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2018 Incentives for Developing Business in Italy (Part 2)
Italy is ranked 46 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Italy improved to 46 in 2017 from 50 in 2016.
Regarding the distance from the border, or the so-called gap between the performance of the individual country and the best performance observed for each indicator (since 2005), Italy registers the most important leap forward among the OECD countries (passing from 71.55 to 72.70).
The encouraging signal came after the promotion of Standard and Poor's (October 2017 and April 2018) which revised upwards the rating of Italy to "BBB / A-2" with a stable outlook. Italy has become the country with the best performance in the OECD area. In particular, Italy has made access to electricity easier by reducing the time for connection and installation of the meter, making it easier to pay taxes for three years exempting employers from social security contributions for some subjects and simplifying VAT obligations.
The Italian economy is characterized by 4.4 million highly dynamic firms operation in different industries. The large majority are small and medium-sized enterprises (SMEs), of which more than 200.000 have over 10 employees. Only 3.500 are large companies with more than 250 employees.
The service sector is a major contributor to the Italian economy. It accounts for approx. 74% of GDP and it is also the fastest growing segment. Tourism, retail and financial services represent a significant part of the sector.
The industrial sector accounts for 18,8% of GDP, with the remainder contributed by agriculture (source: L’Italia in cifre, ISTAT, 2016).
Some of the key Italian sectors are: Tourism, Automotive, Fashion and luxury, Pharmaceuticals, Information and communication technology, Chemicals, Aerospace, Renewable energy.
As I focused in my previous article on the Stability Law, this time I will pay attention to other incentives, you could consider for developing your business in Italy, as shown by the graphic:
There are five kind of calls for incentives:
- Subsidized loans
- Credit guarantee
- Investment in venture capital
Many grants and incentives are available for new businesses in Italy.
Grants include EU subsidies, central government grants, regional development grants, redeployment grants, and grants from provincial authorities and local communities. Grants are mostly focused on promotion and internationalization of the company, on research and technological assistance, on subsidies for job creation.
There are a number of Italian trade organisations, including the Istituto Nazionale per il Commercio Estero (ICE), which is a public organisation (with over 30 offices in Italy and some 80 abroad) that promotes Italian trade throughout the world.
The Confcommercio specialises in certain industries, such as construction, computers (hardware and software), cosmetics, fashion, retailing, and import and export, organises trade fairs and other promotional activities, and provides free financial and legal advice to its members.
Subsidized loans can be used for improve funding sources and facilitate the acquisition of company or business unit.
Mixed mostly refers to all kind of projects except for acquisition of company or business unit
Credit guarantee facilitate SME access to financing through state guarantee on bank loans.
SMEs will obtain financing without additional guarantees on the amount of the Guarantee Fund. The Fund does not intervene directly in the relationship between the bank and the enterprise. The parties contractually determine the rates of interests, the conditions of reimbursement etc.
There are three different types of public guarantee:
- Direct guarantee: the Fund directly provides the guarantee to banks.
- Counter-guarantee: the Fund provides a counter guarantee to Mutual Guarantee Institutions (MGIs).
- Co-guarantee: the Fund directly provides a guarantee on bank loans and jointly with MGIs.
Investment in venture capital
The Venture Capital Fund aims at supporting investments in venture capital firms with high growth potential. The goal is to strengthen the Venture Industry with a focus on innovative start-ups.
The Fund operates exclusively on a co-investment basis with private investors, committing up to 70% of investments within a range of €0.5 million and €1.5 million
The investment strategy will focus on high-growth sectors such as: Internet & ICT, Logistics & Mechatronics, Biotech and Health, Clean Energy & Green Tech, Public Administration & Government, Social Impact and Sustainability, Food, Fashion, Life Style and Fintech.
Interconsulting Studio Associato is at your complete disposal to deliver you further details regarding all kinds of incentives and to select together with you the strategy, which better fits to your company’s aim.