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20 April 2018

Tax rev­enue in March 2018

Information on tax revenue from the Finance Ministry’s monthly report for April 2018.

Trends in general government tax revenue

Current-year trends in tax revenue (excluding local authority taxes)

2018

March

Year‑on‑year
change

January to

March

Year‑on‑year
change

2018 estimates4

Year‑on‑year
change

in €m

in %

in €m

in %

in €m

in %

Joint taxes

           

Wages tax2

15,022

+6.3

48,059

+6.1

205,200

+4.9

Assessed income tax

15,369

+2.5

17,640

+3.7

60,950

+2.6

Non-assessed taxes on earnings

1,353

 -19.3

3,512

 -3.7

19,880

 -5.0

Final withholding tax on interest and capital gains

427

 -16.9

3,083

+22.5

7,500

+2.3

Corporation tax

8,160

+4.2

9,418

+10.7

30,650

+4.8

Value added taxes (VAT)

16,034

+0.7

59,248

+3.0

234,450

+3.6

Trade tax apportionment

13

+57.5

178

 -31.2

4,718

+0.7

Increased trade tax apportionment

8

+107.6

113

 -37.1

3,868

 -0.7

Total joint taxes

56,383

+2.4

141,252

+4.7

567,216

+3.6

Federal taxes

Energy duty

3,150

+2.5

4,865

+1.1

41,000

 -0.1

Tobacco duty

1,102

 -10.7

2,425

 -8.0

14,360

 -0.3

Spirits duty incl. alcopops duty

142

+13.6

591

+2.3

2,080

 -0.6

Insurance tax

735

+1.6

6,388

+3.4

13,520

+1.9

Electricity duty

594

 -17.8

1,725

 -1.2

6,930

 -0.2

Motor vehicle tax

958

+4.1

2,602

+2.6

9,010

+0.7

Aviation tax

83

+7.3

193

+1.7

1,175

+4.9

Nuclear fuel duty

0

X

0

X

0

X

Solidarity surcharge

2,227

+3.0

4,587

+6.1

18,450

+2.8

Other federal taxes

100

 -0.1

376

+3.4

1,463

+1.2

Total federal taxes

9,091

 -0.5

23,752

+1.7

107,988

+8.1

Länder taxes

Inheritance tax

492

 -23.9

1,431

 -12.8

5,767

 -5.7

Real property transfer tax

1,222

+5.3

3,576

+6.4

13,820

+5.2

Betting and lottery tax

155

+3.6

479

 -2.3

1,881

+2.4

Beer duty

44

 -9.7

142

 -1.3

659

 -0.8

Other Länder taxes

155

+3.3

207

+4.0

465

+3.1

Total Länder taxes

2,069

 -4.1

5,836

+0.0

22,592

+1.7

EU own resources

Customs duty

452

+15.0

1,271

+3.9

5,250

+3.7

VAT-based own resources

201

+27.6

723

+22.5

2,510

+6.3

GNI-based own resources

1,868

+37.8

5,197

+1.269.7

24,440

+71.4

Total EU own resources

2,521

+32.3

7,191

+227.8

32,200

+48.5

Federation3

30,795

 -0.1

76,971

 -2.1

315,797

+2.1

Länder 3

29,552

+1.3

75,811

+3.4

306,787

+2.8

EU

2,521

+32.3

7,191

+227.8

32,200

+48.5

Local authorities’ share of income tax and value added tax

5,127

+5.5

12,136

+8.4

48,262

+6.9

Total tax revenue (excluding local authority taxes)

67,995

+1.9

172,110

+4.1

703,046

+4.2

Tax revenue in March 2018

Total tax revenue in March 2018 (excluding local authority taxes) was up by 1.9% over the same month last year. Revenue growth continued to be driven by the yield from joint taxes, which climbed by 2.4% on the year. Due to the high 2017 baseline, this relatively modest pace of growth was expected. Receipts from wages tax, assessed income tax and corporation tax posted marked gains. In contrast, the revenue results for withholding tax on interest and capital gains and for value added taxes were generally subdued or exhibited a downward trend. The yield from taxes accruing solely to the Federation posted a slight year-on-year decline of 0.5%. Revenue from taxes accruing solely to the Länder contracted as well, by 4.1%.

