EUROPEAN UNION REGULATORS ARE investigating Italian tax breaks potentially worth €8bn granted to properties owned by the Catholic Church.

The tax breaks may have to be repaid if they are found to be in breach of European law.

They could be illegal if the properties involved have been used for commercial activities, in which case the tax breaks could constitue illegal state aid.

The European Commission said that Italian tax law “lays down the conditions that can trigger the loss of the “non-commercial status”, but shields ecclesiastic institutions and amateur sports clubs from that provision”.

EU regulators are investigation whether this provision grants an unfair advantage to non-commercial entities, distorting competition.

The Independent reports that the investigation will include 100,000 Vatican properties in Italy.

If the Commission rules that EU laws have been violated, the Italian government may call on the church to repay the exempted funds, which are estimated to have been worth up to €2bn a year since Italy introduced the tax break in 2005.