ITALY: Useful Info

Italy’s location at the heart of the Mediterranean—the crossroads of the southern, northern and central Europe—has led to both a rich and influential culture. The work of Botticelli, Leonardo da Vinci, Michelangelo, Verdi, Puccini, and Fellini have been loved and admired throughout the centuries.

This location also gives Italy, and all who invest or do business in it, many opportunities. Aside from its 60 million consumers, it gives access to 396 million other consumers in the European Union, North Africa, and the Middle East. Despite its unstable political environment (it has had several dozen government since the end of the second world war), Italy’s economy remains stable, with the fourth largest GDP in Europe.

Quick Facts

Population: 57.2 million (Source: UN, 2005)
Capital: Rome
Area: 301,338 sq km (116,346 sq miles)
Major language: Italian
Monetary unit: 1 Euro = 100 cents
Main exports: Machinery and transport equipment, chemicals, clothes, wine
GNI per capita: US $26,120 (Source: World Bank, 2005)

Economic Background

Italy and UK have enjoyed a good commercial and economic relationship. It is the UK’s 8th largest export market, with £8.3 billion worth of goods (about 5% of Italy's imports) sold in 2004. Approximately 1,600 UK companies have subsidiaries or joint ventures in Italy. Italy’s exports to the UK reached £11.7 billion in the same year.

Italy’s economy is driven by exports, though inflation and increased costs have made it difficult for some Italian firms to remain competitive. Many of them are open to cooperating with UK firms to help share the operation costs as well as gather enough resources to expand into the new European and Asian markets.

While the country has experienced some economic problems, there is still a high demand for foreign imports. The Italian consumer is very brand-conscious and will pay well for quality and image. Furthermore, the country has the highest per capita income in Europe and the second largest savings ratio in the world.

The government has also initiated several incentives and policies to attract foreign investors. Corporate income tax rate has been reduced up to 33%. Exemptions for capital gains are being offered, while 95% exemption on dividend distributions is also being introduced. Italian and foreign limited companies belonging to the same group can consolidate their tax base, while regional tax on business activities will be progressively abolished.

Italy has also one of Europe’s most flexible labour policies. In 2003, the government instituted new types of contracts that would enable companies to upfront special growth trends for limited periods and minimise labour costs when output levels had decreased. Independent contractors can also control job placements to periods when performance for a specific project is required.

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