Italy is one of the original members of the European Union (EU) and the single currency eurozone. It adopted the euro (EU) in 1999, replacing its former national currency, the Italian lira. Today, the euro is the second most traded currency in the world after the US dollar. Italy does not impose foreign currency controls and guarantees the unrestricted transfer of funds in and out of the country, including both within and outside of the eurozone.
Italy has deregulated the process of sending money across national borders, although certain reporting requirements apply. Non-corporate residents in Italy must declare any incoming or outgoing financial transfer that exceeds a value of EUR10,000 on their tax statements; this includes series of transactions which, if conducted within a short time frame, are considered a single movement. A Financial Intelligence Unit (FIU) was established at the Bank of Italy in 2008, replacing the Italian Foreign Exchange Office. The FIU analyses reports of suspicious financial transactions in line with the country’s policy to combat money laundering and terrorism financing.
Foreign individuals and companies are free to invest in Italy, and the country does not apply capital controls. However, following France’s example, Italy implemented a 0.2% financial transaction tax (FTT) on the purchase of shares in publicly-traded Italian firms in March 2013. The FTT, a measure that is highly contested within the EU, aims to deter potentially harmful capital flight from financial markets.
The advent of the EU monetary union led to the adoption of a single monetary policy, which is set by the European Central Bank (ECB) and applied throughout the eurozone. The Italian central bank, Bank of Italy (Banca d’Italia), supervises the monetary and financial systems, issues technical regulations for financial services firms, monitors their application and sanctions firms that fail to comply.
Italy is one of the 12 original members of EU’s common currency platform, known as the eurozone. Latvia was the most recent country to adopt the euro in January 2014, expanding the zone to 18 countries. Increasing political and economic integration resulted in the creation of a single payments system, which greatly simplified the process of sending money within Europe. This single payment system extends to Iceland, Liechtenstein, and Norway, despite the fact that they retain separate national currencies.
Italy was particularly hard hit by the economic downturn that has shaken up the eurozone since 2008 and undermined the common currency’s value, similar to the experience of Ireland, Spain, Portugal and Cyprus. Italy is the third-largest economy in the zone, but its high public debt, heavy reliance on state subsidies in the south, and the strong role of the informal economy exposed the country to risk and contributed to the deepening of the EU economic crisis.
Nonetheless, the common market structure has encouraged high levels of migration and cross-border investment. Given the free-circulation policies in the EU and its geographic proximity to Africa, Italy is the second-largest destination for international migration in southern Europe. It was home to 5.7m migrants in 2013, behind Spain with 6.5m migrants. This helps to drive demand for foreign exchange transactions, as migrants in Italy transferred the equivalent of US$10.1bn out of the country in 2013.
Within Italy, euros are primary exchanged for USD, Japanese Yen, and GBP. The USD accounted for two-thirds of the total foreign exchange volume on Italian platforms in April 2013, followed by 10.4% for the yen and 7% for the pound sterling.
There are no restrictions on foreign property ownership in Italy, although we recommend working with a reputable local agent. The tax system for non-residents follows the general model throughout Europe, where non-residents are subject to taxation only on income generated through local activity. Italy has signed 94 bilateral treaties to avoid double taxation, most recently with the Congo, Belgium and the independent republic of San Marino.
The euro is printed in denominations of EUR5, EUR10, EUR20, EUR50, EUR100, EUR200 and EUR500. Coins are available in values of 1, 2, 5, 10, 20 and 50 cents, and EUR1 and EUR2. The Bank of Italy produces its own currency, but all notes and coins produced by national central banks are universally accepted within the eurozone.
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