Italy June 2014– A Hot Spot for Foreign Investment
June 20, 2014
Italy is one of the key players in the EU (European Union). Italy is known for it rich cultural and historical heritage. Italy, officially known as the Italian Republic is located in the south of the Central European Continent. The country shares its border with several countries in the Northern region including Austria, France, Slovenia and Switzerland. With over 60.4 million inhabitants (approx figures) residing in the country, Italy is the fifth most populated country in European continent and it is the 23rd most populous country in the world.
Italy’s capital city of Rome occupies a significant place in the history for its cultural significance. The city has been an important political center of western civilization during the Roman Empire rule. Since the fall down the Roman Empire and after facing the two most deadly wars in the Human history (Both world war I and II), the face of Italy has changed radically. The modern day Italy is a Democratic Republic, it is currently ranked 23rd in the most developed countries in the world list. Italy is ranked amongst the top 10 countries in the world for its high standard of living and quality of life index.
Italy is one of the founding members of the European Union and it also part of the Eurozone. Italy is also one of the key members of G8, G20 and NATO and other important International organizations. Today the Economy of Italy is experiencing a boom rapidly. Italy is the sixth largest economy in the world Italy has become one of the key destinations in the EU for foreign investment.
Foreign direct investment policy in Italy:
• With a view to attract foreign investment in the country, the Federal Government of Italy has laid down a mandatory rule that it would discriminate between the benefits and incentives granted to the foreign investors and the local investors. This is a huge initiative taken by the Italian government to attract foreign investment in the country.
• The Italian Federal Government provides various benefits to the foreign investors in terms of tax benefits, investment loans at discounted rate of interest, state guarantee for exporters and other financial aid. The Italian government grants financial assistance to the foreign investors depending on the geographical location of the investment, the size of the investing company and the sector in which the company is investing.
• A foreign investor investing in certain areas in southern Italy, where rate of unemployment is high, the government of Italy grants tax exemptions (corporation tax and local tax) for a period of 10 years.
Owing to such favorable FDI policy of Italy, it is one of the most preferred destinations in EU amongst big conglomerates for Investment.
Incentives provided by Italian Government:
Foreign companies that investment a sum that is in excess of the average investment for the past 5 years are eligible to get a tax deduction from taxable income to the limit of the excess investment.
The Federal Government of Italy has strictly laid down that in no case the financial benefits for foreign investors would exceed 50% of the taxable income.
Depending on the geographical location, foreign investors can avail investment grant up to 65% on the investment invested in acquiring fixed assets in the country.
Key Sectors for foreign investments in Italy:
There are investment opportunities galore for foreign investors in its diverse sectors. The sectors that promise the most profitable returns are discussed below:
Real Estate: The Real Estate Industry has been one of the mainstays of Italian industry that has attracted huge foreign investment. Italy is one of the few countries in the world where majority of the population own their own homes. Today, a huge number of Italian populations are investing in buying a second holiday homes. Several foreign immigrants in the country are investing in buying real estate property in Italy due to the attractive living condition and the low cost of living. The value of real estate properties through out Italy is increasing steadily and foreign investors can enjoy valuable returns on their investment. Experts suggest that the demand for real estate properties would continue to rise in the future mainly due to the underlying demand from both local and foreign sources.
Tourism Sector: Italy has a huge potential for foreign investment in the Tourism sector. In recent years, Italy has become one of the best tourist destinations in the world. While important cities like Rome, Venice and Florence continue to attract tourists from all around the world, recently lesser known cities like Tuscany and Cinque Terre are attracting influx of tourists.
The increase in tourism has opened up several avenues for foreign investment in the sector. Several foreign investors are increasing in to new tourism sectors such as agri-tourism and eco-tourism. Investors are investing in acquiring and building property to provide accommodation facilities to the tourists.
Food Industry: Italy is known for its great food. It is the home for the two of the most popular delicacies – Pasta and Pizza. Italians in general love good food and there are plenty of world class restaurants in the country. The Food industry is another key sector that offers great foreign investment opportunities. The Italian culinary tradition is greatly appreciated by both locals and the foreign visitors. In a recent survey conducted by an Italian institute that studies trends in tourism showed that the food is one of the prime considerations for the tourists. In these circumstances the restaurant business is provides a good investment opportunity for foreign investors. Since the numbers of licensed restaurants in Italy are limited there is opportunity galore for investing in restaurant. The best approach for investing in the industry is to buy a functioning restaurant with a good reputation so that investors have better chance of earning good returns.
Thus, with the favorable government FDI policy and with investment opportunities in various sectors, Italy is truly a hot sport or foreign investment. Foreign Investors investing in Italy are in a win-win situation to earn profitable returns on their investments.