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Italy: Market Profile

Picture: Italy factsheet
Picture: Italy factsheet

1. Overview

Italy's economy, which ranks among the top ten largest in the world, is largely diversified and distinctively dominated by SMEs which comprise 99% of Italian businesses. Tourism is an important source of external revenue, as are exports of pharmaceutical products, furniture, industrial machinery and machine tools, electrical appliances, automobiles and auto parts, food and wine, and textiles and fashion. However, the economy's exporting sector has underperformed compared with its eurozone competitors (Italy is an original member of the 19-nation eurozone) and that situation is expected to continue in the years ahead because of long-standing competitiveness issues and Italy's rigid labour market. Germany, France, the United States, Spain, Switzerland and the United Kingdom are Italy's most important investment partners, with Mainland China gaining ground. Italy's relatively affluent domestic market, access to the European Common Market, proximity to emerging economies in North Africa and the Middle East, and assorted centres of excellence in scientific and information technology research, remain attractive to many investors.

Source: Fitch Solutions

2. Major Economic/Political Events and Upcoming Elections

March 2018
The Five Star Movement led by Luigi Di Maio won the most votes in the general election, with the centre-left coalition, led by former prime minister Matteo Renzi, placed third.

June 2018
A coalition government led by the Five Star Movement and the League was agreed. Giuseppe Conte was appointed prime minister.

June 2018
The government took office with an agenda to cut taxes, boost welfare spending, and overhauled European Union (EU) budgets and immigration rules.

December 2018
The Government was forced to scale back budget spending plans after EU objections.

January 2019
The Italian economy slipped into recession in the last quarter of 2018.

February 2019
The port of Trieste officially opened its new free trade zone area called FREEeste, linked to the railway station at Aquilinia.

February 2019
The Italian parliament's 18-month moratorium on oil and gas exploration permits, intended to assist with the transition to a low-carbon future, would affect 70 pending permits and represents a blow to an already struggling industry. The ban would increase Italy's reliance on hydrocarbon imports.

March 2019
The port of Trieste and China Communications Construction Company signed an agreement to develop transport infrastructure that would enable the port of Trieste to join China's Belt and Road Initiative. The Chinese and Italian governments also signed a memorandum of understanding that formalises an expanded role for Chinese firms in Italy, especially in infrastructure and the expansion of northern Italy’s port facilities.

March 2019
With Italy's economy in a technical recession, the banking sector in Italy remained weak and exposed to a large amount of risky Italian government debt.

April 2019
The economy edged out of recession in the first quarter of 2019, leaving behind two successive quarters of contraction. The expansion, although far from spectacular, was supported by the external sector, while domestic demand dragged on growth.

Sources: BBC Country Profile – Timeline, Ports Europe, Port of Trieste, The Guardian, Fitch Solutions

3. Major Economic Indicators

Graph: Italy real GDP and inflation
Graph: Italy real GDP and inflation
Graph: Italy GDP by sector (2017)
Graph: Italy GDP by sector (2017)
Graph: Italy unemployment rate
Graph: Italy unemployment rate
Graph: Italy current account balance
Graph: Italy current account balance

e = estimate, f = forecast
Sources: IMF, World Bank, Fitch Solutions
Date last reviewed: May 31, 2019

4. External Trade

4.1 Merchandise Trade

Graph: Italy merchandise trade
Graph: Italy merchandise trade

Source: WTO
Date last reviewed: May 31, 2019

Graph: Italy major export commodities (2018)
Graph: Italy major export commodities (2018)
Graph: Italy major export markets (2018)
Graph: Italy major export markets (2018)
Graph: Italy major import commodities (2018)
Note: Unclassified products account for USD1.3 billion of imports
Graph: Italy major import commodities (2018)
Note: Unclassified products account for USD1.3 billion of imports
Graph: Italy major import markets (2018)
Graph: Italy major import markets (2018)

Sources: Trade Map, Fitch Solutions
Date last reviewed: May 31, 2019

4.2 Trade in Services

Graph: Italy trade in services
Graph: Italy trade in services

e = estimate
Source: WTO
Date last reviewed: May 31, 2019

5. Trade Policies

  • Italy is a member of the EU, which has a common set of tariffs and customs levied on various imports and exports. The trade policy is largely identical to that of the wider regional bloc. The EU updated its trade policy (and, by extension, its import tariffs, customs, duties, and procedures) in 2017.

