Executive Summary

Italy’s successful vaccination campaign, an ambitious reform and investment plan funded and approved by the European Union, and Prime Minister Mario Draghi’s leadership which has boosted Italy’s role on the international stage, helped the Italian economy to grow a healthy 6.6 percent in 2021 – one of the fastest rates in Europe. Growth was underpinned by a robust 17 percent increase in investment. However, energy price spikes, supply chain disruptions, and Russia’s full-scale invasion of Ukraine create uncertainty affecting consumer and business confidence. Italy now forecasts its economy, the euro area’s third largest, will grow by 3.1 percent (down from a 4.7 percent projected in September 2021). For 2023, the government projects GDP will grow 2.4 percent (down from the previous target of 2.8 percent). The public debt, proportionally the highest in the eurozone after Greece’s, is targeted at 147 percent of GDP in 2022, down from 2020’s 156 percent, and projected to decline to 145 percent in 2023.

Italy’s National Resilience and Recovery Plan (NRRP) combines over €200 billion in investment to accelerate the digital and green transition coupled with wide-ranging reforms addressing the Italian economy’s longstanding drags on growth — namely its slow legal system, tax administration and bloated bureaucracy — while rebalancing policies to address gender, youth, and regional disparities. This combination of investment and reform, with some easing of fiscal constraints from Brussels, may reposition Italy, the eurozone’s second largest industrial base, as an engine for growth. In April 2022, the European Commission disbursed €21 billion in the first tranche of Next Generation EU funds pandemic aid to Italy after determining the Italian government successfully met the 51 objectives of its NRRP set out for 2021. Italy will have to achieve a further 45 milestones and targets by June 30, 2022, to receive the second tranche of funds worth €24.1 billion. Crucial for improving Italy’s investment climate and spurring growth is reform of Italy’s justice system, one of the slowest in Europe. According to the European Commission, the average Italian civil law case takes more than 500 days to resolve, versus an average of about 200 days in Germany, 300 in Spain and 450 in Greece. For U.S. investors, judicial reform and bureaucratic streamlining would minimize uncertainty and create a more favorable investment climate.

Italy is and will remain an attractive destination for foreign investment, with one of the largest markets in the EU, a diversified economy, and a skilled workforce. Italy’s economy, the eighth largest in the world, is dominated by small and medium-sized firms (SMEs), which comprise 99.9 percent of Italian businesses. Italy’s relatively affluent domestic market, access to the European Common 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. Italy is the eighth largest consumer market in the world, the seventh largest manufacturing producer, and boasts a diversified economy and skilled workforce. The clustering of industry, the infrastructure, and the quality of life are also among the top reasons international investors decide to start or expand a business in Italy. According to Italy’s Institute of Statistics, over 15,000 foreign multinationals employ one out of seven Italian residents.  Foreign companies account for 18 percent of Italian GDP and 14 percent of investments. Exports of pharmaceutical products, furniture, industrial machinery and machine tools, electrical appliances, automobiles and auto parts, food and wine, as well as textiles/fashion are an important source of external revenue. The sectors that have attracted significant foreign investment include telecommunications, transportation, energy, and pharmaceuticals. The government remains open to foreign investment in shares of Italian companies and continues to make information available online to prospective investors.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 42 of 180 http://www.transparency.org/research/
Global Innovation Index 2021 29 of 132 https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, historical stock positions) 2021 $31,093 https://www.bea.gov/international/
World Bank GNI per capita 2020 $32,290 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Policies Towards Foreign Direct Investment

Italy is an open economy and welcomes foreign direct investment (FDI). As an EU member state, Italy is bound by the EU’s treaties and laws. Under EU treaties with the United States, as well as OECD commitments, Italy is generally obliged to provide national treatment to U.S. investors established in Italy or in another EU member state.

EU and Italian antitrust laws provide Italian authorities with the right to review mergers and acquisitions for market dominance. In addition, the Italian government may block mergers and acquisitions involving foreign firms under its investment screening authority (known as “Golden Power”) if the proposed transactions raise national security concerns. Enacted in 2012 and further implemented through decrees or follow-on legislation in 2015, 2017, 2019, 2020, and 2022, the Golden Power law allows the Government of Italy (GOI) to block foreign acquisition of companies operating in strategic sectors: defense/national security, energy, transportation, telecommunications including 5G and cloud computing, critical infrastructure, sensitive technology, and nuclear and space technology.  Under the April 6, 2020, Liquidity Decree the Prime Minister’s Office issued, the government strengthened Italy’s investment screening authority to cover all sectors outlined in the EU’s March 2019 foreign direct investment screening directive. The decree also extends (and has been renewed until December 31, 2022) Golden Power review to certain transactions by EU-based investors and gives the government new authorities to investigate non-notified transactions. Embedded in a broader government decree issued on March 18, 2022, the latest revision of the Golden Power investment screening authority reflects the government’s effort to adapt to both rapid developments in technology and recent shifts in the geopolitical landscape.  The proposed restructuring of the Golden Power mechanism revolves around three poles: the first enlarges Golden Power’s scope to capture emerging and critical technology, including cloud-based activities of strategic importance to the national defense and security system; the second proposes a requirement that companies submit to the Golden Power committee for approval annual procurement plans; and the third empowers a ten-expert committee to carry out investigations to monitor compliance, and also establishes strict penalties and enforcement mechanisms for non-compliance. The decree is in force for 60 days by which time it will need to be passed by the Italian parliament.

The Italian Trade Agency (ITA) is responsible for foreign investment attraction as well as promoting foreign trade and Italian exports. ITA operates under the coordination of the Italian Ministry of Economic Development and the Ministry of Foreign Affairs. As of April 2022, ITA operates through a network of 79 offices in 65 countries. ITA promotes foreign investment in Italy through Invest in Italy program: http://www.investinitaly.com/en/ . The Foreign Direct Investment Unit is the dedicated unit of ITA for facilitating the establishment and development of foreign companies in Italy. ITA supports foreign investors from location scouting to bureaucratic consulting to aftercare following the establishment of their business (e.g., visas, expansion projects, etc.).

While not directly responsible for investment attraction, SACE, Italy’s export credit agency, has additional responsibility for guaranteeing certain domestic investments. Foreign investors – particularly in energy and infrastructure projects – may see SACE’s project guarantees and insurance as further incentive to invest in Italy.

Additionally, Invitalia is the national agency for inward investment and economic development operating under the Italian Ministry of Economy and Finance. The agency focuses on strategic sectors for development and employment. Invitalia finances projects both large and small, targeting entrepreneurs with concrete development plans, especially in innovative and high-value-added sectors. For more information, see https://www.invitalia.it/eng . The Ministry of Economic Development ( https://www.mise.gov.it/index.php/en/ ) within its Directorate for Incentives to Businesses also has an office with some responsibilities relating to attraction of foreign investment.

Italy’s main business association (Confindustria) also helps companies in Italy: https://www.confindustria.it/en .

