German tax revenue rises 2.6% in September, but finance ministry warns of weak economy

I was encouraged by this news of German tax revenue rises. But not so much by the caveat that ministry popped in regarding the weak economic outlook. I imagine markets will have a similar response.

Germany’s combined federal and state tax revenues rose by 2.6% in September to 88.4 billion euros, according to a finance ministry report. Despite this increase, the ministry warned that the weak economy will not provide any short-term boost to future tax income.

This caution is due to Germany’s poor economic performance. After contracting in 2024, Europe’s largest economy is only expected to grow by 0.2% this year, with recent data showing falling exports and industrial orders. The September revenue growth was primarily driven by wage taxes, as value-added tax collections remained stagnant.

From January to September, tax revenues have increased by 6.2% over the same period in 2024. Looking ahead, analysts project a full-year revenue increase of 3.7% for 2025.

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The market impact of Germany’s September tax revenue figures is likely to be muted or even negative, despite the headline 2.6% rise.

Financial markets will almost certainly look past this single data point and focus on the finance ministry’s explicit warning that no economic momentum is expected. The report’s confirmation of stagnant VAT revenues—a key indicator of weak domestic consumption—along with the backdrop of falling exports and a minimal 0.2% growth forecast, reinforces the narrative of a struggling German economy. Consequently, this news offers little support for the Euro (EUR) or German equities (like the DAX index), as the underlying economic weakness detailed in the report is a far more significant driver for investor sentiment than the slightly better-than-expected tax collection.

This article was written by Eamonn Sheridan at investinglive.com.