Guidelines”), which are recommendations addressed by governments to multinational enterprises operating in or from adhering countries (the OECD members plus Argentina, Brazil and Chile). The Guidelines provide voluntary principles and standards for corporate social responsibility, in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, competition, taxation, and science and technology.

Key links: OECD Guidelines:

Full text in English:

The Italian National Contact Point (NCP) for encouraging observance of the Guidelines in Italy and for ensuring that the Guidelines are well known and understood by the national business community and by other interested parties is located in the Ministry of Economic Development. The NCP spreads and enforces the Guidelines; disseminates related information; and promotes collaboration among national and international institutions, the economic world and civil society. Italy’s National Action Plan on Corporate Social Responsibility is available online. Internationally, the NCP works with the OECD Investment Committee and international stakeholders.

Key link: Italian NCP:

The NCP also maintains a list of partners and stakeholders that are involved in CSR. The list can be found here:

Italy encourages responsible supply chains and has provided operational guidelines for Italian businesses to assist them in supply chain due diligence.

Italy is a member of the Extractive Industries Transparency Initiative (EITI). The Italian Ministry of Foreign Affairs works internationally to promote the adoption of best practices.

11. Political ViolenceShare    

Political violence is not a threat to foreign investments in Italy, but corruption, especially associated with organized crime, can be a major hindrance, particularly in the south – see next section.

12. CorruptionShare    

Corruption, including bribery, raises the costs and risks of doing business. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law. Corruption and organized crime are significant impediments to investment and economic growth in parts of Italy and cost the country an estimated €60 billion annually in wasted public resources. Successive Italian governments have been engaged in the fight against corruption

Legislative Approaches to Corruption

In October 2012, the Italian parliament passed an anti-corruption law promoting transparency in public administration and prohibiting persons found guilty of serious crimes from holding public office. The law also provides for the appointment of an Anti-Corruption High Commissioner to head the new National Anti-Corruption Authority (ANAC – previously known as CiVIT), which is responsible for adopting a public administration anti-corruption plan; monitoring its implementation; recommending measures to be taken by other agencies; and conducting inspections and investigations in conjunction with the financial police. The legislation included stiffer penalties for those convicted of bribery-related offenses, protective measures for whistleblowers, and requirements for greater transparency in public contracts. It also prohibits anyone convicted of a serious crime from holding certain public administration positions. In March 2014, Prime Minister Renzi nominated respected prosecutor Raffaele Cantone, already a national figure for his courageous anti-mafia work, to head ANAC. In January 2016 the Italian Senate gave final approval to a law reforming public contracts. The law strengthens ANAC’s powers to police public contracting and attempts to address some of the inefficiencies that may lead to delays and corruption in public works projects (limiting appeals, making it harder to change a project once it is already underway, and facilitating direct payment of smaller companies by the public administration).

In 2014, Italy’s anti-money laundering laws specifically enhanced due-diligence procedures for politically exposed persons, defined as any person who has been entrusted with important political functions, as well as the immediate family members of these individuals. (This encompasses anyone from the head of state to members of the executive body in State-owned companies.) The law does not apply to members of political parties who are not serving in a public role. While anti-corruption laws and trials garner headlines, they have been only somewhat effective in stopping corruption. Italy has improved in Transparency International’s Corruption Perceptions Index each year since 2012, though it still ranks behind 29 European countries.

Recent Corruption Cases in Italy

In 2014 and 2015 a number of officials were arrested on corruption charges related to Milan Expo. This scandal rose to a high level, with the Minister of Transport Maurizio Lupi eventually forced to resign due to allegations of his involvement in corrupt contract distribution. In 2015, there was a continuation of a major public sub-contracting scandal in Rome known as Mafia Capitale, which exposed not only public corruption but ties between organized crime groups and government officials. In November 2015, 46 individuals were placed on trial in connection with Mafia Capitale, the second-largest corruption trial in Italy’s history. The services affected by the Mafia Capitale corruption scandal ranged from recycling to providing food and shelter for refugees. As of January 2016, four individuals had been convicted of corruption with sentences ranging from one year and ten months to two years and four months.