Limits on Foreign Control and Right to Private Ownership and Establishment

Under EU treaties and OECD obligations, Italy is generally obliged to provide national treatment to U.S. investors established in Italy or in another EU member state. EU and Italian antitrust laws provide national authorities with the right to review mergers and acquisitions over a certain financial threshold. The Italian government may block mergers and acquisitions involving foreign firms to protect the national strategic interest or in retaliation if the government of the country where the foreign firm is from applies discriminatory measures against Italian firms. Foreign investors in the defense and aircraft manufacturing sectors are more likely to encounter resistance from the many ministries involved in reviewing foreign acquisitions than are foreign investors in other sectors.

Italy maintains a formal national security screening process for inbound foreign investment in the sectors of defense/national security, transportation, energy, telecommunications, critical infrastructure, sensitive technology, and nuclear and space technology through its “Golden Power” legislation. Italy expanded its Golden Power authority in March 2019 to include the purchase of goods and services related to the planning, realization, maintenance, and management of broadband communications networks using 5G technology. Under the April 6, 2020, Liquidity Decree the Prime Minister’s Office issued, the government strengthened Italy’s investment screening authority to cover all sectors outlined in the EU’s March 2019 foreign direct investment screening directive. The EU regulations cover: (1) critical infrastructure, physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defense, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate; (2) critical technologies and dual use items, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies, and nanotechnologies and biotechnologies; (3) supply of critical inputs, including food security, energy, and raw materials; (4) access to sensitive information; and (5) freedom of the media. The 2020 decree also extended (and has been renewed until December 31, 2022) Golden Power review to certain transactions by EU-based investors and gives the government new authorities to investigate non-notified transactions. Embedded in a broader government decree issued on March 18, 2022, the latest revision of the Golden Power investment screening authority reflects the government’s effort to adapt to both rapid developments in technology and recent shifts in the geopolitical landscape.  The proposed restructuring of the Golden Power mechanism revolves around three poles: the first enlarges Golden Power’s scope to capture emerging and critical technology, including cloud-based activities of strategic importance to the national defense and security system; the second proposes a requirement that companies submit to the Golden Power committee for approval annual procurement plans; and the third empowers a ten-expert committee to carry out investigations to monitor compliance, and also establishes strict penalties and enforcement mechanisms for non-compliance. The decree is in force for 60 days by which time it will need to be passed by the Italian parliament.

Other Investment Policy Reviews

Business Facilitation

Italy has a business registration website, available in Italian and English, administered through the Union of Italian Chambers of Commerce: http://www.registroimprese.it.  The online business registration process is clear and complete, and available to foreign companies. 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 2020, Italy’s ranking decreased from 67 to 98 out of 190 countries in terms of the ease of starting a business; it takes seven procedures and 11 days to start a business in Italy. Additional licenses may be required, depending on the type of business to be conducted.

Invitalia and the Italian Trade Agency’s Foreign Direct Investment Unit assist those wanting to set up a new business in Italy. Many Italian localities also have one-stop shops to serve as a single point of contact for, and provide advice to, potential investors on applying for necessary licenses and authorizations at both the local and national level. These services are available to all investors.

Outward Investment

Italy neither promotes, restricts, nor incentivizes outward investment, nor restricts domestic investors from investing abroad.

Italy does not have a bilateral investment treaty (BIT) with the United States.

A list of all countries with which Italy currently has bilateral investment treaties is available at the following website: http://investmentpolicyhub.unctad.org/IIA/CountryBits/103 .

Italy has not ratified a BIT since 2009 and has not negotiated a BIT since 2014. Since 2009, investment treaty negotiations fall within the competence of the EU: http://ec.europa.eu/trade/policy/accessing-markets/investment/ .

Likewise, Italy’s FTA negotiations are handled at the EU level: http://ec.europa.eu/trade/policy/ .

Italy shares a bilateral taxation treaty with the United States. The text of the treaty is available at: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z .

Italy is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

Transparency of the Regulatory System

Regulatory authority exists at the national, regional, and municipal level. All applicable regulations could be relevant for foreign investors. The GOI and individual ministries, as well as independent regulatory authorities, develop regulations at the national level.  Regional and municipal authorities issue regulations at the sub-national level.  Draft regulations may be posted for public comment, but there is generally no requirement to do so. Final national-level regulations generally are published in the Gazzetta Ufficiale (and only become effective upon publication).  Regulatory agencies may publish summaries of received comments.  In Italy private companies are not required to obtain an Environmental Product Declaration (EPD) – an internationally-recognized certificate on the environmental impact of their products or services – but an increasing number of companies apply and disclose it voluntarily. Eco-label licenses were first introduced to Italy in 1998. Since their inception, there has been a positive growth trend in both the number of labeled products and services and EU Eco-label licenses. According to a report issued by the European Commission, Italy ranked second in Europe for number of Eco-labeling licenses. Currently in Italy there are 351 EU Eco-label licenses involving 8,552 products. The product group with the largest number of licenses is “Tourist services” with 199 licenses followed by “Paper Fabric” with 36 licenses.

No major regulatory reform affecting foreign investors was undertaken in 2021.

Aggrieved parties may challenge regulations in court.  Public finances and debt obligations are transparent and are publicly available through banking channels such as the Bank of Italy (BOI).

International Regulatory Considerations

Italy is a member of the EU. EU directives are brought into force in Italy through implementing national legislation. In some areas, EU procedures require Member States to notify the European Commission (EC) before implementing national-level regulations. Italy on occasion has failed to notify the EC and/or the World Trade Organization (WTO) of draft regulations in a timely way. For example, in 2017 Italy adopted Country of Origin Labelling (COOL) measures for milk and milk products, rice, durum wheat, and tomato-based products. Italy’s Ministers of Agriculture and Economic Development publicly stated these measures would support the “Made in Italy” brand and make Italian products more competitive. Though the requirements were widely regarded as a Technical Barrier to Trade (TBT), Italy failed to notify the WTO in advance of implementing these regulations. Moreover, in March 2020, the Italian Ministers of Agriculture and Economic Development extended the validity of such COOL measures until December 31, 2021. Italy is a signatory to the WTO’s Trade Facilitation Agreement (TFA) and has implemented all developed-country obligations.

Legal System and Judicial Independence

Italian law is based on Roman law and on the 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 is 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 alternate dispute resolution (ADR), including legally binding arbitration, though use of ADR remains rare. The GOI in recent years has introduced justice reforms to reduce the backlog of civil cases and speed new cases to conclusion. These reforms also included a digitization of procedures, and a new emphasis on ADR. Judicial sector reform is a significant pillar of Italy’s National Recovery and Resilience Program.

Regulations can be appealed in the court system.

Laws and Regulations on Foreign Direct Investment

Italy is bound by EU laws on FDI.

Digital Services Tax

In 2020, Italy began implementing a digital services tax (DST), applicable to companies that meet the following two conditions:

1.  €750 million in annual global revenues from any source, not just digital services; and,

2.  €5.5 million in annual revenues from digital services delivered in Italy.

Some U.S. technology companies fall under Italy’s DST, as do some Italian media firms.  Taxes incurred for the calendar year are due in May of the following year. The government collected €233 million in digital services taxes incurred in 2020, well below the €702 billion estimate. The DST will expire with the full implementation of Pillar 1 of the corporate tax deal reached as part of the OECD/G20 Inclusive Framework. In October 2021, the United States and Italy (along with France, Spain, Austria, and the UK) agreed that DST liabilities accrued by U.S. companies prior to implementation of the global tax deal will be creditable against future Pillar 1 taxes.

