Doing business in Italy: Italy trade and export guide
Updated 5 November 2015
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1. Italy export overview
Italy has a long-standing trade relationship with the UK. It’s a major advanced economy with a Gross Domestic Product (GDP) of USD 2,148 billion in 2014. Italy is the second largest manufacturer in Europe behind Germany.
Contact a Department for International Trade (DIT) Italy export adviser for a free consultation if you’re interested in exporting to Italy.
Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Italy.
Italian companies are globalising. Most are Small and Medium Enterprises (SMEs) which require professional services to grow internationally.
Benefits for UK businesses exporting to Italy include:
- European Union (EU) market, so no tariffs
- similar regulatory framework to UK and modern intellectual property protection practices
- appreciation for British professional services and technologies and quality consumer goods
- easy access from the UK with low cost flights from several regional airports
- only 1 hour ahead of UK time
Strengths of the Italian market include:
- modern infrastructure
- high level of internationalisation and entrepreneurship, with fully integrated supply chains
- strong manufacturing and innovation capability in several areas
- gateway to Mediterranean and Middle East markets, where the lifting of Iranian sanctions could increase exports by EUR 3 billion over the next 4 years
- hosts many trade exhibitions with global appeal
- one of the world’s highest rates of household wealth
- one of the world’s top 5 tourist destinations
Read the EU’s practical guide to doing business in Europe.
2. Challenges
Doing business in Italy is very similar to doing business in the UK. Standard European business practices apply.
Payment terms in Italy are longer than in the UK. In 2014, it took about 80 days on average for business-to-business payments. Payment terms can be particularly long in certain sectors, especially when creditors are public administration bodies (average almost 5 months in 2014), but the situation is improving following the recent introduction of the Prompt payment code.
Major challenges include:
- complex bureaucracy and regulations
- slow judicial system
- unfair competition due to cases of bribery, corruption and tax evasion
You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.
3. Growth potential
3.1 Economic growth
High public debt and weak external competitiveness contributed to a contraction of the Italian economy following the global economic crisis.
Italy’s economy is now emerging slowly from recession. Estimates by the European Commission, Bank of Italy, International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) released recently indicate a moderate increase in GDP of 0.5 to 0.6% in 2015 and 1.1 to 1.4% in 2016.
3.2 Trade agreements
Italy is a member of the EU, the World Trade Organization (WTO) and other international bodies. Goods manufactured in the UK are exempt from import duties.
Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.
4. UK and Italy trade
Bilateral trade in goods was valued at £25.7 billion in 2014, a 6.6% increase over 2013. UK goods exports to Italy totaled £8.9 billion in 2014, a 3.11% increase on 2013. This made Italy the 10th largest market for UK exports of goods.
The main exports of goods by value from the UK to Italy in 2014 were:
- crude petroleum
- basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber
- motor vehicles
- pharmaceutical products and preparations
- natural gas
UK exports of services to Italy totaled £2,411 million in 2013. This does not include data for the travel, transport and banking sectors.
5. Opportunities for UK businesses in Italy
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).
Italy has a highly diversified economy and can offer opportunities in many sectors.
5.1 Aerospace
The Italian aerospace industry is the third largest in Europe and the seventh worldwide. The sector has:
- a turnover of EUR 13 billion
- exports worth EUR 7 billion
- over 100 hundred companies, with 64,000 direct and indirect employees
The leading aerospace clusters are in:
- Piedmont and Lombardy
- Lazio and Umbria
- Campania and Apulia
The Department for International Trade (DIT) aerospace team in Italy has strong relationships with many Italian and British trade associations. The team is present at major air shows, including Farnborough, to help UK companies source business and R&D opportunities in the Italian market.
Contact milancommercialenquiries@fco.gov.uk for more details on aerospace opportunities.
5.2 Automotive
In 2014 the index of vehicle industrial production in Italy recovered with a production rate reaching 84.4%. National production increased by 6% compared with 2013. This is after a number of difficult years for the Italian automotive industry.
Sales of alternative, more environmental friendly vehicles are rising with hybrid, Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG) vehicles now accounting for 53% of total turnover.
The 3 main sub-sectors offering relevant opportunities for UK companies are:
- components
- Research and Development (R&D)
- motorsport
Contact milancommercialenquiries@fco.gov.uk for more details on automotive opportunities.