Impact on Private Companies

It is important for U.S. companies, irrespective of their size, to assess the business climate in the market in which they will be operating or investing, and to have effective compliance programs or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the anticorruption laws of both the foreign country and the United States in order to comply with them and, where appropriate, they should seek the advice of legal counsel. Relevant Italian laws include Italian legislative decree No. 231 of 08/06/2001, No. 146 of 16/03/2006, No. 81 of 09/04/2008 and No. 190 of 06/11/2012. According to Italian law a private party who is unlawfully induced to give or promise money or other advantage to a public officer or person charged with a public service commits an offence. It is likewise an offence for a person to take advantage of his or her relationship with a public officer for the purpose of receiving or promising money or other kind of economic advantage.

In order to avoid liability, Italian companies and foreign companies operating in Italy must demonstrate that they have put into place adequate organizational, management and control structures to detect and prevent corruption. These structures are described as the organizational model in Articles 6 &7 of legislative decree 231/2001. Business associations also encourage such measures. For example, the by-laws of Italy’s main business association (Confindustria) require it to expel members found to be paying protection money and to assist those in reporting extortion attempts to authorities.

While the U.S. Embassy has not received specific complaints of corruption from U.S. companies operating in Italy, commercial and economic officers are familiar with high profile cases that may impact U.S. companies (such as the corruption allegations linked to Milan Expo (see above). The Embassy has received requests for assistance by companies facing a lack of transparency and complicated bureaucracy, particularly in the sphere of government procurement and specifically in the aerospace industry. There have not been any reports of government failure to protect NGOs that investigate corruption (such as Transparency International Italy).

U.S. Foreign Corrupt Practices Act

In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to foreign public officials for the purpose of obtaining or retaining business for or with, or directing business to, any person. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. For more detailed information on the FCPA, see the FCPA Lay-Person’s Guide at:

Other Instruments

It is U.S. Government policy to promote good governance, including host country implementation and enforcement of anti-corruption laws and policies pursuant to their obligations under international agreements. Since enactment of the FCPA, the United States has been instrumental to the expansion of the international framework to fight corruption. Several significant components of this framework are the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Antibribery Convention), the United Nations Convention against Corruption (UN Convention), the Inter-American Convention against Corruption (OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a growing list of U.S. free trade agreements. Italy is party to the OECD Antibribery Convention and the UN Convention, and has signed and ratified both the Civil and Criminal Law Conventions on Corruption within the Council of Europe. However, Italy has not yet ratified the COE’s additional protocol on corruption. Italy also works to counter corruption through various international bodies suck as the International Chambers of Commerce, International Business Leaders Forum, International Association of Anti-Corruption Authorities, and the G20 Anti-Corruption Working Group. Italy also has local branches/networks of the Global Organization of Parliamentarians Against Corruption, Transparency International, and UN Global Compact. Generally all countries prohibit the bribery and solicitation of their public officials.

OECD Antibribery Convention

The OECD Antibribery Convention entered into force in February 1999. As of April 2016, there are 41 parties to the Convention including the United States (see ). Major exporters China and India are not parties, although the U.S. Government strongly endorses their eventual accession to the Convention. The Convention obligates the Parties to criminalize bribery of foreign public officials in the conduct of international business. The United States meets its international obligations under the OECD Antibribery Convention through the U.S. FCPA. Italy ratified the 1997 OECD Convention on Combating Bribery and implemented its provisions in September 2001.

UN Convention

The UN Anticorruption Convention entered into force on December 14, 2005, and there are 178 states and signatories to it as of December 2015 (see The UN Convention is the first global comprehensive international anticorruption agreement. The UN Convention requires countries to establish criminal and other offences to cover a wide range of acts of corruption. The UN Convention goes beyond previous anticorruption instruments, covering a broad range of issues ranging from basic forms of corruption such as bribery and solicitation, embezzlement, trading in influence to the concealment and laundering of the proceeds of corruption. The Convention contains transnational business bribery provisions that are functionally similar to those in the OECD Antibribery Convention and contains provisions on private sector auditing and books and records requirements. Other provisions address matters such as prevention, international cooperation, and asset recovery. Italy enacted the United Nations Convention against Corruption in 2009.

