- Overview of FDI importance in Italy

Foreign direct investment (FDI) plays a critical role in the Italian economy, fostering economic growth, innovation, and employment. To regulate and facilitate these investments, Italy has established a comprehensive legal framework.

The Italian FDI regime was first introduced in 2012 and has undergone significant revisions, especially from 2020 onwards. These changes aim to enhance the clarity, efficiency, and effectiveness of FDI regulations, ensuring they align with national security interests and economic policies.

This document provides an overview of the current Italian FDI regime, highlighting the key laws, scope of application, government powers, procedural requirements, and recent updates (2022-2023).


2. Legal Framework

   - Key laws and revisions (2012, 2020, 2022, 2023, 2024) 

Since April 2020, in response to the first wave of the COVID-19 outbreak, Italy has adopted measures that have significantly broadened the scope of the government’s powers under the FDI Decree and extended the regime to new areas. Initially, many of these measures were temporary but have since been made permanent. FDI screening in Italy is governed by both EU and national rules.

At the EU level, Regulation (EU) No. 2019/452, effective from 11 October 2020, establishes an EU-wide framework for FDI screening. This regulation does not replace the Italian legislative framework but supplements it, creating an obligation for member states to report FDIs to the European Commission. 

At the national level, the primary legislation governing FDI is Law Decree No. 21 of 15 March 2012, converted into Law No. 56 of 11 May 2012 (Law No. 21/2012), and its subsequent amendments. Key amendments include: 

• Law Decree No. 148 of 16 October 2017, converted into Law No. 172 of 4 December 2017: extended FDI rules to the high-tech sector.
• Law Decree No. 22 of 25 March 2019, converted into Law No. 41 of 20 May 2019: extended FDI screening to transactions in the 5G sector.
• Law Decree No. 23 of 8 April 2020 (Liquidity Decree), converted into Law No. 40 of 5 June 2020: introduced a temporary regime in response to the COVID-19 outbreak, which remains applicable.
• Law Decree No. 21 of 21 March 2022, converted into Law No. 51 of 20 May 2022: introduced mandatory joint notifications for transactions, amended government powers in 5G and broadband, and permanently expanded FDI control to:
• Purely national and intra-EU transactions in specified sectors.
• Greenfield investments and the establishment of new companies in specified sectors.

These amendments have reinforced the Italian government's ability to oversee and regulate foreign investments, ensuring they align with national interests and security considerations. 


3. Scope of Application

   - Covered sectors, investment types and procedures 

Summary of Major Changes in 2023 to the Italian FDI Screening Regime

The year 2023 brought significant changes to the Italian Foreign Direct Investment (FDI) screening regime, particularly expanding government powers over intra-group transactions.

Historically, transactions within the same corporate group were only subject to a notification requirement and were excluded from the government’s exercise of the golden power.

However, as of August 2023, this exception has been partially lifted. The FDI review and exercise of special powers now extend to intra-group transactions involving non-EU investors in strategic sectors such as artificial intelligence, cybersecurity, aerospace, semiconductor manufacturing machinery, quantum and nuclear energy storage technologies, and food production technologies. 

Filing obligations under the Golden Power law 

The Golden Power filing must be made by any company adopting a resolution related to strategic company transactions. These include asset sales, mergers, demergers, transfer of headquarters outside Italy, or changes to corporate purposes that result in changes in ownership, availability, or use of strategic assets.

Joint filings are required by both the purchaser and the target company for acquisitions, whether direct or indirect, of equity or debt interests or voting rights in a target company holding strategic assets. The filing obligations apply not only to non-Italian and non-EU persons but also to Italian and EU persons, depending on the strategic business sector and the type of transaction.

Types of Deals Reviewed

Under the Golden Power Law's permanent measures, mandatory clearance is required for:

• any strategic company transaction in the defense and national security sectors by any investor;
• transactions in the energy, transportation, communication, health, agri-food, and financial sectors by any EU investor;
• transactions in strategic sectors other than defense, security, and 5g technology by any non-EU investor.

Clearance is also necessary for the assignment by guarantee of strategic assets and strategic acquisitions involving significant equity interest thresholds.

These thresholds include 3%, 5%, 10%, 15%, 20%, 25%, and 50% for the defense and national security sectors, and a controlling interest for any key other sector by any EU investor.

Non-EU investors must seek clearance for acquisitions of at least 10% of corporate capital or voting rights (with subsequent increases beyond 15%, 20%, 25%, and 50%) in other strategic sectors, provided the investment value equals or exceeds €1 million. Agreements involving 5G technology also require clearance if non-EU investors are involved.

Scope of the Review

The Golden Power Law's implementing decrees outline the strategic businesses and assets subject to FDI review. The scope remains broadly defined, covering: 

• defense and national security businesses, including those producing dual-use products with revenues over €300 million
• energy sector platforms, critical infrastructure, and businesses with revenues over €300 million and more than 250 employees
• essential infrastructure in transportation, telecommunications, and aerospace sectors
• financial, insurance, and credit sector technologies and businesses with revenues over €300 million and more than 250 employees
• critical technologies such as ai, cybersecurity, aerospace, and robotics
• healthcare and pharmaceuticals sector businesses with revenues over €300 million and strategic resources for medical supplies
• agri-food and supply of critical inputs sectors, including essential goods and services

Review Process Timeline 

Filings must be made within 10 days after executing a binding agreement or adopting a relevant corporate resolution. 

The review period is 45 business days (30 days for 5G-related filings), during which the transaction cannot be completed, and voting rights are frozen until clearance. The review period may be extended once for an additional 10 or 20 business days if the government requests more information. The review can be extended twice for 5G-related filings, each extension lasting up to 20 business days. If an EU Member State or the EU Commission reviews the transaction, the review period may be suspended for up to 35 days.

A pre-notification procedure is available, allowing companies to file a voluntary pre-notification. The government then has 30 days to determine whether the transaction is out of scope, in scope but requiring no special powers, or in scope and requiring a formal filing.

To mitigate risks, foreign investors should consider using the pre-notification procedure and ensure compliance with filing timelines. Acquisition agreements should include terms accounting for the latest Golden Power Law conditions and review periods.

Given the law's broad applicability, careful planning and thorough legal evaluation are essential for foreign investors to navigate the Italian FDI screening regime effectively.