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20 August 2018

Tax rev­enue in Ju­ly 2018

Information on tax revenue from the Finance Ministry’s August 2018 monthly report

Trends in general government tax revenue

2018 trends in tax revenue (excluding local authority taxes)

2018

July

Year-on-year
change 

January

to July

Year-on-year

change  

2018 estimates4

Year-on-year
change

in €m

in %

in €m

in %

in €m

in %

Joint taxes            
Wages tax2

18,240

+7.9

117,694

+6.5

206,450

+5.6

Assessed income tax

-644

X

31,885

+0.8

61,650

+3.7

Non-assessed taxes on earnings

4,495

+6.6

17,338

+29.0

21,900

+4.7

Final withholding tax on interest and capital gains

(including the former withholding tax on interest income)

456

 -5.8

4,945

+6.4

7,895

+7.7

Corporation tax

-506

X

18,214

+9.9

32,330

+10.5

Value added taxes (VAT)

19,320

+2.1

134,369

+2.8

235,000

+3.8

Trade tax apportionment

1,034

+10.4

2,429

+4.8

4,758

+1.6

Increased trade tax apportionment

986

+5.2

2,098

+2.1

3,899

+0.1

Total joint taxes

43,382

+2.3

328,972

+5.5

573,882

+4.8

Taxes accruing to the Federation
Energy duty

3,504

 -3.0

18,526

+0.1

41,300

+0.7

Tobacco duty

1,558

+29.1

7,467

 -0.1

14,160

-1.7

Alcohol duty (formerly spirits duty)

176

+1.2

1,233

+0.4

2,100

+0.3

Insurance tax

776

+16.6

9,606

+4.5

13,670

+3.0

Electricity duty

532

+0.1

4,062

+0.0

6,930

-0.2

Motor vehicle tax

709

 -1.2

5,672

+0.8

9,010

+0.7

Aviation tax

102

 -0.3

584

+2.4

1,175

+4.9

Nuclear fuel duty

0

X

0

X

0

X

Solidarity surcharge

1,171

+3.3

10,885

+6.0

18,750

+4.4

Other taxes accruing to the Federation

107

 -1.4

824

 -0.2

1,467

+1.5

Total taxes accruing to the Federation

8,634

+4.6

58,860

+14.3

108,562

+8.6

Taxes accruing to the Länder
Inheritance tax

487

+10.5

4,085

+12.8

6,020

-1.5

Real property transfer tax

1,197

+10.0

8,043

+6.1

13,900

+5.8

Betting and lottery tax

169

+24.8

1,118

+1.6

1,851

+0.8

Beer duty

65

 -4.4

382

 -0.9

665

+0.1

Other taxes accruing to the Länder

24

 -2.8

320

+1.6

465

+3.1

Total taxes accruing to the Länder

1,942

+10.5

13,948

+7.3

22,901

+3.1

EU own resources
Customs duties

401

 -5.5

2,791

 -4.7

5,200

+2.7

VAT-based own resources

181

 -8.1

1,380

+0.2

2,510

+6.3

GNI-based own resources

1,694

+0.0

11,041

+55.1

22,610

+58.6

Total EU own resources

2,276

 -1.7

15,212

+33.1

30,320

+39.8

Federation3

23,475

+2.9

182,305

+6.6

321,336

+3.9

Länder 3

25,290

+2.6

179,689

+4.8

310,276

+4.0

EU

2,276

 -1.7

15,212

+33.1

30,320

+39.8

Local authorities’ share of income and value added tax

3,317

+7.9

27,366

+7.8

48,613

+7.7

Total tax revenue (excluding local authority taxes)

54,358

+2.9

404,571

+6.7

710,545

+5.3

Tax revenue in July 2018

Total tax revenue (excluding local authority taxes) was up by 2.9% in July 2018 over the same month last year. Revenue from joint taxes climbed by 2.3%. In particular, revenue from wages tax and from non-assessed taxes on earnings posted sharp year-on-year increases once more. Receipts from final withholding tax on interest and capital gains declined on the year. Revenue from taxes accruing solely to the Federation was up by 4.6% in year-on-year terms, while revenue from taxes accruing to the Länder was up by 10.5% on the year.

EU own resources

Transfers of own resources to the EU, including customs duties, fell by 1.7% on the year in July 2018, to roughly €2.3bn. 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.

