Trends in general government tax revenue
Total joint taxes
Total federal taxes
Total Länder taxes
EU own resources
Total EU own resources
Local authorities’ share of income tax and value added tax
Total tax revenue (excluding local authority taxes)
|1 Methodology: Total cash income from the various taxes is recorded and allocated to the various government levels as stipulated by law. Actual tax amounts collected in the current month by individual government levels may differ from target amounts due to technical reasons.|
|2 After deduction of child benefit refunds by the Federal Central Tax Office.|
|3 After supplementary grants; any discrepancies with table on federal revenue are due to methodology used.|
|4 Working Party on Tax Revenue Estimates, May 2017|
|Source: Federal Ministry of Finance|
Tax revenue in June 2017
Total tax revenue (excluding local authority taxes) recorded a year-on-year decline of 6.5% in June 2017. Receipts from joint taxes were up by 2.3% on the year. This was driven mainly by receipts from wages tax, assessed income tax and corporation tax, the latter two mainly as a result of the continued rise in prepayments for the current year. However, the growth in revenue from joint taxes was slowed by a substantial 52.3% decline in receipts from non-assessed taxes on earnings. Although receipts from the most important federal taxes posted gains, the nuclear fuel duty repayments of €6.3bn had a severe impact on total federal tax revenues, which fell by 59.9%. Taxes accruing to the Länder also took a hit, with yields dropping by 21.4% as a result of a 51.2% decline in inheritance tax revenue.
EU own resources
Payments of own resources to the EU, including customs duties, rose by 53.3% in June 2017 compared with the same month last year. Nevertheless, a considerable cumulative drop of 34.6% was registered for the January–June period. Transfers had declined sharply in the first quarter of 2017 as a result of (a) balances resulting from EU adjustments and amending budgets and (b) the implementation of the EU’s new Own Resources Decision. Overall, it is anticipated that Germany’s transfers of own resources to the EU will be lower this year than in 2016. The amount of the monthly transfers is determined by the EU’s current financing needs.
Cumulative overview of the January–June 2017 period
In the first half of 2017, total tax receipts increased by 3.0% on the year. This was driven by the 5.8% growth in revenue from joint taxes. Federal taxes and Länder taxes both posted drops, falling by 10.6% and 3.3% respectively.
Distribution among the Federation, Länder and local authorities
The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) fell by 18.2% on the year in June 2017. The Federation’s share of revenue from joint taxes posted a small increase, but this did little to balance out the strong decline in receipts from federal taxes and the rise in transfers of own resources to the EU from the federal budget. In contrast, the tax receipts of the Länder rose by 0.3% compared with the same period last year. The shortfalls in revenue from Länder taxes were compensated by higher revenues from joint taxes, income from federal subsidies for public transport, and supplementary federal grants, resulting in a slight increase overall. The local authorities’ share of revenue from joint taxes was up by 10.8% on the year overall.
The upward trend in wages tax revenue seen in recent months continued in June 2017, buoyed by sustained positive employment trends and rising wages. Gross wages tax revenue was up sharply by 6.0% on the year in June 2017. Child benefit payments – which are financed from wages tax receipts and subtracted from the gross figure – increased by 0.9% on the year in June. On balance, cash receipts from wages tax were up by 7.1% in year-on-year terms in June 2017. In cumulative terms, cash receipts from wages tax recorded a sizeable year-on-year gain of 6.5% in the first half of 2017.
In June, the second corporation tax prepayment instalments for the current year were due. These were up by approximately 9% on the year. The balance between back payments and refunds deteriorated due to higher refunds resulting from completed audits. Overall, gross receipts from corporation tax rose by 7.6% in June 2017. After deduction of investment allowance payments, which continue to decline in terms of volume, cash receipts from corporation tax posted a year-on-year gain of 7.8% in June 2017. A high volume of corporation tax refunds is expected over the course of 2017 as a result of high court rulings (Federal Fiscal Court rulings on the STEKO case and section 40 of the Capital Investment Companies Act). Revenue from corporation tax recorded year-on-year gains of 3.9% in the first half of 2017.
