Swiss Capital Tax Not Creditable Against Italian CFC Tax

The Italian Tax Authority, in its ruling n. 70/2026 published on 6 March, clarified that foreign wealth taxes — even when covered by a Double Tax Treaty — cannot be credited against Italian CFC tax. The foreign tax credit under Article 165 of the Italian Income Tax Code (TUIR) is structurally reserved for income taxes. Italian Groups with Swiss CFCs subject to Capital Tax should therefore treat such tax as a definitive non-creditable cost for Italian corporate income tax (IRES) purposes.

The ruling stems from the case of an Italian parent company (Alfa) that taxes on a look-through basis, pursuant to Article 167 TUIR, the income generated by its Swiss subsidiary (Beta), tax resident in Zurich.

The Tax Authority denied the creditability of the Capital Tax paid by Beta in Switzerland against Italian IRES, holding that the foreign tax credit mechanism under Article 165 TUIR operates exclusively between taxes of the same nature. The treaty reference — including in light of the authentic interpretation provided by Legislative Decree 147/2015 — applies solely to income taxes qualifying as such under the relevant treaty. The Capital Tax is instead classifiable as a wealth tax (Article 2, paragraph 3, letter b, point 2 of the Italy-Switzerland Double Tax Treaty): the fact that its computation incorporates certain income-related adjustments is not sufficient to alter its legal nature

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