EU lets Catholic Church off its billion-euro tax bill

Europe's Competition Commissioner, Joaquin Almunia, previously suggested that the Church would have to cough up missing payments - however, it has now been deemed 'absolutely impossible' (EPA)

The Vatican has received a generous early Christmas present from European Union chiefs with the announcement that illegal tax exemption from 2006 to 2011, which saved the Catholic Church billions of euros, will not have to be paid back.

Europe’s Competition Commissioner, Joaquin Almunia, said two years ago that the Vatican’s exemption from Italian property tax, or ICI, payments, on thousands of buildings, including 4,714 hospitals and clinics, breached EU competition law. He suggested that the Church would have to cough up the missing payments.

But now the European Commission has said that the Italian government had demonstrated that clawing back the missed payments “would be absolutely impossible” given how hard it would be to decide which properties in that period were being used exclusively for commercial purposes.

This year the Italian government introduced a revised form of property tax, IMU, which the Commission is satisfied will allow tax breaks only for purely non-commercial buildings. As a result of the IMU, the Church’s tax bill will increase – but not by as much as some of its critics would like.