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German tax revenues up 9 percent on a year ago

Germany's state coffers are still bursting, despite the ongoing euro crisis, with tax revenues increasing by 8.6 percent over the past year, figures released on Monday show.

German tax revenues up 9 percent on a year ago
Photo: DPA

Federal and state authorities received €43.1 billion in July, the Finance Ministry’s monthly tax revenue report said. This was 8.6 percent more than last July, and the upward trend is expected to continue throughout the year.

The German taxman received €311.4 billion between January and July – five percent more than the same period last year, slightly more than the four percent increase forecast last year.

The tax bump is being put down to rising employment and increased income.

But tax income is not necessarily a reliable sign of economic health, since it often lags behind other indicators. Germany’s economic growth slowed down in the second quarter of the year, which is likely to affect state finances next year, the government said.

“The whole picture painted by economic indicators suggests that the German economy could slow down during the rest of the year,” a Finance Ministry statement said.

Exports, in particular would probably be affected by the recession in other eurozone countries, the statement added.

But there are more positive signs coming from consumption figures. “On the back of increasing employment and wages, which are reflected in the dynamic development of income tax revenue, it seems that the preconditions are there for a continuation of positive consumption development,” the statement said.

But despite increasing riches, the German government is apparently planning to remain frugal next year. TheBild newspaper said on Monday that the government’s 2013 budget was likely to spend €302.2 billion – €10.5 billion less than the current year.

The newspaper also said that Finance Minister Wolfgang Schäuble was set to borrow €18.8 billion in the new year – €13.3 billion less than in 2012.

Next year’s budget is not expected to be released until November.

The Local/DPA/bk

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CROSS-BORDER WORKERS

Germany and France extend Covid tax breaks for cross-border workers

Germany and France have agreed to extend the relaxation of tax rules for cross-border workers until the end of the year.

Cross-border workers commute by car but they can for now continue to work at home
Cross-border workers usually have to commute but can for now continue to work at home.. Photo: Fabrice Coffrini / AFP

The agreements between France and the governments of Belgium, Luxembourg, Germany, Switzerland and Italy avoids double taxation issues for anyone travelling across the French border to or from those countries in order to work.

During the pandemic, tax rules were eased to allow French cross-border employees, like their counterparts in Belgium, Luxembourg, Germany, Switzerland and Italy, to work from home without having to change their tax status.

The deals, which were established at the beginning of the health crisis in March 2020, were due to end on September 30th – and would have plunged cross-border workers still working from home because of the health crisis into renewed uncertainty over their taxes.

The latest extension of these agreements means there’s no confusion over where a cross-border worker pays their taxes until December 31st – for example cross-border workers who work in Geneva but live in France, who normally pay their taxes and social security contributions in Switzerland. 

Under normal circumstances, anyone living in France who works in Switzerland can spend no more than 25 percent of their time working from home. If they exceed this time limit, they would have to pay these tax charges tin France rather than in Switzerland, which would be much higher.

The agreements between France and Belgium, Luxembourg, Germany and Switzerland “provide that days worked at home because of the recommendations and health instructions related to the Covid-19 pandemic may … be considered as days worked in the state where [workers] usually carry out their activity and therefore remain taxable,” according to the statement from the French Employment Ministry.

In the case of Luxembourg, days worked from home because of the health crisis are not counted in usual the 29 day limit.

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