It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.
Methods of Payment
Italian firms indicate that some U.S. suppliers are too rigid in their payment terms and have thus lost business to other suppliers. Financing is as much a competitive factor as the product itself, the delivery date, or after-sales service. While some U.S. manufacturers request payment upon receipt of the goods, more successful sellers offer terms allowing settlement of the account from 60 to 120 days following the invoice date, which is the most common practice in Italy. U.S. firms should note that Italians can be slow to pay.
The use of irrevocable letters of credit for the Italian market has declined. Although U.S. exporters sometimes require such instruments, especially when the Italian customer’s credit reputation is not well known, the reluctance of Italian firms to provide letters of credit has required U.S. exporters to turn to other methods to assure payment or lose the sale to other suppliers in the competitive Italian market. The Italian businessperson is reluctant to pay a high fee for a letter of credit when other suppliers or means of payment are available. U.S. firms are increasingly using the export credit insurance and guarantee programs available through the Export-Import Bank of the United States (Ex-Im Bank), the Foreign Credit Insurance Association (FCIA), the International Development and Finance Corporation (DFC) American International Group – AIG Global & Political Risk Insurance Co. (AIG), Multilateral Investment Guarantee Agency (MIGA), and other export credit insurers.
For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.
To access Italy’s ICS section on financing, visit the U.S. Department of State Investment Climate Statement website.
Italy has a well-developed banking and credit system with many correspondent U.S. banks. Italian banks are subject to close government supervision, and the Bank of Italy (BOI, Italy’s central bank) must authorize the establishment of any new bank. The European Central Bank (ECB) has primary supervisory responsibility for 11 banking groups in Italy deemed “significant banks.”
U.S. firms seeking to finance major portions of their capital investment outside the United States may find capital available in Italy. As of December 2021, there were 456 banks in Italy, 18 fewer than in December 2020. Of these, 81 are foreign banks. Currently, the country’s largest private banks, by assets are Intesa Sanpaolo and UniCredit Group. These two banks combined accounted for over half of total bank assets in Italy and are a principal source of credit information. U.S. bank branches in Italy can also assist in financing capital investment.
Italy’s banking sector has undergone significant consolidation since the mid-nineties, decreasing from about 1,000 banks through mergers, takeovers or asset transfers, liquidations, or the conversion of a bank into a financial company, which involved 60% of total Italian banking assets. The government is taking steps to encourage the consolidation process to continue to boost the international competitiveness of the Italian banking sector.
Banks in Italy that have the authority to participate in foreign exchange usually have a U.S. correspondent. Foreign currency transfers and foreign exchange transactions must be channeled via authorized intermediaries (such as the Bank of Italy). Larger Italian banks usually have branches in one or more U.S. cities.
The Bank of Italy follows euro notes issues, performs credit, financial, and market supervision, and regulates bank mergers. The Bank of Italy Governor’s term is for six years in line with ECB standards, and the Governor is limited to two terms in office. Banking-competition oversight responsibilities are divided between the Bank of Italy and the Italian Competition Authority. CONSOB, the government authority that regulates the Italian securities market, holds authority to raid firms suspected of securities violations and to impound evidence.
Foreign Exchange Controls
Per EU directives, Italy has no foreign exchange controls. There are no restrictions on currency transfers; there are only reporting requirements. Banks are required to report any transaction over €1,000 due to money laundering and terrorism financing concerns. Profits, payments, and currency transfers may be freely repatriated. Residents and non-residents may hold foreign exchange accounts. The limit on cash payments for goods or services is €1,999 for a single transaction. Payments above this amount must be made electronically. Enforcement remains uneven and this rule exempts e-money services, banks and other financial institutions, but not payment service companies. Cash deposits of €10,000 and above in banks and other financial institutions may be signaled to the tax authorities who may decide to audit.
Italy is a member of the European Monetary Union (EMU), with the euro as its official currency. Exchange rates are floating.