No Tax, No Bonds... The World’s Only Country That Runs Solely on Donations, Now Forced to Sell Assets

The smallest country in the world and the spiritual center of the Roman Catholic Church, Vatican City, is currently grappling with a severe economic crisis. Spread over just 0.49 square kilometers and home to about 800 residents, this nation neither collects taxes nor issues bonds. It runs entirely on donations, but as these donations continue to decline, the Vatican’s economy is showing signs of strain.

Located near Italy’s capital, Rome, Vatican City is known for its unique political and religious structure. Though it is the smallest country by area and has its own government and currency, it holds vast amounts of historical heritage and property. Despite this, its revenue has fallen short of its expenses, prompting calls for a serious re-evaluation of its economic model.

Vatican Drowning in Expenses Beyond Income

According to media reports, the central administrative body of Vatican City, the Holy See, and the Roman Catholic Church together earned approximately $878 million in 2021, but their expenditures exceeded that. Vatican City neither imposes taxes on its citizens nor issues any form of government bonds. Its main source of income is Peter’s Pence, a global donation collected from Catholics to support the Pope. This donation is traditionally gathered on the last Sunday of June each year. However, in recent years, contributions have dropped significantly.

U.S. is the Largest Contributor

The United States provides the largest share of Peter’s Pence, contributing around $27 million annually, but even this support is now declining. Vatican City owns over 5,449 properties in major cities around the world — including in Italy, London, Paris, Geneva, and Switzerland — but the income from these assets remains disappointing. In 2023, they generated only $399 million.

Will the Vatican Have to Sell Its Assets?

Ward Fitzgerald, President of the U.S.-based Papal Foundation, has suggested that the Vatican must now consider selling some of its properties. Robert Gahl, director of the Church Management Program at The Catholic University of America, believes the Vatican should reduce its dependency on the U.S. and seek donations from other countries. However, this won’t be easy, as the culture of religious giving is far less prominent in Europe. That’s why many experts believe it’s time for the Vatican to seriously reassess its financial future.