  • The EU is party to some 50 free trade agreements (FTAs) and, consequently, access to other markets of the countries concerned is currently mediated through those agreements. The EU’s scheme on Generalised Scheme of Preferences (GSP) came into effect on January 1, 2014. Under the scheme, tariff preferences have been removed for imports into the EU from countries where per-capita income has exceeded USD4,000 for four years in a row. Regarding Hong Kong, the territory has been fully excluded from the EU’s GSP scheme since May 1, 1998.

  • In 2018 the EU modernised its trade defence instruments. Anti-dumping and anti-subsidy regulations have been amended to better respond to unfair trade practices and to furnish Europe's trade defence instruments with more transparency, quicker procedures and more effective enforcement. In exceptional cases, such as in the presence of distortions in the cost of raw materials, the EU will be able to impose higher duties through the limited suspension of the lesser-duty rule.

  • The European Commission (EC) has introduced an import licensing regime for certain iron, steel and aluminium products exceeding 2.5 tonnes. The regulation will be active until May 15, 2020.

  • A number of products from Mainland China are subject to the EU's anti-dumping duties, including bicycles, bicycle parts, ceramic tiles, ceramic tableware and kitchenware, fasteners, ironing boards, and solar glass, which are of interest to Hong Kong exporters. As of March 2019 the EU did not apply any anti-dumping measures on imports originating from Hong Kong.

  • To combat the spread of the Asian longhorn beetle, in July 1999 the EU introduced emergency controls on wooden packaging material originating from Mainland China. Wood covered by the measures must be stripped of its bark and be free of insect bore holes greater than 3mm across or have been kiln-dried to below 20% moisture content.

  • For health reasons, the EU has adopted a directive on the control of the use of nickel in objects intended to be in contact with the skin, such as watches and jewellery. The EU also adopted a directive to ban the use of some phthalates in certain PVC toys and childcare articles, on a permanent basis, which came into effect from January 16, 2007. In addition, the EU has adopted a directive to prohibit the trading of clothing, footwear and other textile and leather articles which contain azo-dyes, from which aromatic amines may be derived.

  • The EU has adopted a number of directives for environmental protection, which may have an impact on the sales of a wide range of consumer goods and consumer electronics.

  • Another important law for foreign companies to grapple with, concerns the Waste Electrical and Electronic Equipment (WEEE) Directive. In brief, the recast WEEE directive subjects member states to higher collection and recycling targets (a 45% collection rate as of 2016 and 65% from 2019) and a wider scope of measure essentially covering electric and electronic equipment and establishing producer responsibility as a means of encouraging greener product designs.

  • REACH, an EU Regulation which stands for Registration, Evaluation, Authorisation and Restriction of Chemicals, entered into force in June 2007. It requires EU manufacturers and importers of chemical substances (whether on their own, in preparation or in certain articles) to gather comprehensive information on the properties of their substances produced or imported in volumes of 1 tonne or more per year, and to register such substances prior to manufacturing in or import into the EU.

  • Nine types of goods imported into the EU are subject to licensing. These goods are (broadly): textiles; various agricultural products; iron and steel products; ozone-depleting substances; rough diamonds; waste shipment; harvested timber; endangered species; and drug precursors. No quotas are imposed on textiles and clothing exports, as well as non-textile products exports from Hong Kong and the Mainland China at present.

