Pope Benedict XVI sits at the helm of a church whose wealth is estimated at $3bn [EPA]

The Italian government is being asked by the European Commission (EC) to explain tax breaks which the Vatican enjoys on income from property.

The EC has received complaints that the concessions amount to illegal state aid, despite the deal stemming from an agreement between Italy and the Catholic church dating back to 1929.

The Catholic church is a wealthy organisation with property and commercial enterprises worth $3bn, at the helm of which sits Pope Benedict XVI.

Accusations within Italy have alleged that many of these enterprises have received generous and illegal subsidies from the Italian government.

Now, the Vatican has been called before the European Union for questioning.

Some analysts have said it is a problem that spreads across the entire European Union, not just within Italy.

Open chequebook

Keith Wood, National Secular Society's executive director, said a lot of people in the EU do not even realise it is happening.

"Particularly within the European parliament, for example, there is a certain anti-Catholic bias," he said.

The Vatican says, like other charitable institutions, the profit it generates is used to help the poorest and weakest in society.

Now, it will be up to the EU and the Italian government to decide whether an early twentieth century agreement granting tax breaks to the Vatican can be upheld.