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Feb YTD Tax Revenue Slightly Behind Schedule; Weak VAT Receipts

GERMAN DATA
DataHomepagemarkets-real-timeData BulletBulletMarketsFixed Income BulletsForeign Exchange Bullets

German tax revenue excl. municipality taxes rose +5.9% in February to E64.1bln vs +5.8% official estimate for total 2024 revenue growth. However, these numbers have been boosted by base effects; YTD revenue stands at 14.3% of 2024 planned overall revenue, slightly behind a 14.6% average since 2017 for February YTD as a % of realized yearly overall revenue (with VAT revenues, which lag 2 months behind the respective sales, confirming the weak christmas business last December).

  • The 0.3pp lag would imply that tax revenue is behind approximately E2.5bln YTD against historical norms (E125.4bln actual revenue YTD vs E128.0bln extrapolating the historical Feb YTD average to 2024 targets, divergence due to rounding).
  • Joint taxes: Overall, joint taxes, which are split between the federal entity and the states according to set quotas (approximately 50/50), and make up the vast majority of total tax revenue (83.5% 2024 plan), increased +5.1% Y/Y to E50.1bln in February; YTD standing at 14.2% of planned 2024 revenue vs 14.6% on average since 2017 of realized yearly revenue.
    • Significantly, VAT decreased 2.7% Y/Y to E23.0bln in February. Also as a whole, the VAT (incl. import VAT) category is behind on YTD revenue on a historical comparison, at 17.3% of projected 2024 revenue, vs 18.0% on average historically since 2017. These lower VAT revenues (which are on a 2-month lag according to the ministry of finance compared to the respective sales) in particular point to weaker consumer spending around the christmas period, mirroring retail sales data from then.
    • Stronger revenues across the joint taxes as a whole in February on a yearly comparison were driven by base effects on the import sales tax, as revenues in this category shifted from February to March last year, the Federal Ministry of Finance noted. These base effects will reverse in March, and apart from this one-off effect, tax income was reported to be relatively weak.
    • Specifically, import VAT rose +87.1% Y/Y to E5.4bln in Feb on these base effects. The base effects will likely be yielding negative Y/Y growth in March.
    • Income tax rose +3.5% Y/Y to E18.3bln in February, and YTD representing 15.2% of planned 2024 revenue vs 16.4% historically.
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German tax revenue excl. municipality taxes rose +5.9% in February to E64.1bln vs +5.8% official estimate for total 2024 revenue growth. However, these numbers have been boosted by base effects; YTD revenue stands at 14.3% of 2024 planned overall revenue, slightly behind a 14.6% average since 2017 for February YTD as a % of realized yearly overall revenue (with VAT revenues, which lag 2 months behind the respective sales, confirming the weak christmas business last December).

  • The 0.3pp lag would imply that tax revenue is behind approximately E2.5bln YTD against historical norms (E125.4bln actual revenue YTD vs E128.0bln extrapolating the historical Feb YTD average to 2024 targets, divergence due to rounding).
  • Joint taxes: Overall, joint taxes, which are split between the federal entity and the states according to set quotas (approximately 50/50), and make up the vast majority of total tax revenue (83.5% 2024 plan), increased +5.1% Y/Y to E50.1bln in February; YTD standing at 14.2% of planned 2024 revenue vs 14.6% on average since 2017 of realized yearly revenue.
    • Significantly, VAT decreased 2.7% Y/Y to E23.0bln in February. Also as a whole, the VAT (incl. import VAT) category is behind on YTD revenue on a historical comparison, at 17.3% of projected 2024 revenue, vs 18.0% on average historically since 2017. These lower VAT revenues (which are on a 2-month lag according to the ministry of finance compared to the respective sales) in particular point to weaker consumer spending around the christmas period, mirroring retail sales data from then.
    • Stronger revenues across the joint taxes as a whole in February on a yearly comparison were driven by base effects on the import sales tax, as revenues in this category shifted from February to March last year, the Federal Ministry of Finance noted. These base effects will reverse in March, and apart from this one-off effect, tax income was reported to be relatively weak.
    • Specifically, import VAT rose +87.1% Y/Y to E5.4bln in Feb on these base effects. The base effects will likely be yielding negative Y/Y growth in March.
    • Income tax rose +3.5% Y/Y to E18.3bln in February, and YTD representing 15.2% of planned 2024 revenue vs 16.4% historically.