Sources: WTO – Trade Policy Review, European Commission, Fitch Solutions

6. Trade Agreement

6.1 Multinational Trade Agreements

Active

  1. The EU Common Market: The transfer of capital, goods, services and labour between member nations enjoy free movement. The common market extends to the 28 member states of the EU, namely: Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

  2. European Economic Area-European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland): This economic integration agreement entered into force on January 1, 1994. While it enhances trade flows between these countries and the EU, only Switzerland is a fairly major trading partner.

  3. EU-Turkey: This customs union entered into force on January 1, 1996 and provides tariff-free access to the EU market for Turkey, benefitting both exporters and importers.

  4. EU-Canada Comprehensive Economic and Trade Agreement (CETA): CETA is expected to strengthen trade ties between the two regions, having been signed in October 2016 and provisionally coming into effect on September 21, 2017. Some 98% of trade between Canada and the EU is duty free under CETA. The agreement is expected to boost trade between partners by more than 20%. CETA also opens up government procurement. Canadian companies will be able to bid on opportunities at all levels of the EU government procurement market and vice versa. CETA means that Canadian provinces, territories and municipalities are opening their procurement to foreign entities for the first time, albeit with some limitations regarding energy utilities and public transport.

  5. EU-Japan Economic Partnership Agreement (EPA): In July 2018, the EU and Japan signed a trade deal that promises to eliminate 99% of tariffs that cost businesses in the EU and Japan nearly EUR1 billion annually. According to the Economic Commission, the EU-Japan EPA will create a trade zone covering 600 million people and nearly a third of global GDP. The result of four years of negotiation, the EPA was finalised in late 2017 and came into force on February 1, 2019, after the EU Parliament ratified the agreement in December 2018. The total trade volume of goods and services between the EU and Japan is an estimated EUR86 billion. The key parts of the agreement will cut duties on a wide range of agricultural products, and it seeks to open up services markets, particularly financial services, e-commerce, telecommunications and transport. Japan is the EU's second biggest trading partner in Asia after Mainland China. EU exports to Japan are dominated by motor vehicles, machinery, pharmaceuticals, optical and medical instruments, and electrical machinery.

  6. EU- Southern African Development Community (SADC) EPA (Botswana, Lesotho, Mozambique, Namibia, South Africa and eSwatini): An agreement between the EU and the SADC delegations was reached in June 2016 and entered into force in October 2016 for five SADC members, joined by a sixth in February 2018 following the ratification of the agreement by Mozambique. The remaining six members of the SADC not included in the deal (the Democratic Republic of the Congo, Madagascar, Malawi, Mauritius, Zambia and Zimbabwe) are seeking EPAs with the EU as part of other trading blocs – such as East or Central African communities.

Provisionally Active

CETA: This is an agreement between the EU and Canada. CETA was signed in October 2016 and ratified by the Canadian House of Commons and EU Parliament in February 2017. However, the agreement has not been ratified by every European state and has only provisionally entered into force.

Ratification Pending

EU-Central America Association Agreement (Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Belize and the Dominican Republic): An agreement between the parties was reached in June 2012 and is awaiting ratification (29 of the 34 parties have ratified the agreement as of October 2018). The agreement has been provisionally applied since August 2013.

Under Negotiation

  1. EU-Australia: The EU, Australia's second largest trade partner, has launched negotiations for a comprehensive trade agreement with Australia. Bilateral trade in goods between the two partners has risen steadily in recent years, reaching almost EUR48 billion in 2017, and bilateral trade in services added an additional EUR27 billion. The negotiations aim to remove trade barriers, streamline standards and put European companies exporting to or doing business in Australia on an equal footing with those from countries that have signed up to the Trans-Pacific Partnership or other trade agreements with Australia. The Council of the EU authorised opening negotiations for a trade agreement between the EU and Australia on May 22, 2018.