Competition and Anti-Trust Laws

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 in the broader EU market.  As a member of the EU, Italy is also subject to interventions by the European Commission Competition Directorate (DG COMP).  Companies can challenge AGCM decisions before the Lazio Regional Administrative Court.  Regional Administrative Court decisions can be appealed to the Council of State.

In August 2021, Italy’s antitrust authority opened an investigation into McDonald’s franchise agreements which require franchisees purchase supplies at fixed prices from the corporation.  While the pending probe could result in considerable fines, it has not hampered the company’s planned expansion; at the end of 2021, McDonald’s announced its intent to open 200 new outlets in Italy over the next five years, a move that would create another 12,000

In November 2021, AGCM fined Amazon and Apple $225 million for alleged anti-competitive cooperation in the resale of Apple and Beats products.

In December 2021 AGCM fined Amazon $1.3 billion for abuse of market dominance, in one of the biggest penalties imposed on a U.S. technology company in Europe.  AGCM alleges Amazon grants benefits and higher site visibility to users (sellers) of Amazon’s warehouse and delivery service, thereby harming competitor delivery services.  In addition to the fine, AGCM ordered Amazon “to grant sales benefits and visibility on Amazon.it to all third-party sellers which are able to comply with fair and non-discriminatory standards for the fulfillment of their orders.”  AGCM alleges Amazon unfairly imposes stringent performance metrics on sellers not using Amazon delivery services, which can lead to account suspension.  An Amazon spokesperson said, “The proposed fine and remedies are unjustified and disproportionate,” and added, “More than half of all annual sales on Amazon in Italy come from [small and medium businesses], and their success is at the heart of our business model.”

Expropriation and Compensation

The Italian Constitution permits expropriation of private property for “public purposes,” defined as essential services (including during national health emergencies) or measures indispensable for the national economy, with fair and timely compensation. Expropriations have been minimal in 2020.

Dispute Settlement

ICSID Convention and New York Convention

Italy is a member state of 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.

Italian law recognizes and enforces foreign court judgments.

Investor-State Dispute Settlement

Italy is a contracting state to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (entered into force on April 28, 1971).

Italy has had very few publicly known investment disputes involving a U.S. person in the last 10 years. Italy does not have a history of extrajudicial action against foreign investors.

International Commercial Arbitration and Foreign Courts

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 February 12, 1931); and

The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (entered into force on May 1, 1969); and

The 1961 European Convention on International Commercial Arbitration (entered into force on November 1, 1970).

Italy’s Code of Civil Procedure (Book IV, Title VIII, Sections 806-840) governs arbitration, 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.

Bankruptcy Regulations

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 to simplify and expedite proceedings. In 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 to restructure debts. Additional changes were approved in 2017 (juridical liquidation, early warning, simplified process, arrangement with creditors, insolvency of affiliated companies as a group, and reorganization of indebtedness rules). The measures aim to reduce the number of bankruptcies, limit the impact on the local economy, and facilitate the settlement of corporate disputes outside of the court system. The reform follows on the 2015 reform of insolvency procedures. Finally, the conversion law of the NRRP includes elements aimed at resolving potential bankruptcies through preliminary agreements among creditors facilitated by exchanges of information and data with the use of telematic tools. In the World Bank’s Doing Business Index 2020, Italy ranks 21 out of 190 economies in the category of “Ease of Resolving Insolvency.”

Investment Incentives

The GOI offers modest incentives to encourage private sector investment in targeted sectors and economically depressed regions, particularly in southern Italy. The incentives are available to eligible foreign investors as well. Incentives include grants, low-interest loans, and 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 in which the applications were filed. The government does not have a practice of issuing guarantees or jointly financing foreign direct investment projects.

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 government has renewed “New Sabatini Law” benefits, extending them through 2027.

The GOI allocated €23.8 billion in 2021-2023 for the private investment plan to transition to “Industry 4.0,” which aims to improve the Italian industrial sector’s competitiveness through a combination of policy measures, tax credits, and research and infrastructure funding. The 2022 budget also reformulated the rates of the tax credit of “Industry 4.0” for the purchase of new investment goods. The government also extended the incentives to the purchase of immaterial goods (software, system integration, platforms, and apps). In the 2021 budget, the GOI allocated €2 billion in tax incentives to spur bank mergers and attract a potential buyer for state-owned bank Monte dei Paschi di Siena. The 2022 budget extended these incentives through June 2022. In 2022, the GOI extended the “Transition 4.0” plan to 2025 to support the green transition. The plan extends tax credits for innovation and design (including to 2031 for R&D expenses) and lowers tax rates for capital investments. The GOI is also in the process of revising incentives and subsidies which it considers inefficient or out of alignment with decarbonization targets.

The Italian tax system generally does not discriminate between foreign and domestic investors, though Italy’s digital services tax may impact certain U.S. companies. The corporate income tax (IRES) rate is 24 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 as a percent of commercial profits at 59.1 percent in 2019, higher than the OECD high-income average of 39.7 percent.

Foreign Trade Zones/Free Ports/Trade Facilitation

Italy’s main free trade zone (FTZ) is in the northeastern city of Trieste. FTZs allow companies to import goods, transform them for re-export without paying import tariffs, and free of any customs restraints. There is an absolute exemption from duties on products coming from a third country and re-exported to a non-EU country. There is draft legislation proposing FTZs in Genoa and Naples. The government is restructuring the FTZ in place in Venice.

In 2017, Laws 91 and 123 allowed for the creation of eight Special Economic Zones (SEZs) managed by port authorities in Italy’s less-developed south (Abruzzo, Basilicata, Calabria, Campania, Molise, and Puglia) and on the islands of Sardinia and Sicily. Investors will be able to access up to €50 million in tax breaks and take advantage of hiring incentives, reduced bureaucracy, and reimbursement of the IRAP regional business taxes. The program is funded annually (€250 million) through 2022.

The 2021 budget law provided for a 50% reduction of income taxes for all business conducted in SEZs. In addition, the NRRP allocates €630 million for infrastructure investments to ensure development of intermodal transportation connections at SEZs and links to the EU’s Trans-European Networks (TEN-T). The NRRP has targeted another €1.2 billion from its reserves for projects in the main ports in the south.

The SEZ in the Region of Campania was the first to become operational. The Naples SEZ encompasses over 54 million square meters of land in the ports of Naples, Salerno, and Castellamare di Stabia, as well as industrial areas and transport hubs in 37 cities and towns in Campania.  Incentives must be approved by local government bodies in a procedure governed by the Port Authority of the Central Tyrrhenian Sea.  The Region of Campania forecasts that the SEZ will create (or save) between 15,000 and 30,000 jobs. Any business can qualify for the fiscal and administrative benefits of the SEZ in Campania if at least 50% of the related investments are carried out within the borders of Campania’s SEZ.

The port cities of Bari and Brindisi completed their SEZ approval procedures in late 2019, followed by the transshipment port of Gioia Tauro in Calabria.  Other zones in the region include eastern Sicily (Augusta, Catania, and Siracusa), western Sicily (Palermo), Sardinia (Cagliari), SEZ Ionica (Taranto in Puglia and the region of Basilicata); and a shared SEZ between ports located in Abruzzo and Molise, which received local approval in 2020.

