Spain told to charge Catholic Church sales tax

Brussels, Belgium - The European Union today asked Spain to start charging the Catholic Church sales tax, saying a special exemption breaks EU tax law.

Spain says a 1979 agreement with the Vatican obliges it to give the church an exemption from value added tax for the goods it buys.

But the EU’s executive Commission said EU rules do not allow such a tax break, threatening to take Spain to court unless it took action within two months.

However, the EU said Spain could charge the sales tax and then compensate the church for some or all of the tax that it has to pay to the tax authorities.

“That would be a matter for Spain alone,” it said.

The Spanish government has helped to finance the church since 1979 under rules that allow Spanish taxpayers to contribute 0.52% of their income taxes if they choose.

Since 1989, however, these contributions have not matched church spending, and the government has made up the difference. In 2003, the pro-church ABC newspaper said the church received €105.9m from tax contributions and €32.8m from the government.

Constitutionally, all religious organisations in Spain should enjoy the same benefits. The Catholic Church is the country’s predominant religion and is still very influential.