Italy is Europe’s second largest manufacturer, behind Germany, and the latest figures show it has a Gross Domestic Product (GDP) of around £15 billion.
And the good news for UK businesses is the country has a long-standing and solid trade relationship with the UK, and the main exports of goods by value from the UK to Italy are:
- crude petroleum
- basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber
- motor vehicles
- pharmaceutical products and preparations
- natural gas
If you’re thinking of exporting to Italy, here’s everything you need to know…
What are the pros and cons of exporting to Italy?
Italian businesses are becoming more and more global, particularly the growing number of small and medium enterprises (SMEs), and so now could be a good time to offer professional services or goods.
If you’re looking at doing business with Italy, the benefits to your business 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
While the strengths of the Italian market are:
- 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
And although doing business in Italy is very similar to doing business in the UK, you may find yourself chasing companies for payment.
Payment times are a lot longer than in the UK and are currently anything up to 80 days, so you may have to sit tight.
Other challenges include:
- complex bureaucracy and regulations
- slow judicial system
- unfair competition due to cases of bribery, corruption and tax evasion
And remember, you can now screen share and video conference, using Crankwheel.
How does tax work in Italy?
The main tax rates in Italy are:
- VAT – Charged at a rate of 22% and known as IVA. A rate of 10% is charged on some food products and tourist services. A reduced rate of 4% is charged on basic food products, some social services, dailies, periodicals, books, some seeds and fertilisers.
- Corporation tax – charged at 27.5%, there is also a regional tax, known as IRAP, set between 4% and 6%, levied on business activities.
- Income tax – ranges from 23% to 43%, depending upon income.
How will I be affected by customs in Italy?
The internal EU single market allows for the free movement of goods and services without any import duties being applied, and testing is mandatory for some imported goods, especially technical and electrical equipment.