How to export to Italy: a useful Financial Guide
Your national business has grown, you’re looking to expand into international trade and you’ve got your eye on the Italian market. Countries within the EU have an easier time because of standardized rules, but other countries, including the US and now the UK, must meet the higher standards related to goods entering the market. As such, requirements for exporting to Italy will be heavily dependent on the country of origin.
Without any contextual knowledge, going international can lead to costly errors. A comprehensive analysis of Italy and its market is fundamental to succeeding.
What to Know: Background Info
The United States is Italy’s third-largest trading partner. This being said, the International Trade Administration, under the US Department of Commerce, will be a fundamental resource as they keep track of the political and economic climate of the country as well as providing detailed accounts of EU (and Italian) standards for products.
The recent global economic crisis has not greatly affected Italy’s GDP. Italy has a large and competitive agricultural sector, and is the world’s largest wine producer with successful machinery, automobile, design and fashion industries, and, of course, food.
Planning is key to success here. There is a seemingly infinite amount of variables to take into consideration when looking at export markets. Exporting internationally can be particularly difficult with local markets, languages, currencies, preferences, etc., so selling to Italy is often best achieved by hiring an agent or a distributor.
There are several other things to take into account as well: legal considerations regarding standards and technical regulation, intellectual property rights; taxes such as the VAT or Value Added Tax, called IVA (22%) in Italy, as well as corporate taxes (27.5% + regional tax that varies from 4-6%) and income taxes (from 23-43% on a progressive scale).
Discover more about IVA, in our detailed article about sales tax in Italy.
Check out the trend of Italian import in the last 10 years in the graph below.
Documentation for International Trade
Paperwork is crucial when trading internationally. Documents that are missing or incomplete can increase risks, cause delays and extra costs, potentially preventing a deal being completed altogether.
A clear written contract between buyer and seller that includes details of exactly where goods will be delivered is absolutely necessary. Specific documents may be needed to get the goods through customs and to work out the right duty and tax charges. These depend on both the importing and exporting country and its best to get in contact with your country’s International Trade Administration for specifics.
Depending on what you want to import, you’ll need to check if any of your products require an export license. Strictly controlled items such as chemicals and firearms usually do.
As part of the EU and the European Free Trade Association Italy must meet EU Directives in addition to national regulations. Commercial and shipping documents must be in Italian without exception. Packing lists are compulsory if the shipment contains more than one package and if the contents are not shown on the commercial invoice.
Products tested and certified in the US to American standards are likely to have to be retested and recertified to meet EU requirements. This is due to the EU’s health and safety centered approach towards consumers and the environment.
The Common Customs Tariff is the external tariff applied to products imported into the EU, even from the US and Canada. The Integrated Tariff of the European Communities (TARIC) which incorporates all EU and trade measures applied to goods imported into and exported out of the EU is managed by the Commission and is updated daily on the official website. It comprises all customs duty rates and certain EU rules applicable to the EU’s external trade and should be consulted often.
Another tax to take into consideration when exporting and selling to Italian market is the sales tax.
With its commitments to sustainable development, the environment and intellectual property the EU has placed restrictions that prohibit certain goods, such as:
● Pirated/counterfeit items could lead the importer to be subject to fines or expulsion;
● Chemical products that contain: mercury, PCB, PCT , CFC and HCFC among others;
● Genetically Modified Organisms (GMO);
● Live animals and/or animal products.
Legislation at the EU level has even regulated the kind of packaging that can be used, preferring eco-friendly and recyclable products. This accompanied with a special CE label which is a mandatory conformity marking for certain products sold within the European Economic Area.
We know that it’s a lot of information to take in all at once, and this only scratches the surface of international trade, so please get in contact with us for any questions or concerns you may have.
For more informations about this check also our video about distance selling and VAT registration in Italy.
For more info check our article about income taxes in Italy as well.
If you want to open a business in Italy, consider reading article about freelancing italy.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.