Council of Europe Criminal Law and Civil Law Conventions

Many European countries are parties to either the Council of Europe (CoE) Criminal Law Convention on Corruption, the Civil Law Convention, or both. The Criminal Law Convention requires criminalization of a wide range of national and transnational conduct, including bribery, money-laundering, and account offenses. It also incorporates provisions on liability of legal persons and witness protection. The Civil Law Convention includes provisions on compensation for damage relating to corrupt acts, whistleblower protection, and validity of contracts, inter alia. The Group of States against Corruption (GRECO) was established in 1999 by the CoE to monitor compliance with these and related anti-corruption standards. Currently, GRECO comprises 49 member States (48 European countries and the United States). As of January 2015, the Criminal Law Convention has 50 parties and the Civil Law Convention has 42. Italy is a party to both. (See

Free Trade Agreements

While it is U.S. Government policy to include anticorruption provisions in free trade agreements (FTAs) that it negotiates with its trading partners, the anticorruption provisions have evolved over time. The most recent FTAs negotiated now require trading partners to criminalize “active bribery” of public officials (offering bribes to any public official must be made a criminal offense, both domestically and trans-nationally) as well as domestic “passive bribery” (solicitation of a bribe by a domestic official). All U.S. FTAs may be found at the U.S. Trade Representative Website: Italy does not have an FTA with the U.S.

Local Laws

U.S. firms should familiarize themselves with local anticorruption laws. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel. Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials, and prohibit their officials from soliciting bribes under domestic laws. Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions discussed above.

Corruption is punishable under Italian law. Italian criminal law provides sentencing guidelines and grants the presiding judge discretion to impose the sentence consistent with the guidelines. Most corruption in recent years has involved government procurement or bribes to tax authorities. Bribes are not considered deductible business expenses under Italian tax law.

Assistance for U.S. Businesses

The U.S. Department of Commerce offers services to aid U.S. businesses seeking to address business-related corruption issues. For example, the U.S. and Foreign Commercial Service provide services that may assist U.S. companies in conducting their due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas. The U.S. Foreign and Commercial Service can be reached directly through its offices in major U.S. and foreign cities, or through its Website at

The Departments of Commerce and State provide worldwide support for qualified U.S. companies bidding on foreign government contracts through the Commerce Department’s Advocacy Center and State’s Office of Commercial and Business Affairs. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel and through the Department of Commerce Trade Compliance Center “Report a Trade Barrier” Website at

Guidance on the U.S. FCPA

The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals to request a statement of the Justice Department’s present enforcement intentions under the anti-bribery provisions of the FCPA regarding any proposed business conduct. The details of the opinion procedure are available on DOJ’s Fraud Section Website at Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general guidance to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the Chief Counsel for International Commerce, U.S. Department of Commerce Website at . More general information on the FCPA is available at the Websites listed below.

Anti-Corruption Resources

Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

Information about the U.S. Foreign Corrupt Practices Act (FCPA), including the Lay-Person’s Guide to the FCPA, is available at the U.S. Department of Justice’s Website at:

Information about the OECD Antibribery Convention including links to national implementing legislation and country monitoring reports is available at: . See also new Antibribery Recommendation and Good Practice Guidance Annex for companies: and .

General information about anticorruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce Website: .

Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 167 countries and territories around the world. The CPI is available at: In the 2015 CPI report, TI placed Italy in 61st position (an improvement of eight places) alongside Lesotho, Montenegro, Senegal and South Africa. While highly publicized anti-corruption enforcement activities have been underway for years, there is general agreement that a high level of corruption limits Italy’s economic growth and ability to attract foreign investment. TI also publishes an annual Global Corruption Report (GCR) which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See

The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 215 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See . The World Bank Business Environment and Enterprise Performance Surveys may also be of interest and are available at:

The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. See .

Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at

Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 109 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: .

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Italy has signed and ratified the UN Anticorruption Convention.

Italy has signed and ratified the OECD Convention on Combatting Bribery.

Resources to Report Corruption

Autorità Nazionale Anticorruzione (ANAC)
c/o Galleria Sciarra
Via M. Minghetti, 10 - 00187 Roma
Phone: +39 06 367231
Fax: +39 06 36723274

Whilstleblower hotline phone: +39 02 49520512

Giorgio Fraschini
Via Vigano 4
21045 Gazzada Schianno (VA)

Transparency International Italia
Via Zamagna 19
20148 Milano – Italy
Phone: +39 02 40093560
Fax: +39 02 406829

Report corruption at:

13. Bilateral Investment AgreementsShare    

Bilateral Investment Treaties

Italy has not signed a bilateral investment treaty with the United States.