  2. EU-United States Transatlantic Trade and Investment Partnership (TTIP): This agreement was expected to increase trade in goods and services, but talks were suspended at the end of 2016. In January 2019, the EC published its draft negotiating directives, which include a trade agreement focused on the removal of tariffs on industrial goods, excluding agriculture. On April 15, 2019, the EU member states gave the EC their approval to start formal negotiations. The negotiating directives for the TTIP are no longer relevant.

  3. EU-Vietnam FTA: In July 2018, the EU and Vietnam agreed on final texts for the EU-Vietnam FTA and the EU-Vietnam Investment Protection Agreement. The EU describes the agreement as the most ambitious it has ever concluded with a developing country, expecting it to increase EU exports to Vietnam by around 29% and Vietnam's exports to the EU by around 18%. As of January 2019 the final text of the agreement has been finalised and is awaiting signature and conclusion.

Sources: WTO Regional Trade Agreements database, European Commission, Fitch Solutions

7. Investment Policy

7.1 Foreign Direct Investment

Graph: Italy FDI stock
Graph: Italy FDI stock
Graph: Italy FDI flow
Graph: Italy FDI flow

Source: UNCTAD
Date last reviewed: May 31, 2019

7.2 Foreign Direct Investment Policy

  1. Italy is bound by EU laws on foreign direct investment. Italy has an investment promotion agency to facilitate foreign investment. The Italian Trade Agency (ITA) is administered by the Ministry of Economic Development. ITA has offices in 70 countries worldwide and has a unit dedicated to facilitating the establishment and development of foreign companies in Italy, with key sectors identified as aerospace, agrifood, automotives, chemicals and pharmaceuticals, consumer goods, green economy, electronics, ICT, infrastructure, life sciences, machinery, and real estate.

  2. Invitalia, a company wholly owned by the Ministry of Economy and Finance, was created as the central point of reference for businesses wishing to establish themselves in Italy. Invitalia offers a free one-stop-shop for foreign investors (helping with permits, location scouting and all aspects of setting up a business) and financial aid in the form of capital grants and soft loans or a combination of the two.

  3. Italy's main business association (Confindustria) aims to retain existing companies in Italy and to support and promote the Made in Italy brand worldwide, from foodstuffs to cruise ships built in Italian shipyards. Confindustria stresses that 85% of its members are small enterprises that have fewer than 50 employees.

  4. Exceptions to foreign participation include access to government subsidies for the film industry (limited to EU member states), capital requirements for banks domiciled in non-EU member countries and restrictions on non-EU-based airlines operating domestic routes. Italy also has investment restrictions in the shipping sector.

  5. To drive economic growth, the Italian government has put in place comprehensive reforms, such as new labour legislation, new financial tools for real estate and dedicated business courts to resolve disputes involving foreign investors. Fiscal  incentives include a 25% tax credit for private investment in research and development (R&D) (50% for projects with universities, research institutes or equivalent centres); a patent box regime to promote investment in the R&D of intangible assets (50% tax deduction from corporate income tax (CIT) for income from the direct use or licensing of qualified intangible assets); a 15% tax credit for investment in machinery and capital goods is made widely available to promote investment in industries such as electro-mechanical, tourism, agrifood processing, fashion, life sciences, and chemicals; and a tax regime for new residents to attract high-net-worth individuals (investor visa for Italy) to transfer their tax residence to Italy, thereby enhancing investment in Italy through a range of strategic asset investment incentives.

  6. The Italian constitution permits expropriation of private property for public purposes, defined as essential services or measures indispensable for the national economy. In such instances, prompt, adequate and effective compensation must be paid to the property holders.

  7. EU and Italian anti-trust laws provide Italian authorities with the right to review mergers and acquisitions on the grounds of market dominance. In addition, the Italian government may block mergers and acquisitions involving foreign firms under the Golden Power Law if the domestic firm involved is determined to be essential to the national economy – for example if the companies are operating in strategic sectors (identified as defence and national security, energy, transport, and telecommunications). The Golden Power Law always applies in cases in which the potential purchaser is a non-company and is extended to EU companies if the target of the acquisition is involved in defence or national security activities.

