The Roman Catholic Church has indicated that it is willing to give up some of the tax breaks it currently receives from the Italian Government, following pressure from the European Commission and political leaders in Italy.

|PIC1|At present the Italian state offers the Church about £680m worth of tax breaks from income tax receipts and exemption from the payment of local authority taxes on most of its property.

In addition, some of the Church's major business activities such as education, hospitals, clinics, hotels are only charged at 50 per cent of the regular corporation tax rate.

This equates to a huge tax saving on the 18 hospitals, 55 clinics and 250 schools owned by the Church in Rome alone, according to Italian media.

In an interview published yesterday by Italian-based La Stampa, a senior Vatican official, Monsignor Karel Kasteel, said: "The Holy See is ready to sit down at a table with the government to update the Concordat (the church-state agreement) and revisit the tax issue."

Mgr Kasteel seemed to be responding to a junior Italian finance minister, Paolo Cento, who said just a week before that the issue needed to be tackled in next year's budget.

In June, it was reported that the EU's competition commissioner, Neelie Kroes, had opened an inquiry into the way the Church was being treated in Italy in relation to taxes.