Taxes in Vatican City

The Vatican City State finances its activities through commercial operations, museums and cultural services, postage stamps and coins, parking, donations and income from assets and investments. These revenues should not be treated as ordinary taxes. The Governatorato, especially the Direzione dell'Economia, manages state accounting, assets, commercial activities and related internal controls. Servizi Doganali handles customs controls, classifications, VAT-exemption certificates, invoice checks and export permissions. No general Vatican tax authority or publicly documented standard chain of tax returns, assessments, refunds and tax audits has been identified. A business or professional activity in Vatican City generally requires authorization from the Governatorato. Authorization to operate, professional rules, employment rules and accounting duties are separate from the question of whether a general Vatican profit tax applies. Publicly available evidence does not establish a general Vatican corporate tax, business tax or standard profit-tax rate for private companies. The 2025 IOR report states that IOR operating profits are not subject to a Vatican City tax deduction, but this does not establish a general rule for every business. Customs and indirect charges apply in specific situations. Servizi Doganali can issue and validate VAT-exemption certificates and check invoices, but purchases and sales are not automatically VAT-free. The result depends on the goods, purpose, recipient, transport path and applicable customs arrangement. Under the 1929 Law on Economic, Commercial and Professional Order, the sale and resale of certain state-monopoly goods are regulated. Certain imports for eligible residents or family use can be exempt from customs duties and excise duties. Private imports can be permitted after the relevant Italian charges have been paid. A vehicle may also be subject to the Vatican tassa automobilistica, with the amount and payment cycle checked for the specific vehicle. The Lateran Treaty creates defined exemptions in Italy. Article 16 exempts listed properties in Italy from ordinary and extraordinary taxes. Article 17 exempts defined remuneration paid by the Holy See, central Church institutions and directly administered institutions to qualifying dignitaries, employees and wage earners, including some people who are not permanently employed, from Italian taxation. Article 20 concerns goods transported through Italy in transit to Vatican City or Holy See institutions and provides customs and charge exemptions under its conditions. These provisions do not create general worldwide tax exemption for every Vatican employee, resident or organization. The 2015 Italy–Holy See tax convention, in force since 15 October 2016, covers defined Italian tax residents and qualifying canonical or Vatican legal persons holding financial assets with professional financial institutions in Vatican City. Depending on the asset and taxpayer, Italian capital or financial-income taxation and a foreign-asset tax may be handled through a financial intermediary or fiscal representative. For certain legal persons, a 26% substitute tax can apply where Italian withholding or substitute taxation does not otherwise apply. The convention does not remove the Article 17 exemption. A Vatican workplace, Vatican passport, visit or stay does not by itself determine tax treatment. The relevant analysis can include tax residence, nationality, home and work location, income source, employer status, contract terms, the institution involved and any applicable treaty. The United States FATCA agreement with IOR creates reporting duties for US-related accounts, while foreign non-residents may need to file and pay tax in their own country of residence. Correct residence information, supporting documents, customs records and invoices can therefore matter more than the location of the employer alone.