With the 2020 budget, the government established that each SEZ is to be chaired by a government commissioner. Only two commissioners have been appointed to date- Rosanna Nisticò in Calabria (October 2020) and Gianpiero Marchesi in Taranto (December 2020).

In addition to SEZs, Italian ports are focusing on Customs Free Zones whereby port operators can conduct commercial activities and take advantage of significant customs incentives. In mid-February 2021, the Port Authority of the Ionian Sea launched Taranto’s Customs Free Zone covering an area of approximately 163 hectares. In March 2021, the Port of Brindisi established a small 20-hectare Customs Free Zone.

Currently, goods of foreign origin may be brought into Italy without payment of taxes or duties, if 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.

Performance and Data Localization 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. Italy does not have enforcement procedures for investment performance requirements. Italy does not require local data storage but companies transmitting customer or other business-related data within or outside of the EU must comply with relevant EU privacy regulations.

In 2020, the GOI exercised its Golden Power authority in several 5G-equipment procurement cases. In some cases, the GOI authorized telecom operators to purchase equipment from certain foreign IT vendors if they could adhere to a set of “prescriptions.” One of these prescriptions includes access to the foreign IT vendors’ source code.

Real Property

According to the World Bank 2020 Doing Business Index, Italy ranks 26th worldwide out of 190 economies for the ease of registering property. 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 on property with titling issues, the Embassy estimates that less than 10 percent of the land in Italy lacks clear title. Italian law includes provisions whereby peaceful and uninterrupted possession of real property for a period of 20 years can, under certain circumstances, allow the occupying party to take title to a property.

Intellectual Property Rights

Italy tracks and reports seizure of counterfeit goods, primarily through the Italian customs agency, Agenzia Dogane Monopoli (ADM). The Italian customs agency, Agenzia Dogane Monopoli (ADM), has an active enforcement posture at Italian ports and an excellent track record for interdicting counterfeit and substandard goods coming into Italy and the European Union.  In 2020, ADM noted it confiscated almost 13 million fraudulent pieces nationwide (with a retail value of €1.64 billion (down 16.75% from 2019) – 98.3% of which reached Italy by ship. ADM also have the authority to monitor, inspect, and embargo intra-EU shipments that pass through Italian ports. During the COVID-19 pandemic, ADM detected an increased use of Adriatic ferries funneling counterfeit goods (mostly clothes and accessories from Bulgaria and Greece originating in China). For example, almost half of the counterfeit footwear (128,748 pieces) seized in trucks traversing in Adriatic ferries originated in China with upwards of three-fourths destined for the Italian market. Counterfeiting remains an issue, but it is in Italy’s interest to protect the “Made in Italy” branding and, accordingly, Italian law enforcement agencies are reportedly active in combatting this phenomenon.

ADM also reported ongoing efforts to monitor and seize counterfeit personal protective equipment (PPE), medication, and unauthorized treatments for COVID-19. In 2020, ADM confiscated over 7.575 billion units valued at €3.10 billion. In addition to counterfeit masks and gloves, and substandard PPE, ADM enlisted private logistics operators to increase awareness of organized crime involvement in COVID-19 vaccine supply chains.

USTR removed Italy from the Special 301 Watch List in 2014 after the Italian Communications Authority (AGCOM) issued new regulation to combat digital copyright theft.  The regulation created a process by which rights holders can report online infringements to AGCOM, which then blocks access to the domestic hosting infringing content.  Italy is not listed in USTR’s Review of Notorious Markets for Counterfeiting and Piracy although USTR has identified several online and domains in Italy that have promoted access to unlicensed digital content. AGCOM’s authority is limited to blocking access to computer servers and web sites located in Italy. Many illegal services provide content through servers located outside Italy.

In December 2021, the EU Copyright in the Digital Single Market (CDSM) Directive came into force, essentially replacing the Italian Copyright Act. The Italian version is more lenient on sharing the digital search results (through via new original works research) of legally accessed materials databases and archival collections unless rights holders “opt out.’” The Italian law also recognizes the exception to copyright for cultural heritage preservation. For example, copies of works in any format or medium and cannot be limited via a contract if permanently held by cultural heritage institutions.  The law also allows educational institutions to use sections of copyrighted materials without the copyright holder’s permission if used in secure online systems accessed only by students and educators.

In July 2020 the UK International Brand Firm, which had registered the Supreme trademark in San Marino in November 2015 (and subsequently sold “legal fakes” in third countries using the “Supreme” trademark) transferred ownership of the trademark to Chapter 4 Supreme, the New York-based streetwear products maker in the United States. This was the result of a settlement following a complaint filed by Chapter 4 in San Marino, which had also led to the precautionary seizures of counterfeit goods in San Marino the year before. The Republic of San Marino is considering new legislation to improve trademark registration. The San Marino Trademark and Patent Office (USBM) publishes a bimonthly bulletin to advertise new trademark applications. Requests remain pending for four months, during which interested third parties can submit their observations to USBM. While the final decision rests with USBM, there is pending legislation that would grant third parties the possibility to submit their remarks and express their opposition to the registration of a trademark. In this case, the final decision would not rest with USBM, but rather a new entity (still undefined) likely composed of specialized experts and attorneys.

For additional information about treaty obligations and points of contact at local IPR offices, please see the World Intellectual Property Organization’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

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, gaining 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.

In 2021 the Netherlands-based Euronext acquired Italy’s stock exchange, the Milan Stock Exchange (Borsa Italiana), from the London Stock Exchange. Euronext’s primary data center is being transferred from London to Bergamo in northern Italy. Borsa Italiana is relatively small, with 407 listed companies and a market capitalization of 43 percent of GDP at the end of 2021, up from 37 percent at the end of 2020.  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.  The GOI recognizes that Italian firms remain overly reliant on bank financing and has initiated some programs to encourage alternative forms of financing, including venture capital and corporate bonds.  Financial experts have held that slow CONSOB (the Italian Companies and Stock Exchange Commission) processes and cultural biases against private equity have limited equity financing in Italy. The Italian Association of Private Equity, Venture Capital, and Private Debt (AIFI) estimates investment by venture capital and private equity funds in Italy increased by 142% in the first half of 2021 compared to the first half of 2020 (and by 81.5% over the first half of 2019) and totals around €4.5 billion – a low figure given the size of Italy’s economy.

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).  As of January 2022, the European Central Bank directly supervised 13 of Italy’s largest banks and indirectly supervised less significant Italian banks through the Bank of Italy.  IVASS supervises and regulates insurance companies.  Liquidity in the primary markets 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).

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.

Italy imposed a financial transactions tax (FTT, or 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 as well, with fees ranging from €0.025 to €200.  High-frequency trading is also 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, government and other bonds, or financial instruments for companies with a capitalization of less than €500 million. The FTT has been criticized for discouraging small savers from investing in publicly traded companies on the Milan stock market.

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.

Since April 2020, investors, Italian or foreign, acquiring a stake of more than one percent of a publicly traded Italian firm must inform CONSOB but do not need its approval.  Earlier the limit was three percent for non-SMEs and five percent for SMEs.

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 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.  Approval and advance authorization by the Italian Insurance Supervisory Authority 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).

