The Italian Catholic Church will be stripped of an historic tax exemption from
2013 after the government upheld a divisive decree under close scrutiny from
EU watchdogs.
The Church currently pays tax on several properties it owns that are
commercial enterprises but is exempt if at least some of the activities on
the property are "non-commercial" - for example a chapel in a hotel.
"The regulatory framework will be definite by January 1, 2013 - the start of
the fiscal year - and will fully respect the (European) Community law,"
Prime Minister Mario Monti's government said in a statement late Tuesday.
In February, the government had amended Italy's property tax law to end the
Church's privileges amid rising calls for the Vatican to share in debt
crisis sacrifices and in the face of intense scrutiny from the European
Commission.
On Monday the Council of State, Italy's highest ranking court for administrative litigation, rejected the decree. But the government insisted everyone would pay property tax, Church included.
In 2010 the EU opened an investigation into whether tax breaks enjoyed by some Church properties in Italy could be classed as illegal state aid.