5.3 Defence and security
Italy’s defence and security industry has a total market size of about £2.32 billion. Italy’s security focus is on:
- terrorism
- immigration (border control)
- organised crime and people trafficking
- safety of transportation services
- cyber security/critical national infrastructure
- disaster relief and mitigation
Transportation is a priority as major airports and seaports have become primary security concerns. These infrastructures are currently seeking to upgrade security resources and services to ensure 100% screening of passengers and work personnel.
Contact Export Control Organisation (ECO) to check your goods you are meeting legal requirements for export.
Contact milancommercialenquiries@fco.gov.uk for more details on defence and security opportunities.
5.4 Education
The Italian Ministry of Education, University and Research (MIUR) is currently reforming schools focussing on:
- improvement of foreign language learning, digital skills and economic studies in secondary schools
- continuous and compulsory training for teachers
- online availability of school data and national teachers’ registry
- adoption of broadband and Wi-Fi in all schools
Additionally more than EUR 3 billion is available from European Regional Development Funds and European Social Funds to enhance Italian education. This is 40% higher than in the previous programme and will be spent between 2014 to 2020 on:
- improving students’ skills
- innovating school structures
- developing teachers’ competences
The funds will be allocated nationwide to:
- reducing student drop outs, strengthening students’ capabilities, training all school staff
- enhancing education system through increased usage of new technologies
- increasing transparency and efficiency in administration and financial management
- improving communication and information systems.
These reforms and additional funds represent a great opportunity for UK education suppliers.
Contact milancommercialenquiries@fco.gov.uk for more details on education opportunities.
5.5 Healthcare and life sciences
The Italian National Health System (SSN) is going through an in-depth reform and modernisation process to take into account:
- ageing population
- move of patients to outpatient care
- increased focus on prevention
- acceleration of e-health development
There are opportunities for:
- innovative equipment and medical devices
- diagnostic (portable) equipment and kits
- innovative daily life aids for elderly and disabled
- e-care and e-health devices
- food supplements and dietary foods
Contact milancommercialenquiries@fco.gov.uk for more details on healthcare and life science opportunities.
5.6 Luxury and design led consumer products
One third of the world’s luxury items are made in Italy. This fashion and textile sector has:
- an estimated value of EUR 52.5 billion in 2014
- one of the highest purchase rates of fashion items in the world
- high spend by foreign tourists
- global leading trade fairs
British fashion brands often consider Italy as a gateway to other foreign markets.
E-commerce grew by 17% in 2014. Online sales of fashion (clothing, shoes, accessories) increased by more than 25% during that year.
The cosmetics, perfume and toiletries sector in Italy:
- had EUR 9.4 billion turnover in 2014
- has the world’s largest trade fair, Cosmoprof
- is growing in terms of natural and organic beauty products and artistic perfumery
Italy’s furniture and interior design sector is made up of over 28,000 companies. It hosts the world’s top exhibition in the furniture sector, Salone del Mobile in Milan. There are opportunities for UK companies to supply:
- materials and components
- product and service design
- innovative product and interior design solutions with environment-friendly features in the contract market
Contact milancommercialenquiries@fco.gov.uk for more details on luxury and consumer product opportunities.
5.7 Marine and ports
The Italian marine sector:
- has a total turnover of EUR 2.5 billion
- grew by 2.1% in 2014 compared with 2013 with 3.1% registered for boat accessories
- featured increased use of boat leasing
Italy is global leader in the production of super yachts with 40% of global orders. Italy’s shipbuilding industry includes many other sub-sectors which offer good opportunities to UK suppliers.
A new government plan launched in July 2015 aims to strengthen ports and logistics competitiveness at a European and global level. This will result in a series of new investment and innovative projects offering potential business opportunities for UK companies.
Contact milancommercialenquiries@fco.gov.uk for more details on marine and ports opportunities.
5.8 Retail
Future shopping centre development in Italy can offer investment and export potential. There will also be high value opportunities for the supply of infrastructure and structural products.
