The Frenchman is not available for loan, but could be sold for over £11.2 million.
But he struggled at White Hart Lane and he moved to newly promoted Watford in the summer. He has been in fantastic form at Vicarage Road as Watford impress at the right end of the Premier League table.
It seems that form has attracted unwanted interest from Italian giants AC Milan.
The Daily Star is reporting that the Rossoneri is keen on the player to strengthen their midfield options.
However it is now being reported in Italian media that Watford have already made it abundantly clear to Milan that they can forget about signing their in form midfielder.
Calciomercato is reporting that Capoue is not available on loan and that any deal to sign him would cost in excess of €15 million (£11.2 million) for the Italian giants - a fee they would not be able to afford.
The same report also makes it clear that as yet, Milan have not made official contact with Watford about the player.