Foreign Direct Investment Counselor,Ministry of Economic Development
FDI attraction to Italy: an overview of the governance to improve business climateand foster foreign investments
Mattia Adani
ITALY FACTS AND FIGURES
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A GDP of EUR 1.67 billion GDP (EU, 2016) 3rd economy of the Eurozone,
accounting for 16% of the EU GDP 2nd manufacturer in Europe and 8th in the world 9th exporter worldwide
Italy’s control over public finance has been among the most solid in the Eurozone in the last 7 years since 2012, the deficit has been consistently below the 3% ceiling and the
forecast for 2017 is 2.1% Italy is the country that, together with Germany, maintained the highest
primary surplus on average (1.1%) during the 2009-16 period
Italy ranks now among the low risk countries with regard to long-term public finance sustainability, according to the European Commission’s S2 indicator that measures the long-term resilience of public finance
ITALY IN INTERNATIONAL RANKINGS: IS IT A TRUE STORY?
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0 1000 2000
Czech Rep.
Chile
Malaysia
Thailand
Indonesia
Italy
GDP 2015 (bln US$, market prices)
Source: elaboration of the European House – Ambrosetti on World Bank data 2017
0 200 400 600
Chile
Czech Rep.
Indonesia
Malaysia
Thailand
Italy
Export 2015 (bln US$)
0 100 200 300 400
Czech Rep.
Chile
Malaysia
Thailand
Indonesia
Italy
Fixed gross investments 2015 (bln US$)
Malaysia 18th place
Czech Rep. 31st place
Thailand 32nd place
Chile 35th place
Indonesia 37th place
Global CompetitivenessIndex 2015-16(140 Countries)
(World Economic Forum)Italy 43rd place
THINGS HAVE CHANGED
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• FDI Confidex INDEX: Italy ranks 13th overall in 2017 (16thin 2016)
• + 20 "Digital Tax Index 2017: Locational Tax Attractiveness for Digital Business Models"
• + 62 % EY Attractiveness Survey (2° best performance after Sweden)
SOMEONE ALREADY NOTICED
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Source: Brand Finance, Nation Brands Ranking
WHY ITALY NOW?
6Source:
In October 2017, credit ratings agencyStandard & Poor’s raised its sovereign rating for Italy
"We are upgrading Italy because ofits improved economic growth prospects, supported by rising investment andsteady employment growth…"
A GOOD PROFILE, WITH ROOM FOR IMPROVEMENTS (AND MANY OPPORTUNITIES)
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7th manufacturer in the world1, 2nd in Europe 8th Economy by GDP 9th Economy by export1
12th in the Country RepTrak Pulse 20162
14th in the Global Attractiveness Index3
18th by inward FDIs4
Sources:1. CSC2. Reputation Institute3. The European House - Ambrosetti4. ITA elaborations on ISTAT data
THE REFORM STRATEGY
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Reform strategy
New Governance
Industry 4.0Taxation
Human Capital
Jobs Act
NATIONAL PLAN INDUSTRY 4.0STRATEGIC INTERVENTION DIRECTIVES 2017-2020
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Key action lines Support action lines
• Incentives for investments private to update machineryand technologies I4.0 (super and hyperamortization and new Sabatini)
• Increase the private expenditure for Research, Development and Innovation (CIR&S)
• Patent Box to boostinvestments in intangible assets and intellectual property
Innovative Investments Competencies
Governance e awareness• Sensitize on the relevance of I4.0 and favour a public-private governance
EnablingInfrastructures
Public Support Tools
• Insure adeguate net infrastructure: Ultra Wide Band Plan giving priority to industrial areasaccording to a fiberto the factory logic
• Cooperate to the definition of security standards and interoperabilitycriteria IoT
• Favour the attraction of FDIsand the financingstrategic projects I4.0
• Strengthenenterprise financieand improve the allocation of savings towardsproductive ends
• Support the exchange salary-productivity throughdecentralizedcompany labournegotiation
SUPER AND HYPERAMMORTIZATION FOR CAPITAL GOODS
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Investments in innovation Advantages of the Plan
Hyperammortization• Increase of the quota for investments 4.0
140% 250%
Super Hyper
Superammortization• Extension of one year with a stabilizzation of
the quota (140%)• Extension to the immaterial assets, e.g.
software, IT systems and digital platforms
Deadlines• To improve the attractivity of these
measures the deadline for applications has been extended to 30/06/18 for the superand to 30/09/18 for the l’iper, though the order and an advance over 20% have to be put in place by 31/12/17
TAX CREDIT FOR EXPENSES IN RESEARCH AND DEVELOPMENT
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Expenditure in research, developmentand innovation (example 2017)
Incrementalexpense based on the fixed average
2012-2014Average
expenditure
Tax credit for R&D
R&D Expense
2012
R&D Expense
2013
R&DExpense
2014
R&DExpense
2017
Regulations regarding tax credit
until 2020
25% 50%
50% 50%
2016 2017
5 €M 20 €M
Credit calculation
Percentage of internalexpenditure
Percentage of externalexpenditure
Maximum Benefit
THE ITALIAN PATENT BOX
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Optional fiscal regime: reduction of 50% of the IRES tax rate on the company profit from direct or indirect use (through licenses) of immaterialgoods such as: works of ingenuity, patents, designs and industrial models, proprietary software, know-how.
Implements the OECD guidelines on harmful tax practises and facilitatesonly those activities of production, development and keeping of IP basedon a real activity of research and development (aka nexus approach).
It is an effective fiscal tool to facilitate those companies which base theircreation of value on knowledge and intellectual property.
It can be added to the tax credit for R&D. In the case of use of internally developed IP a ruling agreement with the
Italian Tax Agency (Agenzia delle Entrate).
INDUSTRY 4.0: ADVANTAGES FOR INVESTORS
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Source: PricewaterhouseCoopers
FDI ATTRACTION FRAMEWORK AND GOVERNANCE
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Source: Ministry of Economic Development
Ministry of Economic Development
Foreign Investments Committee
Members Mise Mef Maeci Min P.AConf. Regioni ICE - ITA, CDP, Invitalia
Sets policies for FDI attraction
fosters synergies among Public Offices
