Navigation and service

23 April 2019

Overview of fed­er­al bud­getary and fi­nan­cial da­ta up to and in­clud­ing March 2019

Translated extracts from the Federal Ministry of Finance’s April 2019 monthly report.

Federal budget trends up to and including March 2019

Table: Trends in the federal budget

 

Actual 2018 2019 target Actual1 March 2019

Expenditure (€bn)2

336.7

356.4

88,4

Year-on-year change in % (year to date)

 

 

+3.0

Revenue (€bn)3

347.6

350.6

78.4

Year-on-year change in % (year to date)

 

 

-3.8

Tax revenue (€bn)

322.4

325.5

71.5

Year-on-year change in % (year to date)

 

 

-4.9

Fiscal balance (€bn)

10.9

-5.8

-10.0

Financing/use of surplus

-10.9

5.8

10.0

Cash resources (€bn)

-

-

64,9

Seigniorage (€bn)

0.3

0.3

-0.1

Movements in reserves4 (€bn)

-11.2

5.5

0.0

Net borrowing5 (€bn)

0.0

0.0

-54.8

Revenue

Federal revenue in the first quarter of 2019 totalled €78.4bn, down by 3.8% (approximately €3.1bn) on the year. Tax revenue (including transfers of EU own resources to the EU) declined by 4.9% (€3.7bn), mainly due to the fact that the Federation transferred around €4.1bn more in GNI-based resources to the EU than it did in the first three months of 2018.

On a cumulative basis, other revenue was 10.2% (approximately €0.6bn) lower in the first quarter than in the same period last year. This was mainly due to an increase in allocations from the Bundesbank’s profits (allocations so far this year have totalled €2.4bn, an increase of €0.5bn on the year).

Expenditure

Federal expenditure in the first quarter of 2019 totalled €88.4bn, up by 3.0% (about €2.6bn) on the year. Federal spending is separated into consumption and investment spending.

The increase in spending in the first quarter was mainly due to higher consumption spending, which increased by 3.3% (€2.7bn) on the year. In absolute year-on-year terms, subsidies to social security funds, which were up by about €1.2bn compared with the first quarter of 2018, made up the largest share of the increase in consumption spending. Military procurement spending, which rose by 28.4%, showed the highest year-on-year increase in percentage terms, followed by spending on ongoing grants for public administrations, which were up by 11.7%.

The higher ongoing grants for public administrations compared with last year mainly involve federal grants to reimburse the Länder for social spending on basic income support for older people and for people with reduced earning capacity. Last year, roughly half of the corresponding funds for the fourth quarter of 2017 were charged to the 2017 budget, while the other half were charged to the 2018 budget. Starting this year, however, Länder are no longer able to draw down the funds for the final quarter of a year across budget years – from now on, the entirety of these funds must be taken from the following year’s budget. This gives the Federation planning certainty regarding its four transfers to the Länder that are scheduled each year. The drawdown of the above-mentioned federal grants for the complete fourth quarter of 2018 took place in January and February 2019. The drawdowns for the first quarter of the current year will begin in March.

The fall in interest expenditure, which was down by 22.0% on the year, moderated the increase in consumption spending.

Investment spending totalled roughly €5.9bn, which was very similar to the amount in the same period last year.

Fiscal balance

The federal budget recorded a deficit of €10bn for the January–March 2019 period.

Revenue and expenditure are subject to strong fluctuations over the course of the fiscal year and thus have an uneven effect on cash funds in individual months. Net borrowing also tends to fluctuate considerably over the course of the year. This means that the fiscal balance at this point in the year and the corresponding net borrowing figures are not reliable indicators of the end-of-year figures for the fiscal balance and net borrowing. This is especially true towards the start of the year.

