Italy is a parliamentary republic in Southern Europe and a founding member of the European Union.
After World War II, Italy rapidly transformed from an agriculture based economy into one of the world's most industrialised nations. Machinery, textiles (including closing), industrial design, furniture production, agri-alimentary are important sectors of Italian economy that contribute significantly to the country’s export. Tourism is also one of Italy's most significant economic sectors accounting for about 4% of Italy’s GDP. However, Italy has several problems which slow down the economic growth, including organized crime, corruption, and economic disbalance between southern and northern Italy.
A business model of Italian banking is focused on loans intermediation and other retail services and very limited exposure to market risk. This traditional banking approach has helped the Italian banks in supporting domestic activities.
Italy joined the Euro Area on 1 January 1999.
|Nominal GDP (2016)||Nominal GDP per Capita (2016)||Real GDP Growth (2016)|
|1 672.4 bln EUR (+0.02%)||27 600 EUR (+0.03%)||0.9 % (2015: 0.8 %)|
According to Eurostat, nominal GDP of Italy in 2016 was 1 672.4 bln EUR.
Italy underperforms the European Union in terms of real GDP growth with the average annual differential coming to -1.0% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 0.9% which was below the Euro Area average (1.8%) and below the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.
Chart 1. Real GDP Growth in Italy. Source: Eurostat, International Monetary Fund.
In 2016, nominal GDP per capita in Italy was 27 600 EUR.
Italy has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -6.0% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.
Chart 2. GDP Per Capita at Purchasing Power Parity in Italy; European Union = 100.
|CPI, MoM (Sep 2017)||CPI, YoY (Sep 2017)||CPI, Year Average (2016)|
|1.8 % (Aug 2017: 0.1 %)||1.3 % (Aug 2017: 1.4 %)||-0.1 % (2015: 0.1 %)|
According to Eurostat, inflation rate in Italy in 2016 expressed as annual percentages of average consumer prices was -0.1% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.
Chart 3. Inflation Rate in Italy. Source: Eurostat, International Monetary Fund.
|Unemployment Rate (2016)|
|11.7 % (2015: 11.9 %)|
|Government Bond Yield (Sep 2017)|
|2.11 % (unchanged)|
Chart 4. Government bond yield of Italy. Source: Eurostat.
|BBB+ (good credit quality), outlook stable||Baa2 (lower medium grade), outlook stable|
Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.
Withholding tax rates applied on payments of interest and dividends in Italy are shown in Table 1.
|Natural person, resident||20.0 %||20.0 %|
|Natural person, non-resident||20.0 %||0.0 %|
Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.
Italy signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 1 January 2013 the date of coming into force is given in brackets):
There are also several agreements between Italy and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 1 January 2013 of signing the agreement is given in brackets):
There are 3 ways for jusrisdictions to exchange information on tax matters:
Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.
Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.
Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.
There are also several agreements between Italy and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 1 January 2013 of signing the agreement is given in brackets):
Italy signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.
Italy has signed bilateral agreements with 58 jurisdictions to automatically receive information:
Italy has signed bilateral agreements with 70 jurisdictions to automatically send information:
Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).
|FATCA Status in Italy|
|IGA in effect since 10 January 2014, Model 1|
Italy has FATCA agreement with the U.S. in effect since 10 January 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Italy are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Italian financial accounts hold in U.S. financial institutions will be reported to Italian authorities.
|Financial Market Development|
|3.1 (max 7.0), 126th out of 138 countries|
|3.7 (max 7.0), 116th out of 138 countries|
According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Italy is scored 3.1 out of maximum 7.0 and ranked 126th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 3.0 (127th place).
Chart 5. Financial Market Development in Italy. Source: WEF.
Soundness of banks is scored 3.7 bringing Italy into the 116th place.
Chart 6. Soundness of Banks in Italy. Source: WEF.
|Maximum Protected Amount|
|100 000 EUR|
Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.
