The Vatican, which previously enjoyed an exemption, must now pay taxes on its commercial properties, Italy's Prime Minister Mario Monti announced on Thursday, BBC News reported.

The state has been exempt from paying property taxes since 2005, which was one of several fiscal perks enjoyed by the Catholic Church and introduced by the Berlusconi administration, The Independent reported.

The annual cost of the property tax could be as high as $945 million, according to Italy's municipal government's estimates. The Vatican currently owns 110,000 properties, including shopping centers and residences, which are collectively worth roughly $12 billion, according to Business Insider.

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As Italy tightens its belt to deal with the financial crisis, more than 130,000 people signed an online petition calling for the Church's tax exempt status to be revoked, according to Business Insider.

"This is a victory for public pressure," Mario Staderini, the leader of the Italian Radicals party, told the Independent. "We've managed to break down – a little bit – the wall protecting the Church."

According to the Corriere della Sera newspaper, tax authorities will calculate how much of a property is used purely for religious purposes and tax it proportionately. Under this system, a church would remain tax-exempt, but a chapel which operates an hostel would pay tax, BBC reported.

“We are waiting to find out the exact formulation of the text to be able to offer a more precise opinion," the Italian Bishops' Conference said in a statement on Thursday, according to Business Insider.

The announcement comes as the Holy See launches an official investigation into a series of embarrassing leaked documents suggesting that there was a plot to kill Pope Benedict XVI.

"It's now complete war inside the Vatican," Robert Mickens, The Tablet's Rome correspondent, told the Independent. "Things are falling apart."

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