Italy, a country known for its cultural diversity, has on the of the largest economies in the world, ranked 9th in GDP. It also heavily depends on foreign trade. The location also is attractive for overseas investors, due to the highly diversified export structure along with a strong manufacturing sector. Proximity to emerging economies like North Africa and the Middle East is also seen as attractive to foreign investors in italy.
Most of Italy’s GDP is derived from family-owned, small-to-medium companies that thrive in smaller communities and at a regional level…meaning, a majority of Italian companies are not driven by share price.
Foreign investments play an important role in Italy’s economy, attracting hundreds of thousands of employees and a turnover of about 450 billion euros.
Italy is open to foreign investment, offering numerous incentives and continuing to make information available to prospective investors.
The Italian government has made it more attractive for foreign entrepreneurs to invest. This includes tax benefits, investment loans with small rates of interest, state guarantees for exports, and many more. The government grants financial assistance for the foreign investments based on the geographical location of the investment, the size of the investing company, and the sector in which the investment is made.
Also, in some regions of southern Italy where unemployment is high, the government offers tax exemptions for corporate and local tax, for a period of ten years. With this FDI policy, Italy is one of the most preferred investment options in the EU.
Here is a list of 2017 tax incentives:
- Super Depreciation – 40% increase of the depreciation deduction on new investments
- ACE – extra tax deduction on the new equity invested
- Sabatini – a contribution on the interest paid to finance new investments
- Start-up innovative – special incentive for the shareholders of a very innovative companies
Where to Invest
With diverse sectors, there are various places to invest in the country.
Real Estate –
Because of low cost of living and living conditions, Italian real estate remains a mainstay
in overseas investment. Italy is one of the only countries in which the majority of the population owns their home, and even the locals are investing in a second home. The value of real estate is slowly increasing, so foreign investors should expect valuable return on investments.
Food Industry –
Both locals and visitors are loyal fans of Italian cuisine, making restaurants a great investment. Italy is home to two of the world’s most popular dishes (pizza/pasta), after all. One study found that food is one of the leading considerations for tourists. Because of this, a restaurant would be a great investment opportunity.
It probably doesn’t surprise you, but tourists flock to Italy every year to experience the culture and beauty of the country. Therefore, there is a lot of potential for investing in the tourism sector. Bigger cities like Rome, Venice, and Florence have always attracted visitors from around the world, but now people are beginning to find interest in smaller places like Tuscany and Cinque Terre, which are now seeing more and more tourists. Agritourism and eco-tourism are also increasing in popularity. Investors are also acquiring and building property in order to accommodate the tourists.
Italy’s other exports include pharmaceutical products, furniture, industrial machinery and tools, electrical appliances, automobiles and auto parts, and textiles and fashion.
Many are hesitant to invest in Italy, due to a recent global crisis that affected the country’s FDI position, which saw a significant decrease between 2007 and 2008, but has since begun to rise again. Compared to many other EU nations, the attractiveness to invest is low, but that does not mean that overseas investment in Italy is a terrible idea.
There has been substantial growth in stock, and interest has been rising. Last year, there was a 62% increase in investment projects, which was the largest increase among the EU countries. This led to a 92% increase in job creation.
Though the country is steadily improving its economy, there is still disparity between the north and the south. While the north is thriving with businesses and tourism, the south is not seeing the same attention and is largely ignored by foreign investors. This is due to a smaller population and not as many thriving businesses, thanks to the quality of institutions. What experts believe is that southern Italy needs a business-friendly environment rather than tax incentives. Though many are aware of this process, changes of this sort are hard to implement.
“The 15 Questions You Should Ask When You Buy Properties Overseas”