Overview of the January–July 2018 period

Total tax receipts increased by 6.7% on the year in the first seven months of 2018. Broken down by category, revenue from joint taxes was up by 5.5%, receipts from federal taxes increased by 14.3%, and the yield from Länder taxes rose by 7.3%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder ) were up by 2.9% on the year in July 2018. Länder tax receipts recorded a year-on-year gain of 2.6%. Both the Federation and the Länder benefited from the good results from their respective taxes. In July 2018, the Federation also paid €800m in consolidation assistance to the Länder of Berlin, Bremen, Saarland, Saxony-Anhalt and Schleswig-Holstein. The local authorities’ take from joint taxes was up by 7.9% on the year.

Joint taxes

Wages tax

Wages tax receipts again recorded strong growth in July 2018, with gross revenue from this tax increasing by 6.5% on the year. This reflected continuing employment growth and rising incomes in Germany. Child benefit payments – which are financed from receipts from wages tax – rose by 0.4% on the year in July 2018. One Land is experiencing problems with preparing the underlying data for child benefit payments, which continues to skew this figure. After adjusting for this, there was an increase of approximately 3% in child benefit payments, which puts the rise in gross wages tax receipts at roughly 7%. However, this effect had no impact on cash receipts. On balance, cash receipts from wages tax increased by 7.9% in year-on-year terms in July 2018. In cumulative terms, cash receipts from wages tax were up by 6.5% on the year in the January–July 2018 period.

Corporation tax

Around €0.5bn in corporation tax refunds was paid out in July, generally a low-revenue month for this tax. Receipts from corporation tax amounted to approximately €0.2bn in the same month of 2017. Investment allowance payments had only a marginal impact on the outcome. Taken cumulatively, cash receipts from corporation tax were up by 9.9% on the year in the January–July period.

Assessed income tax

Revenue from assessed income tax in July was also mainly generated from assessment activities, with gross receipts falling by around €1.0bn on the year. Employee refunds also posted a rise (of 11.8%). After subtracting these (along with investment allowance payments and owner-occupied homes premiums, which are negligible in terms of amount), net refunds of assessed income tax amounted to approximately €0.6bn in July 2018. In cumulative terms, cash receipts from assessed income tax were up by 0.8% on the year in the first seven months of 2018.

Non-assessed taxes on earnings

July 2018 saw a 5.5% year-on-year increase in gross receipts from non-assessed taxes on earnings. Combined with the decline in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings rose by 6.6% in July. Hence the trend in revenue from this tax remained dynamic in July despite strong growth in previous months and a high 2017 baseline. Cumulative cash receipts from non-assessed taxes on earnings were up by 29.0% on the year in the January–July period.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains fell by 5.8% on the year in July 2018. This is likely to be primarily due to a year-on-year decline in tax revenue from capital gains. Taken cumulatively, cash receipts from final withholding tax on interest and capital gains were up by 6.4% on the year in January–July 2018.

Value added taxes (VAT)

Revenue from value added taxes posted moderate year-on-year growth of 2.1% in July 2018, despite a relatively high July 2017 baseline figure. Revenue from domestic VAT fell slightly, by 1.2% in year-on-year terms, while import VAT receipts rose by 12.7% on the year. Cumulative cash receipts from value added taxes were up by 2.8% on the year in January–July 2018.

Taxes accruing to the Federation

Receipts from taxes accruing solely to the Federation were up by 4.6% on the year in July 2018. However, this figure was slightly inflated due to two special factors. Firstly, revenue from tobacco duty was up by 29.1% in July, partly due to the fact that some of the June receipts were only recorded in July. Secondly, the strong growth in revenue from insurance tax (+16.6%) was the result of tax revenue from previous years being recorded. Solidarity surcharge also posted revenue growth (+3.3%). Electricity duty and motor vehicle tax were down on the year in July (by 3.0% and 1.2%, 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 was up by 10.5% on the year in July 2018. This was driven by a significant increase in revenue from real property transfer tax (+10.0%) and by a rise in inheritance tax receipts (+10.5%). The latter had a relatively weak July 2017 baseline, however. Receipts from betting and lottery tax also posted a significantly better result in July 2018, rising by 24.8% on the year. Yields from beer duty and fire protection tax were down in year-on-year terms, by 4.4% and 2.8% respectively.