A spokesman for the Vatican said the atmosphere in the diocese of Limburg had become such that Bishop Franz-Peter Tebartz-van Elst could no longer carry out a “fruitful exercise” of his ministry there.
Tebartz-van Elst, dubbed the “bishop of bling”, had been ordered to stay out of his diocese temporarily last October while a local Church investigation and audit into cost overruns was made. He offered his resignation at the time.
A statement said the Vatican department which oversees bishops had now accepted his resignation after studying the results of the investigation.
“The Holy Father asks the faithful of the diocese of Limburg to accept the decisions of the Holy See with docility and to commit themselves to rediscovering an atmosphere of charity and reconciliation,” the Vatican statement said.
Another prelate, Monsignor Manfred Grothe, has been appointed to run the diocese as an administrator on the Vatican’s behalf for the time being and a position will be found for Tebartz-van Elst in due course, the Vatican said.
The Limburg affair has been an embarrassment for the Vatican as Pope Francis has been urging Church officials around the world to live simpler lives and to get closer to the poor.
Last year, Francis showed his irritation over the affair by keeping the bishop waiting for eight days in Rome before receiving him in the Vatican.
Lay Catholic groups welcomed the move, calling it a chance for a new start in the diocese.
“It is very important for the Church in all of Germany to draw the necessary conclusions … this applies especially to transparency in Church finances,” said Alois Glueck, president of the Central Committee of German Catholics, the main lay association in Germany.
“Today’s decision must be a signal for the whole Church, and not just in Germany,” said the reform-minded lay group We Are Church.
Tebartz-van Elst has apologised for any “carelessness or misjudgment on my part”, but he denies any wrongdoing.
German media, citing official documents, said the residence had been fitted with a bath that cost €15,000, a conference table that cost €25,000 and a private chapel for €2.9m.
The affair has also deeply embarrassed a German Catholic Church that had been enjoying an upswing in popularity because of Francis’s personal appeal.
Tebartz-van Elst, 54, is still 21 years away from official retirement age in the Church. He will retain the title and rank of bishop but the Vatican will probably want to put him in a low-profile job somewhere.
The scandal has put pressure on German bishops for more financial transparency, forcing them to scrap centuries of secrecy over reporting the value of their private endowments.