Europe’s defense investment boom: Italy's regulatory framework

Italy’s defense regulatory environment combines growing investment in military capability with established rules governing defense procurement, strategic transactions, and exports of military equipment. For investors, Italy’s Golden Power regime is particularly significant, giving the government extensive powers to review transactions involving strategically important defense and national security activities. Defense businesses must therefore navigate procurement and export control requirements alongside an increasingly important national security investment screening framework.

Defense and security procurement

Italian defense and security procurement is governed by a specialized legal framework.

Legislative Decree No. 208/2011, which implements Directive 2009/81/EC, applies to qualifying public contracts for works, supplies, and services in the defense and security sectors. It provides for restricted and negotiated procedures, competitive dialogue for particularly complex procurements, and, in specified circumstances, negotiated procedures without prior publication.

In addition, the general Public Contracts Code (Legislative Decree No. 36/2023) applies to defense and security contracts falling outside the scope of Legislative Decree No. 208/2011.

Finally, certain contracts are excluded from the ordinary framework, including categories governed by specific international arrangements. Article 346 of the Treaty on the Functioning of the European Union (TFEU) may permit derogations from EU procurement rules where necessary to protect a Member State’s essential security interests, subject to the conditions set out in that provision.

The result is a procurement landscape in which the applicable route can depend significantly on the nature of the capability, security requirements, and the international structure of the program.

Golden Power and defense investment

Italy’s Golden Power regime gives the government special powers relating to strategically important activities of the national defense and security system. The regime is primarily governed by Article 1 of Decree-Law No. 21/2012, as subsequently amended, including by Decree-Law No. 21/2022, while the relevant strategic activities are identified by Prime Ministerial Decree No. 108/2014.

Where a transaction or corporate action poses a threat of serious prejudice to Italy’s essential defense and national security interests, the government may, depending on the circumstances, impose conditions on acquisitions of shareholdings; veto certain resolutions, acts, or transactions affecting strategic assets; or oppose certain acquisitions of shareholdings.

The framework is therefore a central consideration for investment into Italian defense businesses. Relevant transactions and corporate actions are subject to notification requirements, and a pre-notification procedure is available to obtain a preliminary assessment of the applicability of the Golden Power regime. Defense-related M&A should consequently incorporate Golden Power analysis at an early stage of transaction planning.

Export controls for military equipment

The exports, imports, and transit of military equipment and brokering of military equipment are principally regulated by Law No. 185/1990, as subsequently amended. The regime is administered by the National Authority for Armament Authorizations (Unità per le autorizzazioni dei materiali d’armamento, UAMA), the competent licensing authority within the Ministry of Foreign Affairs and International Cooperation.

Companies carrying out regulated activities involving military equipment are generally required to be registered with the National Register of Companies (RNI) maintained within the Ministry of Defense’s National Armaments Directorate. Controlled transactions are subject to the applicable authorization or licensing requirements under Law No. 185/1990 and to statutory restrictions reflecting Italy’s foreign and defense policy, constitutional principles, and international commitments.

The Italian regime operates alongside applicable EU and international requirements and incorporates the EU framework governing certain intra-EU transfers of defense-related products. Companies should therefore assess the classification of the relevant products and technologies, the applicable authorization or licensing requirements, and any end-user and destination restrictions. Dual-use items are subject to a separate regulatory framework, principally established at EU level under Regulation (EU) 2021/821.

Defense industrial investment and supply chains

Italy’s current defense planning places an increasing emphasis on modernization, technological capability, and maintaining an effective national defense industrial base. Investment opportunities extend beyond traditional platforms into areas including digital capabilities, aerospace, cybersecurity, and advanced technologies, while businesses entering defense supply chains must account for procurement, security, and export control requirements.

The interaction between these requirements and Golden Power review is particularly important for transactions involving technologies or capabilities considered strategically significant to Italy’s defense and national-security interests.

Italian defense spending

Italy continues to plan defense expenditure through its multiannual defense programming process, with investment priorities and programs set out in the Ministry of Defense’s Documento Programmatico Pluriennale (DPP). The latest published DPP covers the 2025 – 2027 period, while the Ministry states that its 2026 programming documentation remains under preparation.

Accordingly, the direction of travel is toward increased capability and investment, but individual opportunities remain dependent on annual budget decisions, program approvals, and the relevant procurement processes.

The EU framework sets the direction, but the regulatory landscape is shaped by how rules are implemented and enforced at national level. The following country views highlight the key legal considerations, differences and developments across major European jurisdictions.