Foreign Direct Investment in Italy
FDI in Figures
In relation to its European neighbors, Italy does not attract but a small amount of foreign direct investment (FDI). After their fall in 2008, under the effect of the global crisis, the FDI flows started to revive in 2009. The privatization program led by the country, the liberalization of the energy and the markets of telecommunications offer interesting opportunities to investors. However, a strict labor law, high taxes, inefficient public services, corruption and the activities linked to organized crime are some of the hindrances to investment.
Country Comparison For the Protection of Investors
|Index of Transaction Transparency*||7.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility**||4.0||5.2||9.0||5.0|
|Index of Shareholders’ Power***||6.0||6.8||9.0||5.0|
|Index of Investor Protection****||5.7||6.0||8.3||5.0|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2007||2008||2009|
|FDI Inward Flow (million USD)||40,202||17,031||30,538|
|FDI Stock (million USD)||364,839||339,927||393,990|
|Performance Index*, Ranking on 141 Economies||117||126||96|
|Potential Index**, Ranking on 141 Economies||31||32||-|
|Number of Greenfield Investments***||178||223||166|
|FDI Inwards (in % of GFCF****)||9.0||3.6||28.0|
|FDI Stock (in % of GDP)||17.2||14.8||18.6|
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Why You Should Choose to Invest in Italy
- Strong Points
- Thanks to the State withdrawal, the market is opening up to competition in several sectors (energy, telephone, etc.). The SME grouping allows for great capacity for adaptation. Italy also has a qualified work force (technical knowledge and high quality production).
Entrepreneurs are creative and innovative.
- Weak Points
- The procedural costs, slow administration processes, red tape and financial scandals do not encourage investments. In some regions, infrastructures are poor, especially in the south of the country.
- Government Measures to Motivate or Restrict FDI
- There is hardly any assistance in Italy for promoting foreign investment. This trend is reinforced by the European Union which wants Italy to harmonize its tax incentives with the Community regulations. Italy only promotes the development of its regions which are in difficulty, in order to facilitate SME activity and job creation. The defense sector and other sectors likely to compromise public safety are not open to foreign investors.
The Italian Institute for Foreign Trade lists and makes available a guide to aids for setting up business in Italy.
- Bilateral Investment Conventions Signed By Italy
- Italy has signed bilateral agreements with fifty or so countries.
To see the list of countries, click here.
To see the conventions, click here.
Procedures Relative to Foreign Investment
- Freedom of Establishment
- As a member of the European Union, Italy applies the principle of freedom of establishment and non-discrimination. Thus, foreign investors can carry out any type of activity in the same conditions as a local investor. In addition, no specific legal text governs foreign direct investment. The regime is in alignment with that applicable to local investment.
- Acquisition of Holdings
- Acquiring a majority holding in the capital of a local company is authorized in Italy, except in certain sectors (petroleum exploitation).
- Obligation to Declare
agency for the promotion of foreign investment in the country gives information about the authorizations necessary for setting up business.
- Requests For Specific Authorizations
- Foreign investors are subject to particular measures (prior authorization issued by the competent ministry and restrictions concerning the permitted amount of equity acquisitions) in certain sectors only:
- telecommunications and the press;
- airline and shipping companies;
- electricity and gas (liberalized in 1999 and in 2000 by respective legal decrees n° 79/99 and n° 167/00);
- petroleum exploitation.
For further information, consult the ICE website.
- Investment Aid Agency
Institute for foreign trade (ICE)
- Tenders, Projects and Public Procurement
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide
- Other Useful Resources
Invest in Italy
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