EU own resources

Transfers of own resources to the EU, including customs duties, increased to approximately €2.5bn in March 2018. This represented a year-on-year gain of 32.3% over a low 2017 baseline. Last year, Germany was granted a discount on its VAT-based own resources as a result of the implementation of the Own Resources Decision. This led to a significant reduction in transfers in 2017. In addition, the annual amount of GNI-based own resources that Germany had to pay to the EU was set lower in the 2017 EU budget. Overall, this meant that Germany’s transfers of own resources to the EU were considerably lower in 2017. Transfers to the EU are based on the planned financial framework for 2018, with fluctuations over the course of the year depending on the EU’s financing needs at any given time.

Cumulative overview of the January–March 2018 period

Total tax receipts posted a year-on-year gain of 4.1% in the first quarter of 2018. Broken down by category, revenue from joint taxes was up by 4.7%, receipts from federal taxes were up by 1.7%, and the yield from Länder taxes was basically unchanged.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) were down slightly on the year in March 2018, by 0.1%. Overall tax receipts for the Länder saw a small year-on-year gain of 1.3% in March despite the decline in revenue from Länder taxes, thanks to a slight increase in the share of joint taxes allocated to the Länder. The marked increase in transfers of EU own resources from the federal budget further weakened the statistical results for federal revenue trends. Local authorities’ share of revenue from joint taxes was up by 5.5% on the year.

Joint taxes

Wages tax

Revenue from wages tax again recorded strong growth in March 2018, with gross receipts registering a 4.8% gain on the year. This outcome reflects the positive trends in both employment and wages. Child benefit payments – which are financed from wages tax receipts – declined slightly on the year by 1.7%, but this figure was significantly distorted by a change in the underlying statistical data. Absent this effect, child benefit payments would have posted a 1.7% gain, and the increase in gross wages tax receipts would have amounted to only 4.1%. Nevertheless, this effect did not have an impact on cash receipts, which were up by 6.3% on the year in March. Taken cumulatively, cash receipts from wages tax were up by 6.1% on the year in the first quarter of 2018.

Corporation tax

Corporation tax receipts recorded a strong year-on-year gain of 4.3% in March, a month when corporation tax prepayments are due and revenue is traditionally high. Prepayments were up sharply, while refunds saw only a minor increase and back-payments declined slightly. Investment grants, which are subtracted from gross corporation tax receipts, showed a slightly higher volume of repayments over disbursements in March. In the end, cash receipts from corporation tax rose by 4.2% on the year in March. For the first quarter as a whole, cash receipts from wages tax were up by 10.7% on the year.

Assessed income tax

Gross revenue from assessed income tax was up by 0.2% on the year in March, a month when prepayments of this tax are due. The size of this increase is relatively small compared with previous years. Prepayments were up by only 1% over the very high baseline figure from last year. After subtracting employee refunds (as well as investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount), net cash receipts from income tax were up by 2.5% on the year in March 2018. This modest pace of growth was expected due to the high baseline figure from March 2017, when revenue from assessed income tax surged by 14.2%. In cumulative terms, cash receipts from assessed income tax were up by 3.7% on the year in the first quarter of 2018.

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings fell by 11.4% on the year in March. Combined with the increase in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings were down by 19.3% in March 2018. Revenue from these taxes shows a high level of volatility over the course of the year, depending on how companies schedule their dividend payments. For the first quarter as a whole, cash receipts from non-assessed taxes on earnings posted a year-on-year decline of 3.7%.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains was down by 16.9% on the year in March 2018. This is probably due to a year-on-year decline in tax revenue from capital gains. In cumulative terms, cash receipts from final withholding tax on interest and capital gains were up by 22.5% on the year in the first quarter of 2018.

Value added taxes

The yield from from value added taxes was up slightly on the year in March, by 0.7%. Receipts from domestic VAT climbed by 0.3% on the year, while import VAT revenue grew by 1.6%. On a cumulative basis, cash receipts from value added taxes recorded a year-on-year gain of 3.0% in the first quarter of 2018.

Taxes accruing to the Federation

Revenue from taxes accruing solely to the Federation declined slightly by 0.5% on the year in March. Taxes posting revenue growth included insurance tax (up 1.6%), solidarity surcharge (up 3.0%), energy duty (up 2.5%) and motor vehicle tax (up 4.1%). In contrast, tobacco duty, electricity duty and coffee duty were down on the year (by 10.7%, 17.8% and 2.6%, respectively). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder fell by 4.1% in year-on-year terms in March 2018. Taxes showing revenue growth included real property transfer tax (up 5.3%), betting and lottery tax (up 3.6%) and fire protection tax (up 3.3%). In contrast, inheritance tax receipts posted a sharp year-on-year drop of 23.9%. The yield from beer duty was also down on the year, by 9.7%.