The Vatican's economic base is the
compensation received from the Italian state when the
Lateran Treaties (see Older History) and the Concordate
(see Modern History) were concluded. The other major
source of income is the "Petersen", that is, the
traditional voluntary contributions from the world's
Catholics. A third important source of income is the
return from the Catholic Church's investments. Tourism
in the Vatican also generates significant income.
The Vatican's budget has periodically suffered
significant deficits, partly due to high costs for
maintenance and restoration of the many historic
buildings. However, the largest item of expenditure is
the cost of personnel in administration and overseas
missions as well as the operation of the Vatican's
radio, television and daily newspaper.
Major imports by Vatican, covering a full list of top products imported by the country and trade value for each product category.
Residents of the Vatican pay no Italian income tax.
The Catholic Church has also been exempt from tax for
its commercial properties, such as hotels and business
centers. However, as a result of a deep economic crisis
in Italy, the Rome government in 2012 decided to start
taxing church commercial activities from 2013.
The Vatican's bank, the Institute for Religious
Activities (Istituto per le Opere di Religione, IOR),
handles the finances of the church's many institutions
and community of communities with extensive relief
activities. The bank has long been suspected of money
laundering and in 2012 the Council of Europe's control
group Moneyval criticized the Vatican for not following
recommendations on transparency. The same year, the IOR
chief was forced to resign since he must have worked to
increase transparency in IOR's accounts but encountered
resistance within the Vatican City.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including VAT which represents the country of Vatican.
Already in the summer of 2013, the next IOR boss had
to resign after a leading priest was arrested on
suspicion of trying to exploit IOR for money laundering
and to smuggle in € 20 million to Italy. (The priest was
released from the charges in January 2016.) In November
of that year, Pope Francis appointed Rolando Marranci as
new bank manager. Marranci had been part of an
independent consulting group which, on the initiative of
the new pope, was set to review the bank's progress.
In the fall of 2013, the Vatican introduced new
finance laws to increase transparency and oversight and
to bring the regulations in line with international
standards, including when it comes to preventing money
laundering and terrorist financing. In addition, some
customers' bank accounts were closed, which were not
compatible with the bank's religious motives. At the end
of the year, Moneyval explained that the Vatican had
made progress in the fight against money laundering, but
that more remained to be done.
The Vatican's control group reported 544 suspected
cases of fraudulent banking transactions in 2015,
compared with 147 such cases in 2014. The Vatican
interpreted this as a manifestation of increased
transparency in the banking system, while critics
pointed out that only 17 of these cases went to court.
There is no agriculture and no industry in the
Vatican except small-scale production of mosaics and
service uniforms. The trade is limited to the sale of
stamps, books, religious souvenirs and more from the
shops owned by the church. The Vatican has its own
postal, telegraph and coinage system. The Vatican's rare
euro coins are wanted by collectors.