Good News (June 2021)

The current revenue forecast is marked by a moderate drop in corporate income tax revenues in 2020 and a faster than expected rate of economic recovery in 2020. The 25% drop of corporate profits seen in 2009 did not recur in 2020. The tax returns filed so far indicate lower losses by half in comparison with initial expectations, which translate into over EUR 200 million higher revenues from businesses in 2020. Accordingly, the estimated reduction in revenue from taxes and social security contributions for 2020 is rather low, only 1%. The accelerated economic revival in 2021 will drive a buoyant, 5% rise in tax revenue. Strong revenue growth will  continue in the following years, supported by funding from the Recovery Plan. The forecast risks are balanced in line with the persisting uncertainty, with a negative scenario anticipating a worsened pandemic situation in autumn and a positive scenario based on expectations of higher consumption in both the domestic and European economies.