Italian Foreign Direct Investment Regime: Overview and recent reforms


The regulation on control of foreign investments in Italy has been subject to significant changes over the last two years. Such reforms have mainly concerned the scope of application of the domestic legislation, which is provided by the Decree Law No. 21 of 15 March 2012 (the “Decree Law”).

I. Relevant transactions

In general terms, the Decree Law allows the Italian Government to review investments in Italian companies active in the fields of defence and national security, energy, transport, communications or high-tech when such investments may threaten national security. Activities and assets caught under the foreign investment regulation are periodically determined by the Government by further decrees.

The nature of the transaction to be notified depends on the sector in which it is executed, but in general terms those subject to government’s control include:

  1. relevant resolutions adopted, or transactions carried out, by a company exercising any strategic activity or holding any strategic asset. In specific circumstances, notifications are required only if the transaction has the effect of changing the ownership of the assets in favour of a non-EU entity.

  2. purchases of equity interests in a company active in the sectors of defence or national security triggers a notification obligation if it exceeds the thresholds of 3, 5, 10, 20 or 25 per cent.

  3. purchases by a non-EEA person of a controlling interest in a company holding any strategic asset in the energy, transport, communications, high tech and supply of critical inputs sectors.

II. Government’s review

The review procedure for transactions falling within the scope of the Decree Law is coordinated by a specific office within the office of the President of the Council of Ministers, which assigns the review to the relevant Ministry depending on the relevant subject matter.

The Government, inter alia, must assess:

  1. the existence, in light of the official position of the European Union, of objective reasons which may suggest the possibility of any connection between a potential investor and third countries that do not respect democracy or the rule of law, which do not respect the rules of international law or which engaged in behaviours against the international community based on their alliances, or which have relationships with criminal or terrorist organisations or with individuals linked to them;

  2. the suitability of the transaction, including consideration of any financing conditions of the acquisition and of the economic, financial, technical and organisational capacity of the investor to guarantee the security and continuity of procurement, as well as the maintenance, safety and operations of the strategic asset;

  3. with respect to the acquisition by non-EEA entities of controlling shareholdings in companies holding any strategic asset or high-tech asset, whether the transaction could jeopardise the national security or public order.

The relevant transaction or resolution can be completed prior to the notification, but its implementation must be suspended pending the Government review. Upon receipt of the notification, a standstill period of 45 business days begins for the Ministries’ review. Should the shareholders try to implement the transaction or resolution during the standstill period, it would not have legal effect. In such circumstances, the Government may impose a penalty of up to double the value of the transaction, or 1% of the turnover for the last financial year.  It may also require the sale of the shares or quotas within one year.

III. Recent reforms 

On 25 March 2019, the Decree Law’s scope of application has been extended to broadband electronic communication services based on 5G technologies.  This extension follows an amendment adopted in December 2017, which added various other categories of high-tech assets

Accordingly, any Italian company entering into agreements regarding 5G technologies with non-EEA counterparties must notify the Government of such an agreement when it concerns (i) the purchase of assets or the performance of services relating to the design, manufacturing, maintenance, or operation of networks which use  5G technologies or (ii) the purchase of high-tech components which are instrumental to the aforementioned manufacturing or operation.

By Law no. 40 issued on 5 June 2020, additional provisions were introduced in order to widen the Decree Law’s scope of application. The new law is part of measures adopted to combat the COVID-19 emergency and will be in force until 31 December 2020.

These new measures expand the Government’s control and impose specific notification requirements to a number of transactions involving companies holding assets/participations in new sectors, including e.g. credit, insurance and healthcare (i.e. production, import and wholesale distribution of medical devices and personal protective equipment).

In particular, the following are now subject to notification and control:

  1. purchases for any reason of participations in companies holding assets/participations in the sectors referred to in Article 4(1)(a) to (e) of EU Regulation 2019/452 on “establishing a framework for the screening of foreign direct investments into the Union” (the “Regulation”);

  2. resolutions and acts adopted by companies holding assets and relationships in the sectors referred to in Article 4, paragraph 1, letter a), b), c), d) and e) of the Regulation which have the effect of modifying the ownership, control or availability of the assets or their destination.