New property development projects with retail centres include:
- Westfield Milan, in Segrate close to Milan Linate airport, which will be the largest shopping mall in Italy at 250,000 sqm when it opens between 2017 and 2018, and will include almost 400 shops, 50 restaurants and 14 multiplex cinemas (investment value EUR 1.3 billion)
- Scalo Milano opening in 2015 with 300 shops (value EUR 170 million)
- Arese Shopping Centre opening in 2016 with 200 shops (value EUR 700 million )
- Verona Porta Sud opening in 2016 with 125 shops (value EUR 200 million)
- Torino Outlet Village opening in 2015 with 90 shops
- San Pellegrino Outlet Village opening in 2016 with 45 shops
Contact milancommercialenquiries@fco.gov.uk for more details on retail opportunities.
5.9 Technology, innovation and smart cities
The total value of the smart cities market in Italy is EUR 1.15 billion. Recent research by the Internet of Things Observatory of Milan Polytechnic indicates smart cars, smart homes and smart cities are expected to grow their business in 2015.
The city of Milan is supporting and promoting shared economy and social innovation initiatives. This includes the re-design of urban spaces and an easier access to information and institutional open data.
There are opportunities for:
- energy efficiency in buildings
- efficient public lighting
- waste management
- smart grid systems
Contact milancommercialenquiries@fco.gov.uk for more details on technology opportunities.
6. Start-up considerations
Selling to Italy is often best achieved by appointing an agent or a distributor.
Contact the Department for International Trade (DIT) team in Italy to help find tax and legal advisers before entering into any distribution or agency contracts. Always seek appropriate trade and bank references before consigning goods.
Italian corporate law differentiates between
- partnerships
- corporations
- limited liability companies
The most common types of companies are:
- Società per Azioni (S.p.A) which are companies with liability limited by shares
- Società a responsabilità limitata (S.r.l) which are companies with liability limited by quotas
If you want to set up a company in Italy, you can complete the necessary procedures through business assistance organisations known as Sportello Unico Attività Produttive (SUAPs).
7. Legal considerations
Contact the Department for International Trade (DIT) team in Italy to help find tax and legal advisers before entering into agreements.
7.1 Standards and technical regulation
Products and packaging should meet EU standards.
Italy follows EU regulations, but it adopts more stringent in some sectors. This also applies to packaging and labelling. If in doubt contact the local Department for International Trade (DIT) team.
Ente Nazionale Italiano di Unificazione (UNI) has responsibility for Italian national standards.
Comitato Elettrotecnico Italiano (CEI) is responsible for electrics, electronics and telecommunications regulations.
7.2 Intellectual property
Trademarks, designs, patents and copyright are the principal forms of Intellectual Property (IP) protection available to companies and individuals.
IP law, especially for patent protection, is not totally harmonised within the EU.
Applications for IP protection should be done through the Italian Patent Office of the Ministry for Economic Development.
8. Tax and customs considerations
Italy has signed a double taxation convention with the UK.
Agenzia delle Entrate (Italian Revenue Agency) provides information on taxation in Italy.
8.1 Value Added Tax (VAT)
VAT is known as IVA in Italy. The standard rate is 22%.
A reduced IVA rate of 4% is applied to:
- basic food products
- some social services
- dailies, periodicals, books
- some seeds and fertilisers
A 10% rate is charged on tourist services and some other food products.
8.2 Corporate tax
The corporate tax (IRES) rate in Italy is 27.5%. This fixed rate must be paid by all resident companies on income from any source, whether earned in Italy or abroad.
There is also a regional tax on business activities called IRAP, which varies from region to region (4 to 6%).
8.3 Income tax
Resident individuals are subject to a personal income tax (IRPEF) on their worldwide income. Non-resident individuals are only subject to tax on their Italian source income.
There are 5 income bands with rates from 23% (for taxable incomes up to EUR 15,000) to 43% (for those over EUR 75,000).
8.4 Customs considerations
The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties apply.
Weights and measures should be metric and temperatures given in centigrade.
More information on customs regulations is available from the Italian customs agency Agenzia delle Dogane.
9. Business behaviour
Knowledge of English is reasonably extensive in Italian business, but traders should not rely on being able to communicate in English.
10. Entry requirements
British nationals do not need a visa to enter Italy. Your passport should be valid for the proposed duration of your stay for visits lasting up to 3 months.
10.1 Travel Advice
If you’re travelling to Italy for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.
11. Contacts
Contact the Department for International Trade (DIT) team in Italy for more information and advice on opportunities for doing business in Italy.