EUROPEAN FISCAL
German tax revenue excl. municipality taxes increased 2.6% Y/Y to E61.2bln in May and remains 2.9% higher YTD (+2.9% April).
- Despite being higher than last year in simple cash terms, as a proportion of total expected revenue for the year, revenues still appear to be disappointing ('Further Downside Risks to Downwardly Revised Tax Estimates' - MNI, May 17). For example May YTD revenues are 36.7% of forecast 2024 total revenues, whereas a normal historical average sees 37.3% of total year revenues received in the period Jan-May. So this suggests revenues overall may be below forecast - a similar story to last month.
- This follows April's revenues tracking at 30.2% vs 31.1% hist avg 2017 - 2023, showing a slight catch-up, however, so the May revenue by itself appears to be largely in line.
- Income taxes saw slightly less growth in May after a strong April at +4.1% Y/Y (vs 5.5% Apr). Comparatively strong upticks would be expected here after strong nominal wage upticks in Q1, and these do not show in full in the revenue data yet, the Ministry of Finance adds.
- Capital gains revenues continue to print way above recent historical standards, at +186.3% YTD Y/Y in May, and 47.6% of 2024 plan vs 49.6% hist as the revenue targets were significantly upwardly revised here. Data confirms that this is driven by higher interest income, MoF noted, helped by significantly larger retail investor holdings of "deposits with an agreed term of up to 2 years" with the banking sector (as opposed to shorter-maturity holdings).
- Taxes on revenue (VAT/import VAT) meanwhile rose a mere 1.3% YTD Y/Y after a very weak -5.2% Y/Y May. The Ministry of Finance attributes the recent decline to some non-unusual volatility in the category, and says underlying developments seem largely in line with expectations on a sequential comparison vs April.
MNI, Ministry of Finance
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