  8. Although many former monopoly operators have been partially or fully privatised, the state retains a controlling interest, either directly or through the state-controlled national development fund Cassa Depositi e Prestiti.

  9. Italy has a business registration website, available in Italian and English, administered through the Union of Italian Chambers of Commerce (Unioncamere). The online business registration process is clear and complete. Foreign companies may use the online process. Before registering a company online, applicants must obtain a certified e-mail address and digital signature, a process that may take up to five days. A notary is required to certify the documentation. The precise steps required for the registration process depend on the type of business being registered.

  10. The minimum capital requirement varies by type of business. Generally, companies must obtain a VAT account number from the Agenzia delle Entrate (the Italian revenue agency), register with the Istituto Nazionale della Previdenza Sociale (INPS – social security agency), verify adequate capital and insurance coverage with the Istituto Nazionale per L'Assicurazione contro gli Infortuni sul Lavoro (INAIL – Italian workers' compensation agency), and notify the regional office of the Ministry of Labour.

  11. Italy has 60 bilateral investment treaties in force, and 12 others are signed but not yet in force.

  12. Italy has treaties with investment provisions with 73 individual countries and economic blocs worldwide.

Sources: WTO – Trade Policy Review, ITA, Confindustria, Italian Trade Agency, Invitalia, Ministry of Economic Development, UNCTAD, Agenzia delle Entrate, Unioncamere, Cassa Depositi e Prestiti

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
The Italian government operates two free trade zones: the Free Port of Trieste (northeast of Italy) and the Free Port of Venice.

Both these free zones are Control Type I, which means goods placed within the perimeter fence are automatically under the well-bound free zone regimeand surveilled by security.
- These zones offer exemptions from VAT for non-EU goods in transit, deferred VAT payment on merchandise imported into the EU, non-discriminatory right of entry for ships and cargos and no customs intervention.

- In free trade zones, exporters are able to defer duties and taxes for 180 days from the time that the goods leave the free-trade zone to enter another EU country, transform goods free of any customs restraints, and obtain exemption from any duties on products coming from a third country.

- The free-trade zone law also allows a company, of any nationality, to employ workers of the same nationality under that country's labour laws and social security.
Other areas- Italy also has numerous general warehouses that are located throughout port areas and cities.

- There are no limitations as to the type or origin of merchandise that can be stored in free trade zones, bonded warehouses or customs warehouses.

- The time limit for such storage is five years.

- Merchandise that deteriorates while in storage can be destroyed without payment of a duty.
Other investment incentives- Incentives include grants, low-interest loans, deductions and tax credits.

- Some incentive programmes have a cost cap, which may prevent otherwise eligible companies from receiving the incentive benefits once the cap is reached.

- The government applies cost caps on a non-discriminatory basis, typically based on the order in which applications were filed.

- Italy provides an incentive for investments by SMEs in new machinery and capital equipment (‘New Sabatini Law’), available to eligible companies regardless of nationality.

- Sector-specific investment incentives are also available in targeted sectors.

- The Italian Trade Agency advertises Italy’s attractiveness for foreign direct investment by highlighting a 50% tax relief for people aged under 35 recruited in 2019-2020 if they have never been employed under a permanent contract.

- A 40% tax credit to offset the expense of personnel employed in eligible Industry 4.0 training activities, aimed at stimulating investment in training paths enabling technology such as automation and the cloud.

Sources: European Commission, Venice Free Zone, Italian Trade Agency, Fitch Solutions

8. Taxation – 2019

  • Value Added Tax: Up to 22%
  • Corporate Income Tax: 15%

Source: Italian Agency of Revenue - Agenzia delle Entrate

8.1 Important Updates to Taxation Information

  • The 2019 finance bill reintroduced an updated and tightened version of the digital services tax (DST) or web tax, which was previously introduced in 2018. The tax has been applicable to digital services applicable since January 1, 2019. Corporations are obliged to pay a 3% tax on the value of specified digital services, net of VAT. A taxpayer will be eligible if their worldwide revenue exceeds EUR750 million and the amount realised in Italy is EUR5.5 million or higher.

