Despite economic turbulence, Italy recently renewed its tax credits for international productions through 2013, prompting the country’s myriad regional funds to increase efforts to lure shoots.

Italo tax incentives offer a 25% deduction for international productions capped at $7 million, payable through an Italian executive producer.

International productions shooting in Italy no longer have to pay a 20% VAT tax, which used to be a sore point.

The incentives are drawn from a tax on automobile fuel, shielding them from upcoming budget cuts, so there should be no surprises.

The latest pic by a U.S. helmer to tap into the Italo incentives is Woody Allen’s “Nero Fiddled” (aka “The Bop Decameron”), produced by Letty Aronson with financing from Italy’s Medusa. Amber Entertainment’s “Romeo and Juliet,” to be helmed by Carlo Carlei on location in Verona, is expected to be next.

Another development caused by the Italo tax credits, which are partly replacing much-maligned straight government subsidies, is the launch of equity financing in the country.

Italian banks are finally starting to invest in movies, especially international co-productions such as Paolo Sorrentino’s “This Must Be the Place,” which saw Italy’s Banca Intesa San Paolo take a stake. Italo banks seem keen to become prospective partners on other high-profile international co-prods.

Of course, the Italian boot’s spectacular locations, food, and superlative set and costume designers add value, while the dollar/euro rate has improved of late.

Rome’s venerable Cinecitta Studios, with 30 soundstages, a total 300 acres of backlots, and some of world’s most skilled craftsmen, are the country’s best full-service soundstages, equipped with state-of-the-art post.

Cinecitta also provides services for shoots in external locations all over the country. But a number of newer, smaller, facilities are also proving worthy, namely Turin’s Cineporto, a high-concept structure comprising production and wardrobe offices, a screening room, but no soundstages. There is also a Cineporto in Bari, a bustling port city in the Apulia region in Italy’s south.

Italy’s Valle d’Aosta is the latest region to set up a film commission with a small fund to lure productions to its Alpine settings.

The tiny scenic locale, which borders Switzerland and France is starting out with a €600,000 ($860,000) pot for both Italian and international projects.

Italian Film Commission