Italy has sought to curb widespread tax evasion by improving enforcement and changing attitudes.  GOI actions include a public communications effort to reduce tolerance of tax evasion; increased and 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.  Tax reforms implemented in 2015 institutionalized some 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.  In July 2021, the Draghi-led government approved overarching guidelines of a general tax reform to simplify Italy’s tax system, which remains complex and has relatively high tax rates on labor income. The tax reform, however, which is part of the National Recovery and Resilience Plan (NRRP) must still be finalized and then implemented through a series of decrees.

The GOI and the BOI have accepted and respect IMF obligations, including Article VIII.

Money and Banking System

Despite isolated problems at individual Italian banks, the banking system remains sound and capital ratios exceed regulatory thresholds.  However, Italian banks’ profit margins have suffered since 2011.  The BOI said the profitability of Italian banks in 2020 declined significantly during the pandemic, with the annualized rate of return on equity (ROE) falling from 5.0 percent to 1.9 percent (net of extraordinary components). Government support measures for households and firms and the economy’s recovery in 2021 contributed to mitigating the effects of the pandemic on the quality banks’ assets. The capitalization of large banks (the ratio between common tier 1 equity and risk weighted assets) stood at 15.5 percent at the end of 2020, an increase of 150 basis points compared to the end of 2019. While the BOI has not yet released ROE data for 2021, major Italian banks reported significant improvements in their profitability compared to 2020. For example, even troubled Monte dei Paschi di Siena (MPS) recorded a €310 million profit, its best result since 2015.

While the financial crisis brought a pronounced worsening of the quality of banks’ assets, the ratio of non-performing loans (NPLs) to total outstanding loans has decreased significantly since its height in November 2015, as banks continue to offload NPLs and unlikely-to-pay loans.  As of December 2021, net NPLs decreased to €15.1 billion, the lowest since March 2009 and down from €20.9 billion in December 2020. ABI, the Italian banking association, reported the NPL ratio was 0.86% (net of provisions) in December 2021, compared to 1.21% in December 2020 and 4.89% in November 2015 when NPLs reached record level of €88.8 billion.  The GOI has also taken steps to facilitate acquisitions of NPLs by outside investors.  In 2016, the GOI created a €20 billion bank rescue fund to assist struggling Italian banks in need of liquidity or capital support.  Italy’s fourth-largest bank, MPS, became the first bank to avail itself of this fund in January 2019.  The government currently owns 64 percent of MPS but failed to exit the bank by the beginning of 2022, as agreed with EU authorities. The GOI also facilitated the sale of two struggling “Veneto banks” (Banca Popolare di Vicenza and Veneto Banca) to Intesa Sanpaolo in 2017.  Italy’s Interbank Deposit Guarantee Fund (FITD) now owns 80 percent of Banca Carige after an industry-financed rescue in 2019. (Carige had been the smallest Italian bank under ECB supervision.) In February 2022, the board of Modena-based Bper bank approved a binding offer to acquire Carige for the symbolic price of €1 and a €530-million capital injection provided by FTID.  The merger requires ECB approval and would create Italy’s fourth largest banking group with about €155 billion in assets.

Government loan guarantees (to large companies via SACE, Italy’s export credit agency, and to SMEs via the Central Guarantee Fund, or Fondo Centrale di Garanzia) and repayment moratoriums also helped lead to an 8.5 percent increase in credit to firms in 2020, the fastest rate of growth since 2008. The guarantee on SMEs and large companies (though SACE) is set expire in June 2022, though it may be extended. The repayment moratorium expired in December 2021. Despite some banking-sector M&A activity in the past several years, the ECB, OECD, and Italian government continue to encourage additional consolidation to improve efficiency. In 2020, Italy had 59 (up from 55 in 2019) banking groups and 90 stand-alone banks (of which 39 were cooperative banks), as well as 81 subsidiaries of foreign banks. As of January 2022, there were 13 groups classified as “significant” under the EU’s Single Supervisory Mechanism. These systemically significant banks accounted for around 80 percent of banking groups’ total assets.

The Italian banking sector remains overly concentrated on physical bank branches for delivering services, contributing to sector-wide inefficiency and low profitability.  Electronic banking is available in Italy, but adoption remains below euro-zone averages. Cash remains widely used for transactions. The limit for cash transactions is €2000 but will be decreased to €1,000 beginning in 2023.

Credit is allocated on market terms, with foreign investors eligible to receive credit in Italy.  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.

The Ministry of Economy and Finance and BOI have indicated interest in blockchain technologies to transform the banking sector.  Beginning in March 2021, the Italian Banking Association (ABI) implemented a Distributed Ledger Technology-based system across the Italian banking sector. The process aims to reconcile material (and not digitalized) products that are exchanged between banks, such as commercial paper or promissory notes.

Foreign Exchange and Remittances

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 €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. The GOI raised the limit on cash payments for goods or services to €3,000 in 2016 then decreased it to €2,000 in July 2020. The limit will be decreased further to €1,000 on January 1, 2023. 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.

Sovereign Wealth Funds

State-owned investment bank Cassa Depositi e Prestiti (CDP) launched a strategic wealth fund in 2011, now called CDP Equity (formerly Fondo Strategico Italiano – FSI).  CDP Equity has €4.9 billion in invested capital and fourteen companies in its portfolio, holding both majority and minority participations.  CDP Equity invests in companies of relevant national interest and on its website ( http://en.cdpequity.it/ ) provides information on its funding, investment policies, criteria, and procedures.  CDP Equity is open to capital investments from outside institutional investors, including foreign investors.  CDP Equity is a member of the International Working Group of Sovereign Wealth Funds and follows the Santiago Principles.

The Italian government formerly owned and operated several 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 (SOEs). Notwithstanding this privatization effort, the GOI retains 100 percent ownership of the national railroad company (Ferrovie dello Stato) and road network company (ANAS), which merged in 2018. The GOI also holds a 99.6 percent share of RAI, the national radio and television broadcasting network; and retains a controlling interest, either directly or through CDP, in companies such as, but not limited to, shipbuilder Fincantieri (71.6 percent), postal and financial services provider Poste Italiane (65 percent), electricity provider ENEL (23.6 percent), oil and gas major Eni (30 percent), defense conglomerate Leonardo-Finmeccanica (30.2 percent), natural gas transmission company Snam (30.1 percent), as well as electricity transmission provider Terna (29.85 percent). The role and influence of CDP in the economy increased steadily in 2020 with the COVID crisis leading to greater GOI intervention in the economy. The GOI also has taken a shareholding position in AMInvestco, an Italian subsidiary of Luxembourg-based steel producer Arcelor Mittal, which is operating a steel plant in Taranto in southern Italy.  CDP appears to have subsequently taken a more conservative approach toward new acquisitions under the current Draghi-led government.

Despite the Italian government’s shareholding positions, most of these companies operate 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. SOEs are subject to the same tax treatment and budget constraints as fully private firms. Additionally, industries with SOEs remain open to private competition.

As an EU member, Italy is covered by EU government procurement rules. As an OECD member, Italy adheres to the Guidelines on Corporate Governance of State-owned Enterprises.

