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29.08.2007

Church tax breaks under attack.


The tax position of the Roman Catholic Church in Italy is under scrutiny by the European Commission. Considerable tax breaks on buildings and income that Italy allows the Catholic Church may be in breach of EU regulations banning state aid to business.

The Roman Catholic Church in Italy is exempt from local property taxes (ICI), as well as corporate tax (IRES) on income from schools, clinics, hospitals, hotels and hostels. However the Church does not receive any preferential treatment that is not also available to other religious and charitable organizations providing health and educational facilities for the general social welfare of the country.

While the income from educational and health services seems to offer a case for exemption, that from more commercial “business” activities such as hotels and hostels is subject to interpretation.

As well as the above tax concessions the Church, along with other religious and non-governmental agencies approved by the government, receives a percentage of the income tax paid by Italian taxpayers each year.

The EU is still only requesting information and has not yet decided whether to open an enquiry. However the subject of taxes and tax exemptions has been one of the hot political subjects in a hot Italian summer. The leaders of almost every party, whether in government or opposition, have targeted taxes (proposed new taxes, cuts in old taxes or tax evasion) knowing that it is a popular issue with private and corporate taxpayers alike.

It is not therefore surprising that exemptions for the Church, which many see as having too many privileges, should come under attack.

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