Foreign direct investment (FDI) in Italy

FDI in Figures

According to UNCTAD’s World Investment Report 2026, FDI inflows towards Italy slowed to USD 8.9 billion in 2025, from USD 20.1 billion one year earlier. At the end of the same period, the stock of inward FDI totalled USD 575.1 billion. Data from the Bank of Italy shows that the majority of FDI stock is held by France (22.4%), the U.S. (10.1%), Germany (9.5%), the Netherlands (6.6%), and the UK (6.4% - 2023 data, by ultimate investing country). In terms of sectors, manufacturing holds 29.1% of the total FDI stock, followed by professional, scientific and technical activities (15%), information and communication (10.9%), financial and insurance activities (9.8%), and wholesale and retail trade (8.8% - data OECD). According to the Attractiveness Survey 2024 published by EY, the number of FDIs in Italy nearly doubled in 2023 compared to pre-pandemic levels, rising from just over 100 to more than 200 annually. In the same year, logistics regained investor interest, accounting for 16% of investment projects, up from 10% in 2022, a 46% increase in project numbers. Machinery, pharmaceutical, and apparel sectors also saw significant growth. As per the latest figures from OECD, in the first half of 2024 total investments in Italy stood at USD 7.6 billion, down from USD 17.7 billion in the same period the previous year.

Among the reasons to invest in Italy, is the fact that the country has one of the biggest markets in the EU, it has a diversified economy and a skilled workforce, it is one of the main manufacturing countries in the world and has good infrastructures and a strategic position, at the crossroads between Europe, Northern Africa and the Middle East. The National Resilience and Recovery Plan (NRRP) of Italy, spanning from 2021 to 2026, leverages more than EUR 200 billion in EU funds. The plan aims to expedite the digital and green transitions while implementing comprehensive reforms to tackle longstanding impediments to growth in the Italian economy. Italy's Institute of Statistics reported that over 17,600 foreign multinationals are active in the country, employing nearly 1.7 million people. Although they accounted for just 0.4% of Italian companies, these firms employed 9.4% of the workforce, generated 20.3% of total sales, contributed 17.1% of added value, and accounted for 32.7% of R&D spending. Nevertheless, high procedural and tax costs slow administrative processes, labour costs, regional disparities, corruption and organised crime are still among the factors that hinder investments in the country. In order to foster Italy’s attractiveness, the government created “InvestItalia”, an agency dependent on the Prime Minister which coordinates Italy’s promotion activities to attract foreign direct investments. Finally, the country’s government amended the “Golden Power” law, which gives it authority to block foreign acquisitions of companies operating in strategic sectors (defence/national security, energy, transportation, telecommunications including 5G and cloud computing, critical infrastructure, sensitive technology, and nuclear and space technology). Overall, Italy ranks 42nd out of 63 economies in the World Competitiveness Ranking, 42nd among the 132 on the Global Innovation Index and 81st out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Italy

Strong Points

The strong points of Italy in terms of foreign investment include:

• Export powerhouse (accounting for almost 30% of its GDP), notably thanks to the worldwide recognition of its craftsmanship and quality
• Geostrategic position to become a hub for European energy supplies from Africa
• Strong tourism sector
• Low household debt (37% of GDP)
• European funds (total NextGenerationEU funds out to 2026 = 11% of 2019 GDP) support modernisation

Weak Points

The key weak points of Italy in terms of foreign investment include : 

• Strong regional disparities that fuel social inequalities and limit economic potential at national level
• Prevalence of small, unproductive enterprises which limits R&D spending (95% of SMEs have fewer than 10 employees)
• Low employment rates for young people and older workers
• High public debt and deficit
• Demographic decline: the low birth rate and ageing population are placing pressure on the workforce
• Dependence on energy imports and fossil fuels (natural gas, oil) in its energy mix
• Slow administration and judicial procedures, persistent corruption

Government Measures to Motivate or Restrict FDI

The Government supports FDI via tax credits. Companies investing in strategic intangible assets can benefit from a tax credits of 15%, whereas those investing in machinery and capital goods qualify for a tax credit of 20-40%. Further public support is granted to new investments in manufacturing and R&D, especially in southern regions and in Special Economic Zones.
The “Industria 4.0” plan aims at boosting private investment in research and development. “Industria 4.0” essentially translates into a series of measures, economic incentives for the digital development of businesses: these include hyperamortisation, superamortisation and soft loans for innovative start-ups.
Companies that make investments in new machinery, plant or equipment for productive use and digital technologies can benefit “Nuova Sabatini" Law facilities. It is an important part of the Industry Plan 4.0 and consists of a contribution by the government to partially cover the interest paid by the company on bank loans relating to the investments made. In order to support the investments of companies that have difficulty in accessing credit, the Industria 4.0 plan has a special instrument: the Guarantee Fund. It aims at facilitating access to sources of finance (loan/grant) for SMEs through the provision of a public guarantee (up to a maximum of 80% of the financing), that works alone or in conjunction with other guarantees and securities.

The Italian Trade Agency's Invest in Italy website provides guidance on investing and setting up a business in the country.

Bilateral investment conventions signed by Italy

Italy has signed bilateral investment treaties (BITs) with fifty or so countries. To see the conventions, click here.