  • From January 1, 2019, CIT was reduced from 24% to 15% on profits which have been reinvested in certain activities (including new hirings and purchasing instrumental goods).

8.2 Business Taxes

Type of TaxTax Rate and Base
CIT
- 24% for IRES (CIT) and
- 3.9% for IRAP (a regional production tax that can vary according to the nature of the business, with regional rates varying by 0.92% higher or lower)
- 15% (given reinvestment conditions are met)
Capital Gains Tax Rate24%
Branch Tax Rate24% (IRES) and 3.9% (IRAP)
Withholding TaxGenerally, the rate for non-residents is 26% on dividend income and and interest and 30% on technical service fees and royalties from patents and suchlike, but treaties may mean different rates for non-resident corporations and individuals
VAT- The standard rate is 22%
- Reduced rates apply for the supply of some goods and services, such as 4% for listed food, drinks and agricultural products; 5% for some health and transport services; and 10% for electric power supplies and listed drugs. Supplies of specific goods and services are zero rated, including education, insurance services, specific financial services and the leasing of particular immovable property
Social security contributionThe total rate of social security contribution is around 40% of the employee's gross compensation, with the employer paying 30% and the employee 10% (the rate can vary depending on the employee's job and the work activity and size of the company)

Source: Italian Agency of Revenue - Agenzia delle Entrate
Date last reviewed: May 31, 2019

9. Foreign Worker Requirements

9.1 Working Permit

Non-EU member citizens require a work permit in order to work within the country; EU member citizens do not require a work permit, but their employer must inform the job office about their being hired. Citizens of the EEA (the EU member states, Iceland, Norway and Lichtenstein) and Switzerland do not require a visa to enter, reside and work in the country. No work permit is needed by foreigners from outside the EU if they have a permanent residence or family reunion permit, have been granted asylum, study in Italy or have blue or green cards.

9.2 Obtaining Foreign Worker Permits

Employers must first apply for a permit to hire foreign workers. A permit is granted once no suitable candidate can be found in Italy or in other EU member states. The vacant position must be reported to the local district labour office and cannot be changed at a later stage to fit the profile of a potential employee. The candidate must then apply for a work permit. The government issues the permit for maximum of two years, which can be repeatedly prolonged, but always for maximum of two years and may be renewed as many times as needed. The permit process takes an average of one month.

9.3 Green Card

The Green Card system only applies to citizens from the following nations: Australia, Montenegro, Japan, Canada, South Korea, New Zealand, Bosnia and Herzegovina, North Macedonia, the United States, Serbia, and Ukraine. The Green Card simplifies entry to the job market for foreigners who have qualifications for which Italy has a job opening in register of jobs suitable for green cards. The permit is for long-term residence for employment purposes.

9.4 Blue Card

Intended for the stay associated with the performance of a highly qualified employment. A foreigner holding a blue card may reside in Italy and work in the job for which the blue card was issued, or change that job under the conditions defined. High qualification means a duly completed university education or higher professional education which has lasted for at least three years. The blue card is issued with the term of validity three months longer than the term for which the employment contract has been concluded, however for a maximum period of two years. The blue card can be extended. One of the conditions for issuing the blue card is a wage criterion – the employment contract must contain gross monthly or yearly wage of at least 1.5 times the gross average annual wage.

9.5 Short-Term Work Visa

These can be granted by the embassy upon an application for a maximum period of 90 days, which must be used within 180 days. The visa must be for the purpose of employment and the application must be submitted, beside general requirements, with a work permit, an employment contract, and proof of securing accommodation.

