The new Italian space law gives the Italian space agency ASI new responsibilities for overseeing national space activities. (credit: ASI)

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

by Italo de Feo, Annalisa Pistilli, and Pasquale Distefano
Monday, August 18, 2025

For several years, the space economy has been one of the most promising strategic sectors for economic growth, technological innovation, and security. The drive towards the exploitation of Earth’s orbits and the commercial use of space technologies is part of a dynamic geopolitical and scientific context. In this context, Italy is positioning itself as a leading European player in the sector.

Against this backdrop, Law No. 89 of June 13, 2025 (the “Law”), containing “Provisions on the space economy”, was recently approved. Published in the Official Gazette on June 24, 2025, and effective from the following day, it is the first piece of legislation to comprehensively regulate space activities in Italy.

The national legislator recognizes space as a “strategic crossroads of geopolitical, economic, scientific and military interests” and introduces the obligation of prior authorization for any space activity that falls within the scope of Art. 3 of the Law (launch, satellite management, reentry, disposal, constellations, stratospheric platforms, resource extraction, in-orbit assembly, etc.), under penalty of imprisonment for three to six years and administrative fines imposed by the Italian Space Agency (Agenzia Spaziale Italiana, or ASI), ranging from €20,000 to €50,000. At the same time, to boost investment in space business, a Space Economy Fund is established to support technological innovation, productive development, and the commercial exploitation of national activities. Special rules have also been introduced to support the effective participation of small and medium enteprises (SMEs) and innovative startups in the space value chain.

The authorization system: requirements and procedure

The law provides for a mandatory authorization regime for all space activities carried out on Italian territory by both Italian and foreign operators or by national operators that carry out space activities abroad (Article 4): in particular, foreign operators are subject to a mechanism of mutual recognition of the authorization issued by their country of origin, with a consequent reduction in terms of time for issuing the license to 120 days. The procedure is complex and involves several institutional bodies, including the ASI, the Interministerial Committee (COMINT), and the competent authority, identified as the Prime Minister or the delegated political authority (Article 7).

Among the objective requirements for authorization (Article 5), particular attention is paid to security, cyber resilience, environmental sustainability, and the mitigation of space debris risk. The subjective requirements (Article 6) include financial soundness, technical capabilities, and the mandatory taking out of civil liability insurance. For start-ups and SMEs, the law introduces a more flexible assessment of financial capacity, taking into account factors such as the presence of institutional investors and participation in acceleration programs.

The authorization may be amended, suspended, or revoked for reasons that arise or if the requirements are no longer met (Articles 8-9). The transfer of ownership or management of the space object is also subject to authorization (Article 10).

Particularly important are the provisions on civil liability (Article 18), which set out the operator's liability for damage caused to third parties on the Earth's surface or to aircraft in flight. There is also a provision on insurance (Article 21), which sets a maximum limit of €100,000,000 per claim. However, there is the possibility of reduced limits: up to €20,000,000 for innovative startups or activities with exclusively scientific purposes. The provisions of the Civil Code remain unchanged with regard to contractual and civil liability.

The establishment of a national register of space objects is also relevant. Operators are obliged to communicate pertinent information, which ASI is responsible for maintaining and updating (Articles 15 et seq.).

The Space Economy Fund

In addition to the regulatory framework, the law introduces a package of measures aimed at supporting the national industrial ecosystem. These include the establishment of a Space Economy Fund with an initial allocation of €35 million for 2025. Article 23 specifies the distribution of interventions into (a) non-repayable grants, up to a limit of 70%, and (b) financial operations, including in combination with each other, for the remaining 30%. Within 90 to 180 days of the law coming into force, detailed rules will follow, to be adopted by a specific decree of the Ministry of Enterprise and Made in Italy, in agreement with the Minister of Economy and Finance and, for the part falling within their competence, with the Minister of Foreign Affairs and International Cooperation and the Minister of University and Research.

SMEs and startups

One of the goals of the decree is to encourage SMEs to participate in public procurement in the space sector by setting aside mandatory quotas for them in tenders.

Article 27 provides that, in the case of contracts not divided into lots, the tender notice shall establish a performance reserve for innovative startups and SMEs, through mandatory subcontracting of not less than 10% of the contract value. The contracting authority may derogate from this rule only if no companies capable of meeting the above percentage can be found in this category on the market.

Additional measures to enhance the participation of SMEs and innovative start-ups have also been introduced. It is therefore stated that, when evaluating the most economically advantageous tender, the contracting authority may consider the percentage of work that the successful tenderer intends to subcontract to innovative start-ups or SMEs.

The amount due for services provided is to be paid directly to the subcontractor when subcontracting is carried out by innovative start-ups and SMEs. Direct payment to subcontractors and an advance payment of 40% of the contract value within 15 days of the commencement of services are also permitted.

The law represents a significant milestone in establishing the regulatory framework for the space economy in Italy, integrating rigorous regulatory tools alongside measures that promote the industrial expansion of the sector. For businesses, particularly SMEs and innovative startups, aiming to operate in this sector, the new framework marks the beginning of a phase with greater opportunities to access public resources. The context nonetheless demands a high level of compliance with technical, licensing, and liability standards.

Italo de Feo is a Partner at CMS Italy and Co-Head of the firm’s Technology, Media & Communications (TMC) department. Dual-qualified in Italy and the UK, he advises on IT law, digital transformation, outsourcing, cybersecurity, and data protection. He is widely recognized for his leadership in tech law and regularly assists clients in complex regulatory and commercial matters, including emerging sectors like space law.

Annalisa Pistilli is a Senior Associate at CMS Italy, focusing on technology, telecoms, and related legal issues. She advises domestic and international clients on regulatory compliance, commercial contracts, and innovation-driven legal frameworks.

Pasquale Distefano is a Senior Associate in the CMS Italy TMC Department. He specializes in data protection, IT law, consumer rights, and e-commerce. With experience advising both multinational and local clients, he provides support on compliance, digital contracts, and tech-sector regulations.

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