Appeal judges at the European Court of Justice (ECJ) have overruled European Commission and lower chamber rulings, ordering Italy it must recoup municipal taxes on Vatican-owned non-commercial properties found to be illegal state aid.

It’s a big win for a Montessori school and a Rome guesthouse owner who asserted unfair taxation in the context of EU law.

As reported by Deutsche Welle (DW), Germany’s international broadcaster, Italy in 2012 established a church loophole, exempting “non-commercial” ecclesiastical education and accommodation properties from paying a new single Italian municipal tax known as IMU.

Even though the European Commission had declared the non-collection as unlawful, it let Italy off the hook with its argument that recovery would be impossibly complicated because Italy’s property title registry and tax database was incomplete.

That excuse was adopted by the ECJ’s General Court in September 2016, prompting further appeals by Rome’s Schuola Elementare Maria Montessori and Pietro Ferraci, a Rome bed-and-breakfast property owner.

The Italian news agency ANSA quoted the school appellants as saying: “We are very happy. It was long battle, but in the end, David won over Goliath”.