Tax exemptions for the Church could be flouting EU rules, say delegates in Brussels. The European Commission is awaiting answers from Spain and Italy relating to tax benefits given to the Catholic Church in order to study the matter further.

MEPs want to analyse whether the institution’s immunity from paying taxes classes as ‘state assistance’ and whether this is ‘incompatible’ with the Church’s ‘unique market’, reveals international news agency EFE.

Spokesman for the Commission, Jonathan Todd, says it has asked the Italian Church for further details about its freedom from paying duties on fixed assets and its 50 per cent discount on tax payments for non-commercial religious associations, but to date the country’s response has been ‘insufficient’.

Italy’s National Alliance called the investigations ‘offensive’ and an attack on ‘the social functions’ of the Church.

Spain is also under investigation, reveals Todd. In December 2005, the Commission asked the Spanish government to ‘modify’ its agreement with the Church covering relief from IVA (VAT in Spain) on certain activities and assets. However, the issue remains unresolved.