The foreign tax credit is granted only under specific conditions.

According to the Court of Cassation, the benefit is allowed only if the tax has actually been paid abroad and if the income on which it was applied is taxable in Italy.

Another limitation comes from double taxation treaties.

If these agreements provide for the exemption of income in the taxpayer’s country of residence, the tax credit cannot be claimed.

This principle aims to prevent double non-taxation and ensure proper coordination between different tax systems.