The new Italian law on the space economy: regulatory framework and incentives for businesses

For several years the space economy has been one of the most promising strategic sectors for economic growth, technological innovation and security. The push to exploit Earth’s orbits and the commercial use of space technologies is part of a dynamic geopolitical and scientific environment. In this context Italy is seeking to consolidate its role as a leading European player.

Against this backdrop, Law No. 89 of 13 June 2025 (the “Law”), containing Provisions on the space economy, entered into force on 25 June 2025 and is the first piece of legislation to comprehensively regulate space activities in Italy.

The legislator recognises space as a “strategic crossroads of geopolitical, economic, scientific and military interests” and introduces a requirement for prior authorisation for any space activity falling within Article 3. The definition covers a wide range of activities including launch, satellite management, re‑entry, disposal, constellations, stratospheric platforms, resource extraction and in‑orbit assembly. Failure to comply with the authorisation requirement constitutes a criminal offence punishable by imprisonment of three to six years, in addition to administrative fines imposed by the Italian Space Agency (Agenzia Spaziale Italiana – ASI) ranging from €20,000 to €50,000.

To stimulate investment in the space sector, the Law also introduces a Space Economy Fund to support technological innovation, industrial development and the commercial exploitation of national capabilities. Special rules aim to strengthen the participation of SMEs and innovative start‑ups across the space value chain.

The Law establishes a mandatory authorisation regime for all space activities carried out in Italy by Italian or foreign operators and for Italian operators carrying out space activities abroad (Article 4). Foreign operators benefit from mutual recognition of authorisations issued by their home jurisdiction, reducing the timeframe for issuing the Italian licence to 120 days. The procedure involves several institutions including ASI, the Interministerial Committee (COMINT) and the competent authority, identified as the Prime Minister or the delegated political authority (Article 7).

Objective requirements for authorisation (Article 5) include security, cyber resilience, environmental sustainability and the mitigation of space‑debris risks. Subjective requirements (Article 6) include financial soundness, technical capabilities, mandatory civil liability insurance and the availability of a collision‑avoidance service, either in‑house or provided by an authorised service provider. For start‑ups and SMEs the assessment of financial capacity is more flexible and may consider the presence of institutional investors or participation in acceleration programmes.

Authorisations may be amended, suspended or revoked if circumstances change or if the requirements are no longer met (Articles 8–9). The transfer of ownership or management of a space object is also subject to prior authorisation (Article 10).

Civil liability provisions (Article 18) establish operator liability for damage caused to third parties on the Earth’s surface or to aircraft in flight. The Law also addresses insurance (Article 21), setting a maximum coverage limit of €100 million per claim, with the possibility of reduced limits down to €20 million for innovative start‑ups or activities conducted solely for scientific purposes. The relevant provisions of the Italian Civil Code continue to apply to contractual and civil liability.

The Law further provides for the creation of a national register of space objects. Operators must supply all relevant information and ASI will maintain and update the register (Articles 15 et seq.).

Alongside the regulatory framework, the Law introduces measures to support the national industrial ecosystem. These include the establishment of a Space Economy Fund with an initial allocation of €35 million for 2025. Article 23 regulates the distribution of support measures into (a) non‑repayable grants, up to seventy per cent, and (b) financial instruments for the remaining thirty per cent, which may be combined. Implementing decrees are expected soon.

A key aim of the Law is to encourage SMEs to participate in space‑sector public procurement by reserving mandatory quotas for them in tenders.

Article 27 provides that for contracts not divided into lots, the tender notice must include a performance reserve for innovative start‑ups and SMEs, through mandatory subcontracting of not less than ten per cent of the contract value. Contracting authorities may derogate from this requirement only if there are no companies in the relevant market capable of meeting this percentage.

Additional measures strengthen SME participation. When evaluating the most economically advantageous tender, contracting authorities may consider the proportion of work the bidder intends to subcontract to innovative start‑ups or SMEs. Payment for services must be made directly to subcontractors where subcontracting involves innovative start‑ups or SMEs. Direct payment and an advance payment of forty per cent of the contract value within fifteen days of the start of performance are also permitted.

The Law marks a significant milestone in the development of Italy’s regulatory framework for the space economy. It combines a rigorous authorisation system with targeted measures to promote industrial growth. For businesses, especially SMEs and innovative start‑ups, the new rules create greater opportunities to access public resources, while also imposing high standards of compliance in relation to technical, licensing and liability requirements.