Italy has bilateral investment agreements with the following countries:

Albania, Algeria, Angola, Argentina, Armenia, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belize (signed, not in force), Bolivia, Bosnia and Herzegovina, Brazil (signed, not in force), Cameroon, Cape Verde (signed, not in force), Chad, Chile, China, Congo, Cote d'Ivoire (signed, not in force), Croatia, Cuba, Cyprus (signed, not in force), Democratic Republic of Congo (signed, not in force), Djibouti (signed, not in force), Dominican Republic, Ecuador, Egypt, Eritrea, Ethiopia, Gabon, Georgia, Ghana (signed, not in force), Guatemala, Guinea, Hong Kong, India, Indonesia, Iran, Islamic Republic of, Jamaica, Jordan, Kazakhstan, Kenya, Korea, DPR of (signed, not in force), Korea, Republic of, Kuwait, Lebanon, Libya, Macedonia, Republic of, Malawi (signed, not in force), Malaysia, Mauritania (signed, not in force), Mexico, Moldova, Republic of, Mongolia, Morocco, Mozambique, Namibia (signed, not in force), Nicaragua (signed, not in force), Nigeria, Oman, Pakistan, Panama, Paraguay (signed, not in force), Peru, Philippines, Qatar, Russian Federation, Saudi Arabia, Senegal (signed, not in force), Serbia, South Africa, Sri Lanka, Sudan (signed, not in force), Syrian Arab Republic, Tanzania, United Republic of, Tunisia, Turkey, Turkmenistan (signed, not in force), Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Venezuela (signed, not in force), Vietnam, Yemen, Zambia (signed, not in force), Zimbabwe (signed, not in force).

Bilateral Taxation Treaties

Italy has a bilateral taxation treaty with the United States. The text of the treaties is available at

Several U.S. multinationals have sought U.S. Embassy assistance in dealing with Italy’s tax enforcement, with some expressing concerns that the Italian Revenue Agency targeted large companies. According to the companies, Italian tax investigations may focus on corporate accounting practices deemed legitimate in other EU Member States, creating inconsistencies and uncertainty.

14. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) does not operate in Italy.

Italy’s Export Credit Agency, SACE, is a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA).

15. LaborShare    

As a result of its longest and deepest recession since World War II, Italy's unemployment rate peaked at 13.1 percent in November 2014. Italy emerged from recession in 2015 and unemployment has since ebbed, but remained high, at 11.5 percent in January 2016 and above the Eurozone average of 10.3 percent. The youth unemployment rate more than doubled during the financial crisis, exceeding 43 percent in 2014. Though youth unemployment has since declined, it remains elevated (37 percent in January 2016) and one of the highest among EU members. In 2015, there were an estimated 2.2 million young Italians not in education, employment or training (NEETs), more than 22 percent of all young Italians, which is one of the highest ratios in the EU. Long-term unemployment is also elevated, leading to a permanent reduction in human capital and earnings potential. In 2015, seven percent of the Italian labor force had sought unsuccessfully for more than 12 months to find employment. Official unemployment data do not account for temporarily laid-off employees who receive benefits from Italy’s “wage guarantee fund” (for struggling or restructuring companies). Additionally, many Italians dropped out of the unemployment statistics, as they became discouraged and stopped looking for work. Italy’s labor force participation rates are among the lowest in the EU, particularly among women, the young and the elderly. Low labor force participation may be partially attributable to the informal economy, which Italy’s statistics agency estimates as 12.9 percent of Italian GDP. The GOI aims to alleviate youth unemployment through the EU Youth Guarantee Fund as well as vocational programs.

The productivity of Italy’s labor force is below the EU average. Many Italian employers report an inability to find qualified candidates for highly-skilled vacancies, demonstrating significant skills mismatches in the Italian labor market. Many well-educated Italians find more attractive career opportunities outside of Italy, with large numbers of Italians taking advantage of EU agreements on freedom of movement to work in the United Kingdom, Switzerland or Germany. There is no reliable measure of Italians working overseas, as many expatriate workers do not report their whereabouts to the Italian government. Skilled labor shortages are a particular problem in Italy’s industrialized north.

On paper, companies may bring in a non-EU employee after the government-run employment office has certified that no qualified, unemployed Italian is available to fill the position. In reality, the cumbersome and lengthy process acts as a deterrent to foreign firms seeking to comply with the law; language barriers also prevent outsiders from competing for Italian positions. Work visas are subject to annual quotas, although intra-company transfers are exempt from quota limitations.