Privatization Program

The government halted a tepid privatization program during the COVID-19-triggered economic crisis and oversaw rescues of troubled institutions like Alitalia and the Arcelor Mittal steel plant in Taranto (formerly known as ILVA). Through its national investment bank CDP, the previous Italian government (led by Giuseppe Conte) also took stakes in Italian companies it considered essential for economic security and prosperity, such as Borsa Italiana, NexiSPA, and WeBuild. In March 2021, the government published regulations for the so-called “Patrimonio Destinato” fund to assist certain pandemic-affected companies strengthen their balance sheets.  The fund, which will be worth up to €50 billion, is financed by specially-issued sovereign bonds and managed by CDP.  CDP can then use the sovereign bonds as collateral to raise liquidity on the market.  Taking advantage of the EU’s more flexible approach to state aid, the fund invests – via capital injections, convertible bonds, or subordinated debt – in non-financial Italian companies with revenues above €50 million with the aim of helping “strategic” companies weather severe financial difficulty.  The 170-year-old CDP, of which the Ministry of Economy and Finance (MEF) now owns 83 percent, played an active role in ensuring strategic assets remained in national hands and in mitigating the economic damage caused by the pandemic.

The MEF owns 64 percent of Banca Monte dei Paschi di Siena (MPS) after a 2017 bailout that cost taxpayers €5.4 billion. While the government agreed with the EU Commission to sell its stake by the beginning of 2022, it is negotiating an extension after it failed to sell MPS in 2021.

There is a general awareness of expectations and standards for responsible business conduct (RBC) in Italy. Enforcement of civil society disputes with businesses is generally fair, though 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 Italian courts fail to protect an individual’s rights under EU law, it is possible to seek redress at 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: https://www.consob.it/c/portal/layout?p_l_id=892052&p_v_l_s_g_id=0

As an OECD member, Italy supports and promotes the OECD Guidelines for Multinational Enterprises (“Guidelines”), which are recommendations by governments to multinational enterprises for conducting a risk-based due diligence approach to achieve responsible business conduct (RBC). The Guidelines provide voluntary principles and standards in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, competition, consumer protection, taxation, and science and technology. (See OECD Guidelines: http://www.oecd.org/dataoecd/12/21/1903291.pdf ). The Italian National Contact Point (NCP) for the Guidelines is in the Ministry of Economic Development. The NCP promotes the Guidelines; disseminates related information; and encourages collaboration among national and international institutions, the business community, and civil society. The NCP also promotes Italy’s National Action Plan on Corporate Social Responsibility which is available online. See Italian NCP: http://pcnitalia.sviluppoeconomico.gov.it/en /.

Independent NGOs and unions operate freely in Italy. Additionally, Italy’s three largest trade union confederations actively promote and monitor RBC. They serve on the advisory body to Italy’s NCP for the OECD Guidelines for Multinational Enterprises.

Italy encourages adherence to OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas 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.

Department of State

Department of the Treasury

Department of Labor

Climate Issues

The Integrated National Plan for Energy and Climate (PNIEC) issued in 2020 outlined Italy’s strategy from 2021 to 2030 in relation to decarbonization, energy efficiency, self-consumption vs. distributed generation of renewable energy, and energy security. After the adoption of more ambitious targets by the EU in 2021 – reducing net greenhouse gas emissions by at least 55 percent by 2030 and reaching net zero emissions by 2050 – Italy must review its strategy. The GOI is preparing the Ecological Transition Plan (ETP) that is expected by June 2022. The ETP will reflect the EU “FIT for 55” plan, that is still under negotiation inside the EU. According to the National Recovery and Resilience Program (NRRP), Italy plans to eliminate the use of coal by 2025 and bring renewables’ share of final gross energy production to 72 percent by 2030 and 95-100 percent by 2050. The NRRP earmarked €59 billion (approximately $66 billion) to incentivize renewable energy sources between 2021 and 2026. After Italy’s ratification of the Convention for Biological Diversity in 2010, Italy adopted its first National Strategy for Biodiversity for 2010-2020. In December 2021, the Ministry for Ecological Transition (MET) launched the “National Strategy for Biodiversity towards 2030.” According to MET, “Italy will contribute to the international objective of ensuring that all ecosystems on the planet are restored, resilient and adequately protected by 2050.” Consultations with stakeholders are still underway.

Italy’s Ecological Transition Plan is still under negotiation, so the GOI has not introduced any implementing policies yet. Lengthy bureaucratic procedures have delayed the permitting of new renewable energy plants, so Parliament is considering draft legislation aimed at simplifying the current public procurement code.

The private sector must follow current EU regulations, since there is no specific Italian requirement. Companies included in the EU “cut and trade” Emission Trading System (ETS) include those in the power and heat generation sector, the energy-intensive industrial sectors, and the aviation sector which together account for around 41 percent of the EU’s total emissions. These companies buy or receive emissions allowances, which they can trade with one another as needed. At the end of each year, the regulated companies must surrender enough allowances to cover all their emissions. If a regulated entity reduces its emissions, it can keep the “saved” allowances to cover its future needs or sell them to another company that is short of allowances.

The 2020 and 2021 tax laws included the “Green Bonus,” aimed at improving private gardens. The law allows for 36 percent of qualifying expenditures (capped at €5,000 per house unit) to be claimed against the tax bill in ten equal installments. Italy introduced the Ecobonus 65 percent scheme in 2012 to improve the energy efficiency of residential and non-residential units in Italy, as well as to reduce the consumption of fossil fuels and natural gas. The scheme allows for 65 percent of the expenses to increase energy efficiency in buildings (e.g., new heating and boiler systems; building external coating; windows replacement, solar panels) to be reimbursed as tax credits in five equal annual installments. This tax credit applies to various buildings, including stores, offices, shops, hotels, and other hospitality buildings on top of residential units. The Superbonus 110 percent was introduced in 2020 and has been recently extended to December 2023. Qualifying seismic renovations and significant (at least two energy classes) energy efficiency improvements (such as insulation, solar panel installation, replacement of old-fashioned boilers and window fittings) allow for a tax credit amounting to 110 percent of the qualifying expenses. People can claim the subsidy by deducting it from their tax returns over a five-year period or use the tax credit to pay the construction firm. Construction firms may subtract the sum from their taxes or sell the credit to a bank, which is then reimbursed by the state. In 2019, Italy introduced another Ecobonus to increase the incentives for buying electric and hybrid vehicles. The Ecobonus is scaled according to CO2 emissions and vehicle classes.

Italy’s public procurement system is bound by international obligations under both the WTO Government Procurement Agreement and the EU Public Procurement Directives. Italy has over 22,000 contracting agencies at the central and local level that are subject to EU Directives on public procurement. GOI Ministries are the main central contracting agencies. At the local level, principal contracting agencies include regions, provinces, municipalities, and entities controlled by the municipalities, including local healthcare authorities. In 2002, Italy approved the “Environmental Action Strategy for Sustainable Development in Italy,” which states that at least 30 percent of goods purchased must meet ecological requirements and 30-40 percent of the vehicle fleet for durable goods must be energy efficient. In 2017, in compliance with the European Green Public Procurement directive, Italy made the use of “Minimal Environmental Criteria” (MEC) for acquiring products and services by public administrations mandatory. Since 2017, MET has identified the MEC for 20 categories of products and services. According to Italian budget law for 2020, public administrations must reserve a 50 percent quota for the purchase or rental of electric, hybrid or hydrogen vehicles when renewing their fleet.

Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Autorità Nazionale Anticorruzione (ANAC)
Via Marco Minghetti, 10 – 00187 Roma
Phone: +39 06 367231
Fax: +39 06 36723274
Email: protocollo@pec.anticorruzione.it 
Contact Info page: http://www.anticorruzione.it/portal/public/classic/MenuServizio/Contatti 
ANAC’s whistleblowing web page is: http://www.anticorruzione.it/portal/public/classic/Servizi/ServiziOnline/SegnalazioneWhistleblowing 

Transparency International Italia
P.le Carlo Maciachini 11
20159 Milano – Italy
T: +39 02 40093560
F: +39 02 406829
E: info@transparency.it 
General web site: www.transparency.it 
Corruption Specific: https://www.transparency.it/alac/ 

Corruption and organized crime continue to be significant impediments to investment and economic growth in parts of Italy, despite efforts by successive governments to reduce risks. Italian law provides criminal penalties for corruption by officials. The government has usually implemented these laws effectively, but officials sometimes have engaged in corrupt practices with impunity. While anti-corruption laws and trials garner headlines, they have been only somewhat effective in stopping corruption. Since 2014, Italy has improved its overall rank and score in Transparency International’s Corruption Perceptions Index, rising to 42nd out of 180 countries for 2021 thanks to an improvement in its score from 53 to 56 out of 100. Italy has “reaped the rewards of anti-corruption reforms” but remains among the region’s low scorers according to Transparency International. Italy’s score is well below the EU average of 64 (although it has risen from 42 in 2012). Transparency International notes “legislative gaps need to be urgently filled for lobbying and beneficial ownership in Italy.”

In December 2018 Italy’s Parliament passed an anti-corruption bill that introduced new provisions to combat corruption in the public sector and regulate campaign finance.  The measures in the bill changed the statute of limitations for corruption-related crimes as well as other crimes and made it more difficult for people to “run out the clock” on their respective cases. In 2019 the government passed an anti-corruption measure, called “spazza-corrotti,” giving the same treatment for political parties and related foundations, strengthening the penalties for corruption crimes against public administration, and providing more tools for investigations.  In December 2020, Italy’s Parliament passed a decree that created an Inter-Departmental Working Group to formulate a code of risk assessment measures in a continued effort to prevent corruption in the government. No significant anti-corruption legislation was passed by Parliament in 2021 due to a series of delays related to Italy’s COVID state of emergency.

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 to comply with them and, where appropriate, U.S. individuals and firms should seek the advice of legal counsel.

While the U.S. Embassy has not received specific complaints of corruption from U.S. companies operating in Italy in the past year, commercial and economic officers are familiar with high-profile cases that may affect U.S. companies. The Embassy has received requests for assistance from companies facing a lack of transparency and complicated bureaucracy, particularly in the sphere of government procurement and specifically in the aerospace industry and among digital economy companies. There have been no reports of government failure to protect NGOs that investigate corruption (e.g., Transparency International Italy).

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

Politically motivated violence is not a threat to foreign investments in Italy. On rare occasion, extremist groups have made threats and deployed letter bombs, firebombs, and Molotov cocktails against Italian public buildings, private enterprises and individuals, and foreign diplomatic facilities. Though many of these groups have hostile views of the United States, they have not targeted U.S. property or citizens in recent years.

Italy-specific travel information and advisories can be found at: www.travel.state.gov.

Unemployment continues to be a pressing issue in Italy, particularly among youth (ages 15-24). Italy has one of the EU’s highest youth unemployment rates at 25.3 percent (January 2022), while the overall unemployment rate was 8.9 percent in December 2021. The effect of the COVID-19 pandemic on the labor force has been uneven and substantial. Job losses were concentrated among self-employed workers and those on fixed-term contracts, especially in the services sector, penalizing younger workers and women. The unemployment rate did not increase due to the government’s ban on layoffs and a program that provided paid furloughs, which allowed companies to temporarily reduce staff during the COVID-19 emergency – without adding them to the ranks of the unemployed. Despite these measures, Italy lost 456,000 jobs in 2020 but recuperated 540,000 jobs in 2021, while Italy’s inactive population (neither working nor seeking work actively) dropped 4.8 percent (corresponding to 653,000 people).

Moreover, compared to February 2020, there are still 207,000 fewer jobs. Most new jobs in 2021 were in the services sector under temporary contracts (without unemployment insurance and social security benefits) and predominantly taken by young people and women. As of January 2022, only 50.3 percent of Italian women had jobs – the second lowest rate in the EU- compared to 68.1 percent for men. The data shows that the COVID pandemic impaired the already low levels of female participation in the labor force. The ratio of long-term unemployment (unemployment lasting over 12 months) as a share of overall unemployment continues to be among the highest of major European economies. Underemployment (employment that is not full-time or not commensurate with an employee’s skills and abilities) is also severe. Those underemployed usually find work in the service industry or other low-skilled professions in the large informal economy, which Italy’s statistics agency estimates comprises at least 12 percent of Italian GDP. According to the latest available data (released in October 2021), the informal economy accounted for 11.3 percent of GDP in 2019, with undeclared work estimated at approximately 3.6 million full-time equivalent units. The agricultural, services, and construction sectors stood out for high rates of undeclared work. However, there is anecdotal evidence of unpaid internships and trainee programs masking as de facto undeclared work in every industry as a precursor to securing a regular labor contract.

Labor force productivity – a central weakness of the Italian economy – is below the EU average. Many Italian employers report an inability to find qualified candidates for highly skilled positions, demonstrating considerable skills disparities in the Italian labor market. The government has also reported difficulty finding qualified candidates to manage NRRP programs in the South. Well-educated Italians find more attractive career opportunities outside of Italy, with large numbers of Italians taking advantage of EU freedom of movement to work in other EU countries. 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.

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. However, the cumbersome and lengthy process is 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.

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

Indefinite employment contracts signed after March 2015 fall under rules established by the 2015 Jobs Act, a labor market reform package that contractually advanced employee protections that increased with tenure. During the first 36 months of employment, firms may dismiss employees for bona fide economic reasons. Under the 2015 Jobs Act regime, dismissed employees must appeal their dismissal within 60 days, and reinstatements are limited.  Regardless of the reason for termination, a former employee is entitled to receive severance payments (TFR – trattamento di fine rapporto) equal to 7.4 percent of the employee’s annual gross compensation for each year worked. Other 2015 Jobs Act measures include universal unemployment and maternity benefits and a reduced number of official labor contract templates (from 42 to six). For example, Italy’s unemployment insurance (NASPI) provides up to six months of coverage for laid-off workers. The government also provides worker retraining and job placement assistance, but services vary by region. Implementation of robust national active labor market policies remains in progress. The NRRP includes provisions for unemployment benefit reform and new active labor policies that the government approved as part of the 2022 budget. In 2018 the government introduced the “Dignity Decree,” which rolled back some structural reforms to Italy’s labor market adopted as part of the 2015 Jobs Act. For example, the Dignity Decree extended incentives to hire people under 35 years of age, set limits on the renewal of short-term contracts (the government suspended the limit during the pandemic), and made it costlier for companies to fire workers.

