Brussels - The European Commission has asked the Italian and Spanish governments for information in cases which could see the Catholic Church judged to have received illegal tax breaks, officials confirmed Tuesday. On July 19, the Commission asked the Spanish government for information on a scheme which allows the Catholic Church in the country exemptions from the national tax on wealth, an official in the Commission's competition office told Deutsche Presse-Agentur dpa.
And the office is currently analysing a response from the Italian government to questions concerning exemptions from the tax on real estate which the Catholic Church enjoys there, the official added.
Both requests for information followed complaints from unnamed interests in the states in question, and both are set to analyze the claim that the tax breaks give the church an unfair advantage over secular commercial entities.
Under Italian law, for example, the church is exempt from local taxes on the possession of real estate and from company taxes levied on the revenues deriving from that property.
It also benefits from a 50-per-cent reduction on company tax generally, Commission officials said.
But these tax breaks do not apply to commercial real-estate management companies, and could therefore potentially be interpreted as state aid which distorts competition in the real-estate market.
"If an organisation has economic activities, it has to follow (EU) competition rules," a Commission spokesman told journalists.
The request for information is the first stage in the Commission's procedure on potential breaches of competition law. If the Commission's competition experts decide that there are grounds for concern, a full investigation could then be launched.
If such an investigation were to rule that the tax breaks were illegal, the government in question would be obliged to end the system, and could be ordered to recover the aid from the church itself, officials said.
