VATICAN CITY - Pope Francis once said that a person who "puts
his hand in his pocket to show that he helps the church while
with the other hand steals from the state, from the poor" is
not simply a sinner, but is corrupt.
While someone may think it is clever to find a way to avoid
paying taxes, the Vatican insists it will not be a tax haven.
In fact, on June 10, it signed a formal agreement with the
United States government promising to send a report each year
to the U.S. Internal Revenue Service listing U.S. citizens
and permanent residents who have bank accounts or other
financial interests at the Vatican.
Under the U.S. Foreign Account Tax Compliance Act, the U.S.
tax collector compares the names on those foreign reports to
the lists of people filing their income tax reports. Those
who fail to file are in trouble.
U.S. officials described the formal agreement with the
Vatican as a further sign of the Vatican's commitment to
financial transparency and the establishment of more ethical
financial activity around the globe.
Ambassador Ken Hackett, U.S. envoy to the Holy See, signed
the agreement on behalf of the United States. Archbishop Paul
R. Gallagher, undersecretary for relations with states,
signed on behalf of the Holy See. And it went into effect the
day it was signed.
"As Pope Francis frequently reminds us, evading just taxes is
stealing both from the state and from the poor," Archbishop
Gallagher said at the signing ceremony. "Every person has, in
fact, the duty to contribute, in charity and justice, to the
common good, according to his own abilities and the needs of
others, by promoting and assisting the public institutions
dedicated to bettering the conditions of human life."
Hackett, retired former president of the U.S. bishops'
Catholic Relief Services, told those gathered for the
ceremony, "Of all the measures that could be taken to
eliminate world poverty, stopping tax evasion may be one of
the most effective options. Every year, tax evasion deprives
governments of all sizes of much-needed resources to fund
public services and investments."
In a joint statement issued after the signing ceremony, the
U.S. and Vatican said the agreement "underscores the
commitment of both parties to promote and ensure ethical
behavior in the financial and economic fields."
"Ensuring the payment of taxes and preventing tax evasion are
of crucial economic importance for every community since
adequate tax revenues and public spending are indispensable
for governments to become instruments of development and
solidarity, to encourage employment growth, to sustain
business and charitable activities, and to provide systems of
social insurance and assistance designed to protect the
weakest members of society," the statement said.
Speaking to reporters before the signing, Hackett said the
agreement is "a type of stamp of approval" of the multiple
steps the Vatican has taken since 2010 to update its
financial laws, reform the so-called Vatican bank and
institute steps to ensure no one can use its offices for
money laundering or the financing of terrorism.
Marji Christian, political and economic officer at the U.S.
Embassy to the Holy See, declined to say if the U.S.
government knew how many of its citizens or permanent
residents have Vatican bank accounts or other financial
interests at the Vatican.
In 2013, the Vatican bank - formally called the Institute for
Religious Works - tightened its rules for account holders and
began closing the accounts of those who no longer qualified.
Individuals holding accounts must be Vatican employees or
retirees or diplomats accredited to the Holy See. Bishops'
conferences, dioceses, religious orders and other official
Catholic works also may have accounts.
Max Hohenberg, institute spokesman, told Catholic News
Service June 10, "less than 1 percent or fewer than 150
clients" were U.S. citizens or U.S.-based Catholic entities.
The bank had been working toward the U.S. agreement for two
years, he said, and "all the protocols are already in place
and have been since late last year. This is just a
formalization" of what was being done already.
The new agreement, which Hackett said is the first "formal
intergovernmental agreement" between the U.S. and Vatican,
was initiated by the U.S. under the terms of the Foreign
Account Tax Compliance Act (FATCA), which is designed to
prevent tax evasion by American citizens.
Some 62 countries already have signed formal FATCA agreements
with the United States and another 50 countries have what are
described as "agreements in substance," according to the U.S.