From a depositor's point of view it is important to know:
All these details about deposit guarantee scheme in Italy are summarised in Table 2.
|Scheme Participants||all credit institutions operating in Italy, branches of non-EU banks, branches of Italian banks abroad|
|Scheme Exemptions||branches of EU-banks (covered by their home countries)|
|Covered Accounts||repayable funds acquired by banks in the form of deposits or other forms and to bankers' drafts or other similar credit instruments shall be eligible for payment|
|Maximum Protected Amount||100 000 EUR|
|Paid In Currency||EUR|
Table 2. Deposit guarantee scheme in Italy.
Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.
|Local Currency (Euro)||Foreign Currency|
|Aa2 (high grade)||Aa2 (high grade)|
Local currency (Euro) deposit ceiling for Italy is set to Aa2 (high grade), foreign currency deposit ceiling is Aa2 (high grade).
|Average Deposit Rate (Aug 2017, EUR)|
|0.91 % (Jul 2017: 0.96 %)|
Chart 7. Deposit Rates in Italy. Source: ECB.
|Number of Banks|
|Consolidated Assets (2016)|
|2 700.37 bln EUR (-0.84%)|
|Recent Changes (2016)|
|new banks: 14, closed banks: 57|
Currently there are 569 credit institutions operating in Italy.
In 2016 consolidated banking assets in Italy were 2 700.37 bln EUR. The consolidated banking assets' evolution is shown at Chart 8 below.
Chart 8. Consolidated banking assets in Italy.
Recent structural changes (2013 - 2016) of the banking sector of Italy are summarised in Table 3.
|Number of Opened Banks||5||8||18||14|
|Number of Closed Banks||19||29||32||57|
Table 3. Recent structural changes in the banking sector of Italy.
The list of the most recently opened banks in Italy is provided in Table 4.
|UBS EUROPE SE (new)||December 2016|
|TERRE ETRUSCHE E DI MAREMMA C.C. - SOCIETA' COOPERATIVA (new)||November 2016|
|BANK OF AMERICA MERRILL LYNCH INTERNATIONAL LIMITED - BAMLI (new)||October 2016|
|YOUNITED (new)||September 2016|
|HEWLETT-PACKARD INTERNATIONAL BANK PLC (new)||September 2016|
|LOMBARD ODIER (EUROPE) S.A. (new)||September 2016|
|BANK OF COMMUNICATIONS (LUXEMBOURG) S.A. (new)||August 2016|
|BANCO FIORENTINO - MUGELLO IMPRUNETA SIGNA - CREDITO COOPERATIVO - SOCIETA' COOPERATIVA (new)||July 2016|
|BCC UMBRIA CREDITO COOPERATIVO - SOCIETA' COOPERATIVA (new)||July 2016|
|BANCA VALDICHIANA - CREDITO COOPERATIVO DI CHIUSI E MONTEPULCIANO - SOCIETA' COOPERATIVA (new)||July 2016|
Table 4. The most recently opened banks in Italy.
All the credit institutions operating in Italy can be classified into several categories. Table 5 summarises the number of banks in each category.
|Category||Number of Banks|
|Branches of foreign banks||87|
There are 87 branches of foreign banks from 18 different countries in Italy. Table 6 shows 10 countries having the biggest number of branches in Italy.
|Country of Origin||Number of Branches|
|1||INTESA SANPAOLO S.P.A.|
|3||BANCA MONTE DEI PASCHI DI SIENA S.P.A.|
|4||Banco Popolare - Societa Cooperativa|
|5||UNIONE DI BANCHE ITALIANE SOCIETA' PER AZIONI (IN FORMA ABBREVIATA UBI BANCA)|
|6||MEDIOBANCA - BANCA DI CREDITO FINANZIARIO S.P.A.|
|7||BANCA NAZIONALE DEL LAVORO S.P.A. (IN FORMA CONTRATTA BNL S.P.A.)|