Successfully investing in Italy

last updated on 6 October 2025 | reading time approx. 3 minutes

How do you assess the current economic situation in Italy? »
How would you describe the investment climate in Italy? Which sectors offer the largest potential? »
What challenges do German companies face during their business venture into Itay? »
Why should companies decide to enter the Italian market or remain there? »
In your opinion, how will Italy develop? »

How do you assess the current economic situation in Italy?

As of June 2025, the Italian economy is showing a cautious yet stable trajectory. The IMF now forecasts annual growth of only around 0.4 percent. Nevertheless, GDP increased by 0.3 percent in the first quarter compared to the previous quarter and by 0.7 percent year-on-year. This trend is supported by strong private investment and an inflation rate below 2 percent. Public debt is expected to approach 139 percent of GDP, making fiscal discipline essential—despite continued EU funding under the National Recovery and Resilience Plan (NRRP).

How would you describe the investment climate in Italy? Which sectors offer the largest potential?

For German companies, a selective expansion strategy remains worthwhile. Projects in green energy, digital infrastructure, and Industry 4.0 continue to benefit from attractive tax credits and NRRP co-financing. Italy’s globally recognized brands in luxury goods, design, and agrifood – often powered by German technology – offer additional synergies. Early structuring with integrated legal and tax expertise is key to turning these incentives into measurable returns.

What challenges do German companies face during their business venture into Itay?

Entering or expanding in the Italian market requires more than capital and a strong product. Success depends on thorough preparation and strategic agility across multiple dimensions.

Investment control and notification requirements

Italy’s foreign investment screening regime now covers a wide range of strategic sectors—from energy and telecommunications to logistics and cloud services. This can trigger additional notification obligations and tight deadlines, which must be addressed early.

Payment practices and liquidity management

Despite improvements, average payment terms in B2B transactions remain between 50 and 60 days. This impacts working capital and calls for proactive liquidity planning.

Labour law framework

Despite recent reforms, Italian labour law remains complex. Companies must navigate a web of national collective agreements, regional wage supplements, and union practices. These should be clearly reflected in robust and legally sound HR policies to avoid future disputes.

Regional administrative procedures

Administrative processes are often bureaucratic and lengthy, varying not only by region but sometimes even by municipality. This is a critical factor in site selection and project planning.

Tax compliance

Tax compliance in Italy extends beyond corporate and VAT obligations. Sector-specific levies, differentiated transfer pricing rules, and a new wave of digital reporting requirements demand early alignment with Italian practice to avoid costly reassessments.

Business culture and communication

Italy’s business culture is highly relationship-driven. Personal credibility, fluency in Italian, and sensitivity to regional etiquette can be decisive in securing contracts.

Conclusion: Key success factors for market entry

Companies that integrate legal, tax, and cultural expertise from the outset can accelerate market entry, reduce complexity, and protect their margins.

Why should companies decide to enter the Italian market or remain there?

As a logistics hub in the Mediterranean, Italy remains a vital component of European supply chains. Efficient north-south corridors connect the industrial triangle in northern Italy with Southern Europe and North Africa. Clusters in automotive electronics, life sciences, and renewable energy are actively seeking strategic partners.

Over 30 billion Euros in NRRP funding continues to enhance the attractiveness of investments—provided that projects are investment-ready and compliant. In this environment, experienced cross-border advisors can deliver tangible added value.

In your opinion, how will Italy develop?

The Italian government is advancing administrative and judicial reforms aimed at accelerating permitting and enforcement procedures, thereby boosting productivity in the medium term. In light of tighter EU fiscal oversight, close monitoring of changes in tax credits, transfer pricing rules, and sustainability reporting will be critical. German investors who seek early advice, establish transparent governance, and adapt to regional market dynamics will gain a competitive edge in one of Europe’s most demanding yet opportunity-rich markets.