Italy

Ease of Doing Business Rank: 58

Overview

 

Geographic location

Italy is a southern European country.

Switzerland, Lichtenstein, and Austria lie to the north, France to the west, Slovenia and the Adriatic Sea lie to the east and the Mediterranean, Tyrrhenian and Ionian Seas to the south.

Spoken language

The official language of Italy is Italian, spoken by 95% of inhabitants as their native tongue. About half of the population speaks a regional dialect.

Minority languages include Albanian, Catalan, German, Greek, Slovene, Croatian, French, Franco-Provençal, Friulian, Ladin, Occitan and Sardinian.

English is the most widely-spoken foreign language (34%), followed by French (16%), Spanish (11%) and German (5%).

Population

The 2019 population estimate is 60.55 million.

Rome is the capital and largest city (2.82 million), followed by Milan (1.36 million) and Naples (966,144). The country has an additional 41 cities with populations over 100,000 and 98 more with populations between 50,000 and 100,000.

Popular industries

The top industries in Italy are manufacturing of machinery, automobiles, appliances, chemicals, and textiles, fashion design, agriculture and tourism.

Education

The Times Higher Education World Rankings includes 43 Italian universities in the top 1,000 in the world.

The Legatum Prosperity Index ranks Italy’s education system 35th out of 149.

Popular entity types

The most common type of business entities in Italy are Limited Liability Company, Partnership Limited By Shares, General Partnership, Limited Partnership and Sole Proprietorship.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Italian incentives for business

Italy offers many incentives to encourage foreign investment. These include a tax credit on expenses over EUR 30,000 related to R&D investments. Qualifying expenses may include employment costs, commissioned work, amortization of equipment and instruments, and the acquisition of technical skills and industrial property rights.

Italy also supports companies that purchase or lease machinery, equipment, facilities, production assets and hardware, as well as software and digital technologies.

The 2019 Budget Law introduced a hyper-amortization measure for major investments and a patent box regime to encourage the development of intellectual property.

The country also offers a 40% tax credit on training expenses up to a maximum of EUR 300,000 annually per qualified taxpayer. An advertising campaign tax credit of between 75% and 90% is also available to qualifying companies.

Italy also offers a non-refundable grant for expenses incurred in 2019 and 2020 for micro, small and medium-sized enterprises and companies participating in a network agreement for technological and digital transformation.

Italy also provides a foreign tax credit to offset foreign-sourced income taxed abroad. Unused credits can be carried back or carried forward for eight years under specific conditions.

History & Features

 

Main cities for business

Italy has several major centers focused on business. Milan is the financial capital of the country. Others areas of interest include Rome, Naples, Bologna, Brescia and Genoa.

Popular historical & tourist attractions

Italy has 55 UNESCO World Heritage sites, the most in the world. Rome has the ancient Coliseum built by the Roman Empire for public spectacles and gladiatorial clashes.

Rome is also home to the Pantheon, Roman Forum, Trevi Fountain, the baroque square of Piazza Navona, Vatican City, St. Peter’s Square and Basilica, the Vatican Museum, the Spanish Steps, the catacombs and much, much more.

Venice is the city of islands, best-known for its canals, romantic gondolas and St. Mark’s Basilica. Pompeii and Herculaneum are two well-preserved ancient towns destroyed by volcanic pyroclastic flows.

Milan is the fashion capital of the country and home to the stunning Gothic Duomo di Milano which took nearly six centuries to complete. It is the largest church in Italy and the fifth largest in the world.

Florence is the capital of Tuscany and home to many masterpieces of Renaissance art and architecture. These include the Cathedral of Santa Maria del Fiore, the Galleria dell’Accademia with Michelangelo’s “David” sculpture, and the Uffizi Gallery with outstanding masterpieces such as Botticelli’s “The Birth of Venus” and da Vinci’s “Annunciation.”

Italy is also well-known for its areas of outstanding natural beauty. Scenic Lake Como has been home to the wealthy since early Rome and includes opulent villas and palaces surrounded by lush gardens.

The Amalfi Coast along the Sorrentine Peninsula features steep cliffs plummeting down towards to the sea and unsurpassed views. Cinque Terre, or five lands, is a group of five picturesque villages perched on the hillside overlooking the Mediterranean Sea.

The Blue Grotto on the Isle of Capri is one of the most visited spots in all Italy. This sea cave features intensely blue waters best seen from the three rocks called the Faraglioni.

The Italian Alps also offer some of the best skiing in the world. Popular areas include Livigno, Bormio, Sestriere, Val Gardena, and more.

History

Many peoples lived in the Italian region in ancient times. These included Greeks, Gauls and Etruscans.

Legend has it Rome was founded in 753 BC. It was ruled by seven kings until 509 BC. The Roman Republic began under the rule of elected officials, wealthy aristocrats within a senate and a lower assembly representing commoners.

As Rome grew, the strain on the government increased. By the 1st century BC, slaves and commoners revolted against aristocratic rule. Rome managed to put down the rebellion, but it splintered the empire into a series of military dictatorships. This ended with the assassination of Julius Caesar.

In 29 BC, the Roman Empire came to be under Emperor Augustus. Rome thrived for two hundred years and expanded its territory. Its territory included lands from Britain and the Atlantic coast of Europe, North Africa, and the Middle East.

However, the Empire faced many pressures and their power slowly declined. By the end of the 4th century, they had divided their empire into western and eastern regions. The eastern region thrived but the west continued to decline. By the end of the 5th century, the west collapsed.

For the next thousand years, Italy operated as city states and struggled. In the 14th century, Italy prospered due to trade in city states such as Florence, Milan, Pisa, Genoa and Venice. Italy became a major cultural center and fostered many great artists, sculptors, writers, scientists, inventers and explorers. The power of the Catholic Church grew immensely.

During the 16th century the Catholic Church’s power waned due to the Reformation and trade shifted away from the Mediterranean towards Northern Europe. As a result, city states came under attack from European powers such as Spain, France and Austria. Many regions were controlled by foreign nations until the 19th century.

Napoleon supported a unified Italy in the 19th century to buffer his territory from his enemies. By 1870, and Italian leader had completed the unification and the Kingdom of Italy was born. During World War I, Italy fought and won against the Central Powers of Germany and Austria-Hungary, but saw little gain.

In 1922, Mussolini seized power through a coup and became the supreme ruler of Italy. Throughout his reign he rebuilt the Italian economy, consolidated power and hoped to restore the Roman Empire. In the 1930s, he invaded Ethiopia and Albania.

During World War II, Italy joined Germany. Italian invasions of Greece, the Balkans and North Africa could not be maintained and eventually the Allies overtook Italy. Mussolini was captured and executed.

In 1946, Italy became a democratic parliamentary republic. Today it has a major advanced economy and it is a founding member of the European Union.

Other relevant facts

The majority of inhabitants identify as Italian (95%). Other ethnicities include Albanian, Romanian, Ukrainian and other European.

The 2018 Eurostat’s Eurobarometer survey revealed the majority of Italians are Christian (85.6%), followed by other religions (2.6%) and non-religious (11.7%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Italy is the 30th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Italy 80th globally and states, “The eurozone’s third-largest economy is hobbled by political interference; corruption; poor management of public finances; exceptionally high public debt; and such structural impediments to growth as labor market inefficiencies, a sluggish judicial system, and a weak banking sector. A complex regulatory framework and the high cost of conducting business drive a considerable amount of economic activity to the informal sector.”

World Bank’s “Doing Business” rankings rate Italy 58th for ease of doing business in the world.

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