Italian Church Could Lose Tax Exemption

December 12, 2011 Taxation in Italy

Property tax in ItalyROME – As Italy searches for new avenues to close its budget deficit, the government’s eyes have turned to the tax exemptions enjoyed by the Catholic Church in Italy.

On December 10th the Prime Minister of Italy Mario Monty called for the country’s newly reinstated property tax to be applied to commercial properties operated by the Church. It is estimated that the tax would apply to over 16 000 properties across the country. If the tax is instated this year it could garner an approximate EUR 700 million in extra tax revenues per annum.

Under long standing laws in Italy, the Catholic Church is exempt from paying property taxes on real estate which is not used exclusively for commercial purposes. Critics of the rule claim that the regulation can be exploited by the Church, allowing it to run large commercial operations without paying property taxes.

The Catholic Church has previously defended the tax exemption, saying that the church should not have to pay, as it already provides valuable public services and protects poorest members of the society. However, over the weekend Cardinal Tarcisio Bertone, the Vatican’s secretary of state, indicated that the Church could potentially be willing to cooperate on the tax, saying that the measure would need to be studied and that sacrifices were a necessary part of life. Cardinal Angelo Bagnasco, the head of the Italian Bishops’ Conference, also spoke to the press regarding the tax, saying that the Church would be happy to investigate any allegations of the institution not paying its rightful tax obligations, and correct the situation and pay all necessary levies.

Photo by sytamni