With the goal of modernizing Italy’s notoriously inflexible labor market, the Renzi government enacted the Jobs Act as the centerpiece of its structural reform agenda. Passed by Parliament in December 2014 and implemented through legislative decrees in 2015, the Jobs Act is a package of structural reforms to Italy’s labor market. The Jobs Act removed a key obstacle to hiring new employees by removing employees’ unqualified right to seek reinstatement, almost always via lengthy court cases (known as “Article 18” of the Italian labor code). The new law provides greater legal certainty to employers by permitting employee reinstatement only in discrimination cases. Article 18 also discouraged employers from hiring employees on indefinite contracts, with employers preferring to hire temporary employees. Often, “temporary” employees were essentially permanent employees, as employers renewed the contracts repeatedly. The GOI introduced a hiring incentive in 2015 for employers to hire workers on indefinite contracts, granting them a three-year exemption from employers’ contributions to social security for each new permanent employee. In 2016, the exemption was reduced to two years and 40 percent of employers’ contributions.

As of January 2016, the Jobs Act appears to be contributing to its stated goal of encouraging indefinite employment. In 2015, 1.44 million labor contracts received the hiring incentive, of which about one-third were conversions from temporary contracts. From January 2015 to January 2016, the number of employed Italians has increased by more than 299,000, marking the highest number of Italians at work since July 2011. The number of Italians on indefinite contracts increased by 426,000 over the same period, as employers increasingly converted employees from temporary to open-ended contracts. Despite the recent improvement, the GOI and the European Commission continue to forecast that Italy’s unemployment rate will remain in double digits until 2020 as employers increasingly seek to improve worker productivity and increase hours for existing workers, rather than hire additional new workers.

Indefinite employment contracts signed before March 2015 would be governed by the June 2012 labor regime, which allows firms to conduct layoffs and firings with severance pay. Under the 2012 system, according to Article 18 of the workers’ statute of 1970, judges could order reinstatement of dismissed employees (with back pay) if they find the dismissal was pretext for discriminatory or disciplinary dismissal. In practice, dismissed employees reserved the right to challenge their dismissal indefinitely, often using the threat of prolonged legal proceedings or an adverse court ruling to negotiate additional severance packages with employers.

Employment contracts signed since March 2015 are governed by the new rules under the labor market reform (Jobs Act), which provides employment contracts with protections increasing with job tenure. During the first 36 months of employment, firms may dismiss employees for bona fide economic reasons. Under the new regime, dismissed employees must appeal their dismissal within 60 days and reinstatements are limited.

Regardless of the reason for termination of employment, all former employees are entitled to receive mandatory severance payments from their employer (TFR - trattamento di fine rapporto), equal to 7.4 percent of the employee’s annual gross compensation for each year worked.

Other Jobs Act measures enacted in 2015 include universal unemployment and maternity benefits, as well as a reduced number of official labor contract templates (from 42 to six). The unemployment insurance (ASDI) provides up to six months of coverage for laid off workers. The GOI also provides worker retraining and job placement assistance, but services vary by region and implementation of national active labor market policies remains in process. Italy also offers other social safety net protections to all residents, designed to tackle poverty.

The GOI must still implement remaining Jobs Act measures, expected in 2016, including a statutory minimum wage (Italy does not currently have a national minimum wage, as wages are set through sector-wide collective bargaining) and a nationwide agency for job training and placement.

Italy does not waive existing labor laws in order to attract or retain investments. All the benefits including the hiring incentives in the 2015 and 2016 budgets are available to all eligible companies operating in Italy.

Historical regional labor market disparities remain unchanged, with the southern third of the country posting a significantly higher unemployment rate (e.g., more than 25 percent in Calabria, at the southern end of the peninsula) than northern and central Italy (e.g., 4.8 percent in Bolzano, a northern region bordering Austria). Despite these differences, internal migration within Italy remains modest, while industry-wide national collective bargaining agreements set equal wages across the entire country. Immigrants from Eastern Europe and North Africa often supplement the shortages in the north of unskilled and semi-skilled labor.

