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YTD April Tax Revenue Slightly Trails Downwardly Revised Forecast

GERMAN DATA
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German tax revenue excl. municipality taxes increased 7.8% Y/Y to E58.1bln in April and stands at +2.9% Y/Y YTD (vs +1.6% in Mar).

  • Revenues seem to be tracking slightly below on a YTD basis on historical standards even after accounting for the recently downwardly revisions ('Further Downside Risks to Downwardly Revised Tax Estimates' - MNI, May 17), with April YTD revenues at 30.2% of 2024 overall planned revenue, against a 31.1% historical average.
  • This follows March's YTD revenues tracking at 23.5% vs 24.3% hist avg 2017-2023, so April revenues on their own seem largely in line with the revised plan.
  • While the large round of centrally negotiated wage increases in March drove up income taxes (+5.5% Y/Y), more workers were also subject to "Kurzarbeit" in April (a state benefit targeted at preventing terminations allowing temporarily lower wages), so income tax revenues as a percentage of total for the year track largely similar YTD compared to historical averages vs March.
  • Higher continuing revenues on capital gains are likely due to higher interest income of retail investors, the Ministry of Finance notes (YTD +197.2%, 40.0% of 2024 plan vs 42.7% hist as the revenue targets were significantly upwardly revised here). There is some likely shift towards retail investors holding cash in money market funds rather than checking/savings accounts.
  • Taxes on revenue (VAT/import VAT) rose 14.0% Y/Y, the stark incline was mostly driven by a statistical base effect, however. A trend reversal towards higher retail sales is not inferrable from the data, MoF adds.
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German tax revenue excl. municipality taxes increased 7.8% Y/Y to E58.1bln in April and stands at +2.9% Y/Y YTD (vs +1.6% in Mar).

  • Revenues seem to be tracking slightly below on a YTD basis on historical standards even after accounting for the recently downwardly revisions ('Further Downside Risks to Downwardly Revised Tax Estimates' - MNI, May 17), with April YTD revenues at 30.2% of 2024 overall planned revenue, against a 31.1% historical average.
  • This follows March's YTD revenues tracking at 23.5% vs 24.3% hist avg 2017-2023, so April revenues on their own seem largely in line with the revised plan.
  • While the large round of centrally negotiated wage increases in March drove up income taxes (+5.5% Y/Y), more workers were also subject to "Kurzarbeit" in April (a state benefit targeted at preventing terminations allowing temporarily lower wages), so income tax revenues as a percentage of total for the year track largely similar YTD compared to historical averages vs March.
  • Higher continuing revenues on capital gains are likely due to higher interest income of retail investors, the Ministry of Finance notes (YTD +197.2%, 40.0% of 2024 plan vs 42.7% hist as the revenue targets were significantly upwardly revised here). There is some likely shift towards retail investors holding cash in money market funds rather than checking/savings accounts.
  • Taxes on revenue (VAT/import VAT) rose 14.0% Y/Y, the stark incline was mostly driven by a statistical base effect, however. A trend reversal towards higher retail sales is not inferrable from the data, MoF adds.