In the case of a resident of Italy, the Italian Republic in determining its income taxes specified in Article 2 of this Convention in the case of its residents or companies may, regardless of any other provision of this Convention, include in the basis upon which such taxes are imposed all items of income; the Italian Republic shall, however, deduct from the taxes so calculated the Irish tax on income (not exempt in Ireland under this Convention) in the following manner:
- if the item of income is, according to Italian law, subjected to the tax on income from movable wealth the tax paid, directly or by deduction, in Ireland shall be deducted from the tax on income from movable wealth, and from the taxes imposed in respect of the same income, but in an amount not exceeding that proportion of the aforesaid Italian tax which such item of income bears to the entire income.
Where the tax paid in Ireland on such income is higher that the deduction so calculated the difference shall be deducted from the complementary tax or from the tax on companies, as the case may be, but in an amount not exceeding that proportion of such complementary or company tax which the item of income bears to the entire income;
- if the item of income is subjected only to the complementary tax or to the tax on companies, the deduction shall be granted from the complementary tax or from the tax on companies, as the case may be, but only for that part of the tax paid in Ireland which exceeds 27 per cent of such item of income. The deduction shall not, however, exceed that proportion of the complementary tax or of the tax on companies which such income bears to the entire income.