Italy is an International Labor Organization (ILO) member country. Terms and conditions of employment are periodically fixed by collective labor agreements in different professions. Most Italian unions are grouped into four major national confederations: the General Italian Confederation of Labor (CGIL), the Italian Confederation of Workers' Unions (CISL), the Italian Union of Labor (UIL), and the General Union of Labor (UGL). The first three organizations are affiliated with the International Confederation of Free Trade Unions (ICFTU), while UGL has been associated with the World Confederation of Labor (WCL). The confederations negotiate national-level collective bargaining agreements with employer associations, which are binding on all employers in a sector or industry irrespective of geographical location.

Collective bargaining is widespread in Italy, occurring at the national-level (primarily to reflect inflation and cost-of-living adjustments) and industry-level (to reflect productivity and profitability). Firm-level collective bargaining is limited. The Italian Constitution provides that unions may reach collective agreements that are binding on all workers. There are no official estimates of the percentage of the economy covered by collective bargaining agreements. A 2014 estimate from union officials projected collective bargaining coverage at 80 percent (for national-level bargaining) in 2014, with less coverage for industry-level agreements and minimal coverage for company-level agreements. Collective agreements may last up to three years, though recent practice is to renew collective agreements annually. Collective bargaining establishes the minimum standards for employment, through employers retain the discretion to apply more favorable treatment to some employees covered by the agreement.

Labor disputes are handled through the civil court system, though they are subject to specific procedures. Before entering the civil court system, parties must first attempt to resolve their disputes through conciliation (administered by the local office of the Ministry of Labor) and/or through specific union-agreed dispute resolution procedures.

In cases of proposed mass layoffs or facility closures, the Ministry of Economic Development may convene a tripartite negotiation (Ministry, company and union representatives) to attempt to reach a mutually acceptable agreement to avoid the layoff or closure.

There were no strikes during the last year that posed investment risks. The Italian Constitution recognizes an employee’s right to strike. Strikes are permitted in practice, but typically short-term (e.g., one working day) to draw attention to specific areas of concern. In addition, workers (or former employees) commonly participate in demonstrations to show opposition to proposed job cuts or facility closings, but these demonstrations have not threatened investments. In addition, frequent strikes among local transportation provides may limit citizens’ mobility.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

The main free trade zone in Italy is located in Trieste, in the northeast. At Trieste FTZ, customs duties are deferred for 180 days from the time the goods leave the FTZ and enter another EU country. The goods may undergo transformation free of any customs restraints. An absolute exemption is granted from any duties on products coming from a third country and re-exported to a non-EU country. Legislation to create other FTZs in Genoa and Naples exists, but has yet to be implemented. A free trade zone operated in Venice for a period but is being restructured. Currently, goods of foreign origin may be brought into Italy without payment of taxes or duties, as long as the material is to be used in the production or assembly of a product that will be exported. The free-trade zone law also allows a company of any nationality to employ workers of the same nationality under that country's labor laws and social security systems.

A “tax free zone” has also been approved and financed by the Government of Italy for the Province of Caltanissetta in central Sicily with €50 million in European structural funds. The project was to have been launched in 2013, but has not moved out of the planning and discussion phase.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source*

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)


$1.814 trillion


$2.141 trillion

Foreign Direct Investment

Host Country Statistical source*

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)


$17.3 billion


$26.7 billion

BEA data

Host country’s FDI in the United States ($M USD, stock positions)




$21.8 billion

BEA data

Total inbound stock of FDI as % host GDP





UNCTAD 2014 Data

* Italian GDP data taken from Istat, the official statistics agency. Italian FDI Data are from the Bank of Italy and are the latest available. ISTAT publishes preliminary year end GDP data in early February and issues revised data in early March. OECD 2015 Average Exchange Rate (1 USD = €0.901) used to convert official host country GDP data to dollars.

Table 3: Sources and Destination of FDI

The statistics below show Italy's largest investment partners to be within the European Union and the United States. This is consistent with Italy being fully integrated with its EU partners and the United States.

Direct Investment from/in Counterpart Economy Data 2014

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward





















United Kingdom









United States



"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

The statistics below show Italy's largest investment partners to be within the European Union and the United States. This is consistent with Italy being fully integrated with its EU partners and the United States.

Portfolio Investment Assets 2014

Top Five Partners (Millions, US Dollars)


Equity Securities

Total Debt Securities

All Countries



All Countries



All Countries






























United States



United States



United States






United Kingdom







18. Contact for More InformationShare    

John W. Barbian
Economic Officer
Embassy Rome
Via Veneto 119a
00186 Rome, Italy
+39 06 4674 2320