In January 2026, corporate tax revenues in Germany plummeted. Compared to January 2025, they fell by 79.1% to €181 million. According to the Federal Ministry of Finance, this was due to significantly lower additional tax payments, while refunds increased. The Ministry also cites the weak economy, particularly in the industrial sector, as a contributing factor. Furthermore, the trade tax levy collapsed by 73.1% to €47 million, while total tax revenues declined by 3.4% to €64.5 billion. (finanzmarktwelt: 24.02.26)
Corporate tax – it pays and why the decline is so severe
The tax primarily affects corporations such as limited liability companies (GmbHs) and public limited companies (AGs), but only when profits are generated. If these profits disappear, corporate tax revenues plummet. This is precisely why January is considered a direct indicator of the profitability of many companies. Nevertheless, the Ministry anticipates revenues of nearly €41 billion for 2026, representing an increase of 4%.
The Federal Ministry of Finance describes the slump in detail, with a clear reference to industry: “In January 2026, corporate income tax revenue was down by around 79 percent compared to the previous year. Here, the additional payments resulting from the assessment were significantly lower than in January 2025, while refunds increased slightly. In addition to the usual fluctuations in revenue during the assessment process, the weak economic development, particularly in industry, is likely to continue to play a role in the development of this type of tax.” This passage sets the framework. It links the assessment effect with the economic situation.
Trade tax levy collapses – municipalities also fall into the risk
The trade tax levy also plummeted, whereas it is usually considered a robust indicator. Municipalities pass on a portion of their trade tax to the federal and state governments, which is why a decline has a rapid impact. While the levy does not show how much trade tax the municipalities collected overall, the collapse suggests that trade tax revenue also declined sharply.
This creates a double shortfall in corporate tax revenue. Corporate income tax and trade tax are tied to profits, so they reinforce each other during a downturn. For the government, this means less room for maneuver, while at the same time expectations for other tax sources rise. January serves as a warning signal in this regard.
Income tax rises, sales tax remains stable – but the effect stems primarily from wages
Part of the revenue side appears stable, but for a different reason than a “boom.” Income tax rose by 9.1% to €23.16 billion. The ministry explains the mechanism, referring to the billing month: “The revenue in January results primarily from the taxation of wage payments for December. The relatively strong rate of change is therefore likely largely attributable to the noticeable increases in overall gross wages and salaries over the course of the past year.” Higher wage settlements are thus driving the revenue.
Sales tax also rose by 2% to €25.91 billion, despite a weaker industrial sector. This fits with a picture in which consumption and employment are providing short-term support. At the same time, profit-dependent taxes are disappearing, and that’s precisely what’s dangerous. Because profits often collapse before jobs do.
Context: Industrial Recession Since 2018, Now with Severe Consequences
When corporate taxes fall so sharply, it usually means declining profits or losses, because these taxes are levied on profits, not revenue. Income and sales tax are still holding up, but only as long as jobs and demand don’t keep pace.
This is precisely where the risk lies for the coming months. If industrial jobs are lost and not replaced, incomes and consumption will fall. Then income and sales tax will also come under pressure, which is why the current slump seems like a precursor. For corporate tax, the question remains whether industry will return to profitability over the course of the year.
Special Funds and Defense Prolongation Support GDP – Structural Problems Remain
The federal government is trying to stimulate the economy through loans, special funds, and defense spending, instead of undertaking fundamental structural reforms. In the short term, this can work because additional orders increase economic output. At the same time, it remains to be seen whether this will lead to sustainable productivity. After all, mere spending doesn’t replace a competitive industry.