Italy’s history as a unified state started in 1861, but its actual history began centuries earlier. Florentine poet Dante Alighieri already praised the virtues of the Belpaese (“beautiful country”) just before the Renaissance movement would turn cities such as Rome, Milan and Florence into the cradles of art and scientific inquiry that characterize Western civilization. Italy’s fame as a land of breathtaking nature and culture is complemented by its prestige as an industrial powerhouse: while in the 19th century the Italian chemical and metallurgic industry started to take off, it was during the 20th century that Italian manufacturing really excelled, giving birth to firms like Ferrari and Lamborghini, which are still symbols of the entrepreneurial spirit and luxury that characterize the peninsula.
For entrepreneurs, Italy is currently still a solid investment target, providing multiple benefits for those looking for important business opportunities in the country.
In fact, Italy is currently enjoying considerable political stability under Giorgia Meloni’s government, as seen by the recent polls that show firm support for the ruling party of Brothers of Italy. Some political commentators believe that Italy might reach a bipolar moment (in the likes of Germany or the UK) with a stable government and opposition, getting over its historically fragmented parliament that rendered the executive power subject to the sensitivities of smaller parties. Markets tend to prefer more stable political environments, as seen, for example, in a country’s interest rate: Italy’s spread (i.e., the difference between the interest rate of Italy’s Treasury bonds and those of Germany) hit its lowest point since 2016 this year.
The renewed political stability is complemented by the resilience of the Italian economy. As we have previously reported, Italian exports have maintained its strength in the past few years despite a complicated regional context. This has led Italy to become the G7 country with the best post-pandemic recovery. The country is also experiencing lower inflation than other European nations like Germany and France, given that the government quickly managed to diversify its energy supplies away from Russia to other partners like Algeria and Qatar after the start of the war in Ukraine. Moreover, the Superbonus tax relief for home improvements implemented in 2020 caused a boom in the Italian property and construction sectors. Furthermore, this year the financial sector has performed well far, as seen by the great results by insurance and banking firms like Unipol, UniCredit, Monti dei Paschi di Siena and BPer, obtaining capital appreciations of over 100%.
Industries with a global presence like pharmaceuticals (Angelini, Chiesi, Menarini), food products (Barilla, Nutella) and luxury apparel (Gucci, Versace, Armani) determine the international prestige of Italian firms, giving anyone willing to invest in Italy the opportunity to interact with brands with several decades of business experience. Italian innovation used to be concentrated in the so-called Italian industrial triangle (Turin, Milan and Genoa), focused on car and naval manufacturing, as well as finance. In the last decades, the north-eastern part of the country started gaining importance, with cities like Bologna, Modena, and Venice becoming centers of industrial power, adding pharmaceuticals and agricultural products to the catalogue of local excellence. This wide geographical area gives a vast array of choice for entrepreneurs looking for investment opportunities in Italy in many different sectors. As a side note, the industrial associations Unioni Industriali Torino, Assolombarda and Confindustria Genova have recently set up a plan to re-boost the former Italian industrial triangle through the synergies of universities, research centers and the central and local governments. Foreign investors could take good advantage of this opportunity.
Italian universities are among the most prestigious in the world. University of Bologna, the oldest university in the Western world, recently reached the 146° place in THE’s World University Rankings. Other institutions such as University of Padova, La Sapienza in Rome and Turin’s Politecnico also excel in international rankings thanks to their high quality of education and research. Italian youth excels mainly in STEM related fields, from computer science to different types of engineering programs, but they are also proficient in the economic-financial sector. Investors can, therefore, be confident about finding a highly qualified workforce in the peninsula.
The Italian State provides different incentives to international entrepreneurs willing to invest in Italy in the areas of industrial innovation and R&D; the so-called Industria 4.0 plan, launched in 2016. The Patent Box provides a generous tax relief for intellectual property, reducing the tax payments on profits obtained from patents and trademarks, which are particularly important for high-tech and multinational companies. The Super and Hyper Amortizations are crucial for investing in advanced technologies, consisting in reduced costs in acquisition of innovative machinery. The Tax Credit for R&D especially benefits big multinationals that want to invest in research and development products and processes, helping to boost Italian productivity. Finally, Special Economic Zones (ZES in Italian) and the Tax Credits for Investments in Southern Italy are focused on the Mezzogiorno, a zone that is yet to be exploited to its full potential. In addition, the Made in Italy brand certifies the high quality of Italian-made products, acting as a signal for local and foreign customers that seek the finest goods on the market. The details for these and other benefits are available on the official website of the Italian government.
European benefits for investors should also be considered. In fact, to invest in Italy is to have immediate access to a regional market of almost 450 million people, as well as to a more diversified asset portfolio. Moreover, the Next Generation EU program, aimed at the economic recovery of the Eurozone after the COVID-19 pandemic, gives EU funds to governments to be applied through National Resistance and Resilience Plans, which can certainly serve important investment purposes. There are also other European funds aimed at renewable business initiatives (the Green Transition) as well as furthering the interconnection of Europe through infrastructure projects (Connecting Europe Facility).
The strategic position of Italy at the heart of the Mediterranean has – since ancient times – made it a particularly crucial location for international trade: the route between the Mediterranean and Red seas contains 12% of the world’s commercial exchanges alone. Italy stands high in the logistic competitiveness ranking elaborated by the World Bank, while having historically crucial ports like Genoa, Trieste and Livorno. The government’s Mattei Plan, aimed at boosting Italian investments in Africa and the Mediterranean, will further increase Italy’s geographical importance for the years to come.
Finally, besides its strictly business-related benefits, living in Italy presents many personal benefits. Italy is a country with a high quality of life, as seen by the longevity of its citizens, granted by its excellent healthcare system. To this we can add the delicious cuisine, the breathtaking nature and the centuries-old historical heritage that complement a business-friendly environment with a complete cultural experience.
In a nutshell, Italy offers a uniquely attractive environment for investors, combining political stability, economic resilience, and a wealth of opportunities across multiple sectors. With its strategic location at the crossroads of international trade routes, prestigious universities producing a highly skilled workforce, and numerous government incentives for innovation and R&D, Italy stands as a compelling destination for both domestic and international entrepreneurs. Additionally, the high quality of life in the peninsula makes it a place where business and personal fulfillment can thrive together.
For investors seeking to navigate Italy’s business landscape, Tax Legal Solutions offers expert assistance in corporate consulting, tax planning, and legal advisory. Our team is dedicated to helping you maximize the benefits of Italy’s favorable business environment, from accessing government incentives to ensuring compliance with local regulations, providing customized support for your success in the Belpaese.
Author: Luis Cabezas