Italy offers residents other social safety net protections. In 2017 the government implemented an anti-poverty plan (Reddito di Inclusion, or “Inclusion Income”) to provide some financial relief and training to the indigent and those below a certain income threshold. In the 2019 budget, the government introduced the Citizenship Income (Reddito di Cittadinanza), which replaced and broadened the 2017 Inclusion Income program. The Citizenship Income program provides a basic income of €780 per month to eligible citizens and acts as an employment agency to some participants. The estimated annual cost of the program was approximately €6.5 billion, but the pandemic increased the number of potential beneficiaries. The program benefits around 1.3 million households (or 3.1 million individuals).

In 2019 the government implemented an early retirement plan (Quota 100), which changed the pension law and permitted earlier retirement for eligible workers aged 62 or older with at least 38 years of employment. The benefit expired at the end of 2021, although the government proposed a less generous early retirement pilot program in the 2022 budget and is actively negotiating pension reform with unions.

While the 2015 Jobs Act included a statutory minimum wage, the government has yet to implement the policy. With no national minimum wage, sector-wide collective bargaining determines prevailing wages. The government in 2016 established an agency for Job Training and Placement (ANPAL) to coordinate (with Italian regional governments) the implementation of many labor policies. ANPAL oversees the relocation allowance (Assegno di Ricollocazione), an initiative to provide unemployment benefits to workers willing to move to different regions, and a related special wage guarantee fund (Cassa Integrazione Straordinaria) that provides stipends for retraining.

The Citizenship Income program and ANPAL appear to have failed in their goal of helping eligible workers find jobs. However, the Citizenship Income program seems to have played a role in reducing poverty before the pandemic and limiting its rise in 2020 during the economic crisis. In March 2021, the Ministry of Labor set up a committee to reform the Citizenship Income program. The 2022 budget provided extra funds to the program (€8.8 billion for 2022-2029) and implemented more stringent qualification criteria. Historical regional labor market disparities remain unchanged, with the southern third of the country posting a significantly higher unemployment rate than northern and central Italy. Despite these differences, internal migration within Italy remains modest and limited to highly educated workers that cannot find jobs in the South. At the same time, industry-wide national collective bargaining agreements set equal wages across the entire country.

Italy is a member of the International Labor Organization (ILO), and Italy does not waive existing labor laws to attract or retain investments. Collective labor agreements in different professions periodically fix the terms and conditions of employment. Italian unions fall 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 is usually affiliated with the World Confederation of Labor (WCL). The confederations negotiate national-level collective bargaining agreements with employer associations that are binding on all employers in a sector or industry.

Collective bargaining is widespread, occurring at the national level and used primarily by labor to secure compensation for inflation, cost-of-living adjustments and bonuses for increased productivity and profitability. Firm-level collective bargaining is limited, and the Italian Constitution provides that unions may reach collective agreements binding on all workers. There are no official estimates of the percentage of the economy covered by collective bargaining agreements. However, a 2019 estimate from the European Trade Union Institute estimated collective bargaining coverage was approximately 80 percent (for national-level bargaining), with less coverage for industry-level agreements and minimal coverage for company-level agreements.

Collective agreements may last up to three years, although the current practice renews collective contracts annually. Collective bargaining establishes the minimum standards for employment, but 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 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 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 reach a mutually acceptable agreement to avoid layoffs or closure. In recent years, U.S. companies have faced significant resistance from labor unions and politicians when attempting to right-size operations. Due to the COVID-19 pandemic, the government banned most layoffs through 2021. The end of the ban did not generate any relevant impact on layoffs and employment, and the 2022 budget extended the prohibition to end-April 2022.

There have been no recent strikes that posed investment risks. The Italian Constitution recognizes an employee’s right to strike. Strikes are permitted in practice but are 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, occasional strikes by employees of local transportation providers may limit citizens’ mobility.

DFC (formerly OPIC) does not currently operate programs in Italy.

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 Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $2,197,296
(€1,781,221) **
2020 $1,889,000 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2020 $12,902
2020 $31,093 https://www.bea.gov/international/
Host country’s FDI in the United States ($M USD, stock positions) 2020 $46,006
2020 $31,631 https://www.bea.gov/international/
Total inbound stock of FDI as % host GDP 2020 23.2% 2020 25.8% https://unctad.org/topic/investment/

* Italian GDP data are taken from ISTAT, the official statistics agency. ISTAT publishes preliminary year end GDP data in early February and issues revised data in early March. Italian FDI data are from the Bank of Italy and are the latest available; new data are released in May.

**2020 GDP is $1,967,248 (€1,651,595).

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $470,509 100% Total Outward $582,558 100%
The Netherlands $97,760 21% United States $46,006 8%
France $87,000 18% Spain $44,120 8%
Luxembourg $84,618 18% Luxembourg $42,483 7%
Germany $44,414 9% Germany $41,765 7%
United Kingdom $42,339 9% The Netherlands $41,723 7%
“0” reflects amounts rounded to +/- USD 500,000.

The statistics above 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.

U.S. Embassy Rome
Economic Section
Via Vittorio Veneto, 119
Tel. 39-06-4674-2867

Mailing Address:
Unit 9500
Attn: Economic Section
DPO, AE 09624
Email: RomeECON@state.gov 
Tel: +39 06 4674 2107

On This Page

  1. Executive Summary
  2. 1. Openness To, and Restrictions Upon, Foreign Investment
    1. Policies Towards Foreign Direct Investment
    2. Limits on Foreign Control and Right to Private Ownership and Establishment
    3. Other Investment Policy Reviews
    4. Business Facilitation
    5. Outward Investment
  3. 2. Bilateral Investment and Taxation Treaties
  4. 3. Legal Regime
    1. Transparency of the Regulatory System
    2. International Regulatory Considerations
    3. Legal System and Judicial Independence
    4. Laws and Regulations on Foreign Direct Investment
    5. Digital Services Tax
    6. Competition and Anti-Trust Laws
    7. Expropriation and Compensation
    8. Dispute Settlement
      1. ICSID Convention and New York Convention
      2. Investor-State Dispute Settlement
      3. International Commercial Arbitration and Foreign Courts
    9. Bankruptcy Regulations
  5. 4. Industrial Policies
    1. Investment Incentives
    2. Foreign Trade Zones/Free Ports/Trade Facilitation
    3. Performance and Data Localization Requirements
  6. 5. Protection of Property Rights
    1. Real Property
    2. Intellectual Property Rights
  7. 6. Financial Sector
    1. Capital Markets and Portfolio Investment
    2. Money and Banking System
    3. Foreign Exchange and Remittances
      1. Foreign Exchange
      2. Remittance Policies
    4. Sovereign Wealth Funds
  8. 7. State-Owned Enterprises (SOEs)
    1. Privatization Program
  9. 8. Responsible Business Conduct
    1. Climate Issues
  10. 9. Corruption
    1. Resources to Report Corruption
  11. 10. Political and Security Environment
  12. 11. Labor Policies and Practices
  13. 12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
  14. 13. Foreign Direct Investment Statistics
  15. 14. Contact for More Information
2022 Investment Climate Statements: Italy
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