Assessed income tax
As with corporation tax, revenue trends from assessed income tax were driven by prepayments, which rose by about 8%. The balance between back payments and refunds (excluding employee refunds) registered a slight improvement. Gross receipts from assessed income tax increased by 8.0% in June 2017. Refunds made to employees assessed for income tax dropped by 21.4%. Payments of investment allowance and owner-occupied homes premium now have only a slight impact on revenue from assessed income tax. On balance, cash receipts from assessed income tax were up by 12.7% on the year in June 2017. In cumulative terms, cash receipts from assessed income tax increased by 15.7% on the year in the first half of 2017.
Non-assessed taxes on earnings
June 2017 saw a 50.4% year-on-year decline in gross receipts from non-assessed taxes on earnings. Refunds paid out by the Federal Central Tax Office, which are subtracted from revenue totals, rose by 47.3%. This meant that, overall, cash receipts from non-assessed taxes on earnings posted a substantial fall in June, down by 52.3% on the year. Receipts from non-assessed taxes on earnings mainly come from the taxation of dividend distributions by corporations. Because the scheduling of dividend distributions changes from year to year, the monthly yield from non-assessed taxes is subject to strong year-on-year fluctuations. In the first half of 2017, cumulative cash receipts from non-assessed taxes on earnings were up by 14.5% compared with the first half of 2016.
Final withholding tax on interest and capital gains
Revenue from withholding tax on interest and capital gains posted a considerable year-on-year gain of 45.8% in June 2017, continuing the positive trend seen in the last few months. Given the ongoing low interest-rate environment, this cannot be attributed to taxes on interest. It is more likely to be linked to trends in capital gains. It is fair to assume that stock market trends have led many investors to realise profits by selling their shares, resulting in an increased yield from capital gains tax. However, no separate statistics are kept on the two revenue components, so no reliable information can be provided on this question. In cumulative terms, revenue from final withholding tax on interest and capital gains rose by 25.3% on the year in the first half of 2017.
Value added taxes
Growth in receipts from value added taxes had already been relatively weak in recent months (compared with the trends observed over the course of the year to date) and remained moderate in June, up by only 1.1% on the year. However, it should be noted that VAT revenue displays a high level of volatility over the course of the year. Revenue from domestic VAT dropped by 3.4% in year-on-year terms, while receipts from import VAT saw a substantial rise of 15.9%. Taken cumulatively, revenue from value added taxes rose by 4.3% on the year in the first half of 2017.
Taxes accruing to the Federation
Receipts from taxes accruing solely to the Federation were down by 59.9% on the year in June 2017. This sharp decline is linked to the Federal Constitutional Court’s decision of 13 April 2017 (2 Bvl 6/13). The court ruled that the Nuclear Fuel Duty Act is unconstitutional and therefore null and void. As a result, tax collected on the basis of this law had to be paid back. The refunds were carried out in June and amounted to a total of €6.3bn. These refunds had a corresponding negative impact on receipts from taxes accruing to the Federation. However, revenues from other major taxes accruing to the Federation posted good results. Taken by themselves, they recorded gains of more than €1bn. For example, receipts from energy duty were up by 2.9%, the solidarity surcharge posted a 10.9% increase, the yield from tobacco duty grew by 49.5%, and electricity duty revenue rose by 62.5%. In the two latter categories, however, it should be noted that last year’s results were weak. Cumulatively, receipts from federal taxes declined by 10.6% on the year in the first half of 2017.
Taxes accruing to the Länder
Receipts from taxes accruing solely to the Länder were down by 21.4% on the year in June 2017. This decline is linked to inheritance tax receipts, which had more than doubled in June last year due to an individual case. As a result, a sharp year-on-year decline of 51.2% was recorded in June 2017. Real property transfer tax, the Länder tax that generates the most revenue, was up by 7.1%. In cumulative terms, revenue from taxes accruing solely to the Länder declined by 3.3% in the first half of 2017 compared to the same period of last year.