Sources: Ministry of Foreign Affairs and International Cooperation, European Commission, Ministry of Interior, Fitch Solutions

10. Risks

10.1 Sovereign Credit Ratings


Rating (Outlook)Rating Date
Moody's
Baa3 (Stable)19/10/2018
S&P GlobalBBB (Negative)
27/10/2017
Fitch Ratings
BBB (Negative)22/02/2019

Sources: Moody's, Standard & Poor's, Fitch Ratings

10.2 Competitiveness and Efficiency Indicators


World Ranking
201720182019
Ease of Doing Business Index
50/19046/19051/190
Ease of Paying Taxes Index
129/190112/190118/190
Logistics Performance Index
N/A19/160N/A
Corruption Perception Index
54/18053/180N/A
IMD World Competitiveness44/6342/6344/63

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices


World Ranking
201720182019
Economic Risk Index RankN/A46/20244/202
Short-Term Economic Risk Score
65.666.562.7
Long-Term Economic Risk Score65.666.467.6
Political Risk Index RankN/A36/20242/202
Short-Term Political Risk Score
67.765.267.9
Long-Term Political Risk Score77.677.675.3
Operational Risk Index RankN/A41/20142/201
Operational Risk Score63.964.164.8

Source: Fitch Solutions
Date last reviewed: May 31, 2019

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK
The Italian economy will continue to register a very modest rate of growth over the long term, weighed down by weak credit availability, a subdued external environment, a massive public debt load and waning global competitiveness. Italy's business environment is becoming increasingly uncompetitive as a result of bureaucratic inefficiencies and structural rigidities. Unlike some other eurozone economies, Italy did not take full advantage of the opportunity to enact structural reforms during the global financial crisis and the eurozone debt crisis.

OPERATIONAL RISK
The government remains open to foreign investment in shares of Italian companies and continues to make information available online to prospective investors. Italy's economy is struggling to emerge from its longest recession in recent history, and the current government is making slow progress on improving Italy's investment climate.

Source: Fitch Solutions
Data last reviewed: June 3, 2019

10.5 Fitch Solutions Political and Economic Risk Indices

Graph: Italy short term political risk index
Graph: Italy short term political risk index
Graph: Italy long term political risk index
Graph: Italy long term political risk index
Graph: Italy short term economic risk index
Graph: Italy short term economic risk index
Graph: Italy long term economic risk index
Graph: Italy long term economic risk index

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Economic and Political Risk Indices
Date last reviewed: May 31, 2019

10.6 Fitch Solutions Operational Risk Index


Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Italy Score64.8
54.5
59.7
76.2
68.7
Developed States Average73.564.671.376.381.8
Developed States Position (out of 27)2624
26
1725
Developed States Average73.564.671.376.381.8
Developed States Position (out of 27)26
24
26
1725
Global Average49.750.349.849.049.8
Global Position (out of 201)42
73
66
19
44

100 = Lowest risk; 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Graph: Italy vs global and regional averages
Graph: Italy vs global and regional averages
Country
Operational Risk Index
Labour Market Risk Index
Trade and Investment Risk IndexLogistics Risk
Index
Crime and Security Risk Index
Denmark80.874.876.288.384.0
Netherlands80.365.978.288.688.4
Switzerland79.975.077.675.191.8
Sweden
79.367.778.187.583.8
New Zealand77.773.775.772.189.4
United Kingdom77.671.479.0
78.581.3
United States77.581.375.382.970.5
Norway77.364.072.280.892.3
Canada77.174.375.476.782.1
Finland
76.155.874.183.491.2
Austria75.460.871.980.588.3
Luxembourg75.254.277.680.088.9
Japan75.172.465.577.984.7
Ireland74.866.878.072.082.5
Germany74.365.569.081.281.7
Australia73.167.872.168.384.3
Spain72.659.468.980.981.3
France72.560.171.183.275.5
Belgium72.458.272.883.275.3
Portugal71.051.766.580.985.0
Iceland71.060.667.269.686.6
Liechtenstein70.559.878.161.582.6
Israel67.471.464.671.162.4
Malta66.254.969.060.880.1
Isle of Man65.869.162.449.382.3
Italy64.854.559.776.268.7
Greece58.954.249.268.963.2
Regional Averages73.564.671.376.381.8
Emerging Markets Averages46.048.146.544.744.8
Global Markets Averages49.750.349.849.049.8

