Appeal judges at the European Court of Justice (ECJ) overruled EU commission and lower chamber rulings Tuesday, telling Italy it must recoup municipal taxes on Vatican-owned non-commercial properties found to be illegal state aid.
In January 2012 Italy established a church loophole, exempting "non-commercial" ecclesiastical education and accommodation properties from paying a new single Italian municipal tax known as IMU.
In December 2012, the Brussels-based European Commission declared the non-collection as unlawful but let Italy off the hook with its argument that recovery would be impossibly complicated because Italy's property title registry and tax database was incomplete.
That excuse was adopted by the ECJ's General Court in September 2016, prompting further appeals by Rome's Schuola Elementare Maria Montessori and Pietro Ferraci, a Rome bed-and-breakfast property owner.
The Italian news agency ANSA quoted the school appellants as saying: "We are very happy. It was a long battle, but in the end David won over Goliath."
The extent of the Vatican's unpaid tax bill is still unclear.
Appellants recognized, excuses dismissed
ECJ appeal judges in Luxembourg recognized the Montessori school and Ferraci as complainants under Article 263 of the Treaty on the Functioning of the European Union (TFEU), which allows "any natural or legal person" to institute proceedings, saying this was a "first time" on admissibility.
Secondly, the appeal judges said Italy's non-recovery of its municipal tax (IMU) from church educational and accommodation entities was only justified after "scrupulous" and objective examination, and if "no alternative methods" existed.
The Commission had failed to establish that Italy's municipal tax recovery was impossible, said the ECJ, and set aside the lower chamber's judgement.
Rome was where in the late 19th century medical doctor Maria Montessori developed a new, child-centered form of education, now widely practiced around the world. Italy has 137 institutions, according to the movement's Italian branch.
ipj/rt (dpa, KNA)