Vatican and Israel to Discuss Taxing Issue of Property

Print More

c. 2005 Religion News Service

VATICAN CITY _ Forty years ago, the Vatican issued Nostra Aetate, officially ceasing to blame Jews for the death of Christ. Since then, acts of reconciliation have come to define relations between the Holy See and Israel.

Full diplomatic relations were established, a regretful John Paul II visited the Western Wall and his predecessor, Benedict XVI, entered a Jewish synagogue in his native Germany.

But one issue remains stalemated: the Vatican’s rights to property and tax exemption in the Holy Land.

Since the creation of the state of Israel, a vast sea of Vatican property ranging from holy shrines to modern hospitals has languished in legal and fiscal limbo. Under current Israeli laws, the church has no access to judicial courts when land ownership disputes occur and is not guaranteed the tax exemptions the Vatican and other religious institutions routinely receive in other countries.

Out of respect for Catholicism’s deep roots in the Holy Land, Israeli officials have generally granted tax exemptions to Catholic properties. But in recent years, local and regional governments have begun pressing for back taxes on Catholic hospitals and other nonchurch properties dating back to Israel’s creation in 1947.

The property dispute has become a thorn in the side of Vatican-Israel relations and an increasingly prominent subtext for high-level meetings. It’s expected to be a topic of discussion when Israeli president Moshe Katsav visits Pope Benedict XVI on Thursday.

“Will this be an issue in the meetings president Katsav will have in the Vatican? The answer is: I don’t know of any other issue,” said the Rev. David Jaeger, an Israeli lawyer and legal expert of Vatican holdings in the Holy Land.

Jaeger was the Vatican’s lead negotiator on the 1993 Fundamental Agreement, the Vatican-Israeli accord that set the stage for the establishment of full diplomatic relations between the two states in the spring of 1994.

As part of that agreement, Israel pledged to swiftly regularize the legal status of church activities within its borders _ a pledge that has languished for more than a decade as Israel turned its attention to more pressing matters, such as suppressing the Second Intifada.

According to Israeli Ambassador to the Holy See Oded Ben-Hur, the Israeli government is now eager to move beyond the dispute, making “serious and painstaking efforts” to find a solution.

“There is now serious involvement at the highest political level possible,” he said, adding that Prime Minister Ariel Sharon has given “specific instructions” to resolve the dispute while Katsav, Israel’s ceremonial head of state, has been “doing everything possible to tie up loose ends” in preparation for his visit with Benedict.

“We are very close to the conclusion,” Ben Hur said in an interview. “The promises are in the future and the future is not that far away.”

Current negotiations, which resumed in July 2004 after stalling in August 2003, aim to reach a written accord that establishes the Holy See’s official status as a major land-owner in Israel.

At issue in the impasse is whether Israel can adhere to international treaties that effectively challenge the status quo of its legal system.

“We have one major dispute or remaining obstacle, and that is whether this accord, once reached, should be inserted in Israeli law,” Ben Hur said.

Allowing judicial courts to review Vatican land disputes would represent a departure from current Israeli law, which considers religious properties the jurisdiction of the executive branch of government. As a result, government-appointed panels typically preside over ownership disputes rather than judicial courts.

Granting the Vatican permanent tax exemptions, meanwhile, could unleash a ripple effect among other nonprofit and religious groups present in the Holy Land, demanding equal status.

“If the Catholics get this deal, the Muslims, the Baptists and everyone else operating in (Israel) will want it,” said John Allen Jr., a longtime Vatican analyst and author.


Pressure to fulfill the Fundamental Agreement has been mounting recently as local and regional governments in Israel have begun to ask for back taxes from Catholic institutions such as hospitals and pilgrimage centers.

In June, a case involving the tax status of a pilgrimage center on the Sea of Galilee went before Israel’s High Court of Justice, after regional authorities pressed the center for back taxes.

When the center invoked the Fundamental Agreement to justify its refusal to pay, the national government told regional authorities that the accord was not yet binding in Israeli law.

The Vatican argues that its right to tax exemption was established centuries ago, recognized under the Ottoman Empire and reflected in United Nations Resolution 181, which effectively created Israel in 1947. According to the resolution, religious properties that had been tax exempt before the resolution should remain so.

“When the state of Israel was created the Catholic Church was already there with its rights, with its freedoms and with its property,” Jaeger said.


Comments are closed.