100 = Lowest risk; 0 = highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: May 31, 2019

11. Hong Kong Connection

11.1 Hong Kong’s Trade with Italy

Graph: Major export commodities to Italy (2018)
Graph: Major export commodities to Italy (2018)
Graph: Major import commodities from Italy (2018)
Graph: Major import commodities from Italy (2018)

Note: Graph shows the main Hong Kong exports to/imports from Italy (by consignment)
Date last reviewed: May 31, 2019

Graph: Merchandise exports to Italy
Graph: Merchandise exports to Italy
Graph: Merchandise imports from Italy
Graph: Merchandise imports from Italy

Note: Graph shows Hong Kong exports to/imports from Italy (by consignment)
Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
Sources: Hong Kong Census and Statistics Department, Fitch Solutions
Date last reviewed: May 31, 2019


2017
Growth rate (%)
Number of Italian residents visiting Hong Kong104,933
-0.4
Number of Italians residing in Hong Kong6521.6

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs - Population Division


2017
Growth rate (%)
Number of European residents visiting Hong Kong1,929,824
-0.2
Number of developed state citizens residing in Hong Kong65,6801.6

Sources: Hong Kong Tourism Board, United Nations Department of Economic and Social Affairs - Population Division, Fitch Solutions
Date last reviewed: May 31, 2019

11.2 Commercial Presence in Hong Kong


2017
Growth rate (%)
Number of Italian Companies in Hong Kong164
2.5
- Regional headquarters39
0
- Regional offices6216.3
- Local offices63
-6.0

Source: Hong Kong Census and Statistics Department, Fitch Solutions

11.3 Treaties and agreements between Hong Kong and Italy

  • Hong Kong and Italy have a comprehensive double taxation agreement that has been effective from August 10, 2015.

  • Italy and Hong Kong have an investment promotion and protection agreement that entered into force on February 2, 1998.

  • Italy has a BIT with Hong Kong that entered into force on February 2, 1998, and a BIT with Mainland China that entered into force on August 28, 1987.

  • Italy has a tax treaty with Mainland China that has been applicable since January 1, 1990.

Sources: Inland Revenue Department, Trade and Industry Department, UNCTAD, Fitch Solutions

11.4 Chamber of Commerce or Related Organisations

Italian Chamber of Commerce in Hong Kong and Macao
Address: 19/F, 168 Queen's Road Central, Central, Hong Kong
Email: icc@icc.org.hk
Tel: (852) 2521 8837
Fax: (852) 2537 4764

Source: Italian Chamber of Commerce in Hong Kong and Macao

Italy-Hong Kong Association
Email: italy-hk@hktdc.org
Tel: (39) 2 865 405
Website: www.associazioneitaliahongkong.org
Please click to view more information.

Source: Federation of Hong Kong Business Associations Worldwide

Consulate General of Italy in Hong Kong
Address: Suite 3201, 32/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
Email: consolato.hongkong@esteri.it
Tel: (852) 2522 0033/4/5
Fax: (852) 2845 9678

Source: Consulate General of Italy in Hong Kong

11.5 Visa Requirements for Hong Kong Residents

Hong Kong residents are entitled to a visa-free entry to Schengen countries lasting no more than 90 days in any six-month period from the date of first entry in the territory of the member states.

Source: Consulate General of Italy in Hong Kong
Date last reviewed: May 31, 2019

Content provided by Picture: Fitch Solutions – BMI Research
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