Trends in federal expenditure by function

Trends in federal expenditure by function

Trends in federal expenditure by economic category

Trends in federal expenditure by economic category

Trends in federal revenue

Trends in federal revenue

Tax revenue in March 2019

2019 trends in tax revenue (excluding local authority taxes)1

Total tax revenue (excluding local authority taxes) was up by 4.3% in March 2019 over the same month last year, partly as a result of special factors. Revenue from joint taxes increased by 3.1%, with receipts from wages tax in particular continuing to rise strongly. Both corporation tax and assessed income tax posted year-on-year growth in March, which is an important month for prepayments. In contrast, receipts from final withholding tax on interest and capital gains continued on a sharp downwards trend. Revenue from taxes accruing solely to the Federation posted a year-on-year increase of 10.7% in March as a result of a shift in insurance tax and tobacco duty revenue from February to March for technical reasons. Taxes accruing to the Länder once again posted a substantial revenue increase of 10.2%.

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €2.6bn in March 2019, an increase of 2.1% compared with last year. Transfers to the EU are based on the planned financial framework for 2019. The overall volume of the 2019 budget is higher than that of the 2018 budget. In addition, fluctuations occur over the course of the year based on the EU’s financing needs at any given time.

Overview of the January–March 2019 period

In the January–March 2019 period, tax receipts increased by 1.8% overall on the year. This upward trend was apparent in receipts from joint taxes (1.6%), taxes accruing to the Federation (0.9%), and taxes accruing to the Länder (11.9%).

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 4.9% on the year in March 2019. This was mainly the result of two effects. First, revenue from taxes accruing solely to the Federation was artificially high as a result of a shift in insurance tax and tobacco duty revenue to March 2019 for technical reasons. Second, receipts from joint taxes were up on the year in March, the first prepayments month in 2019. The Federation’s share of revenue from joint taxes increased by 2.4%. This was despite the fact that the Federation’s share of value added taxes was reduced as a result of legislation adopted in late 2018 which a) extended federal support for the Länder and local authorities to help them pay for refugee-related costs, and b) adjusted revenue distribution arrangements between the Federation and Länder following the financial closure of the German Unity Fund. The Länder saw a 3.7% rise in tax revenue. Their tax receipts were boosted by the above-mentioned change in VAT revenue distribution and by dynamic growth in revenue from taxes accruing to the Länder . The local authorities’ take from joint taxes was up by 4.4% on the year.

Joint taxes

Wages tax

Growth in wages tax revenue continued to be very strong in March 2019, with gross revenue increasing by 5.0% on the year. This reflected continuing employment growth and rising incomes in Germany. Child benefit payments – which are financed from wages tax receipts – increased by 2.4% on the year in March 2019. However, it should benoted that the 2018 baseline was understated as a result of statistical problems. On balance, cash receipts from wages tax increased by 5.6% on the year in March 2019 Taken cumulatively, cash receipts from wages tax were up strongly by 6.0% on the year in the first quarter of 2019.

Corporation tax

In March, the first prepayments month in 2019, gross revenue from corporation tax increased significantly (+9.0%) over March 2018, although it should be noted that the 2018 baseline was relatively low. Investment allowance payments are deducte from the gross receipts, although their impact is only marginal at this point. As a result, cash receipts from corporation tax were up by 9.1% on the year in March 2019. On a cumulative basis, cash receipts from corporation tax fell by 2.4% on the year in the first quarter of 2019.

Assessed income tax

Gross receipts from assessed income tax rose by 4.0% in year-on-year terms in March, the first prepayment month of 2019. However, employee refunds also increased by 10.8% over the same period last year; once these refunds are subtracted from the gross figure, net cash receipts from assessed income tax posted an increase of 3.4%. In cumulative terms, cash receipts from assessed income tax were down by 1.1% on the year in the first quarter of 2019.

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings fell by 24.6% in year-on-year terms in March 2019, following an increase of 20.1% in the previous month. Taking into account a 31.2% 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 fell by 23.6%. Overall, the trend in revenue from non-assessed taxes on earnings tends to be very volatile over the course of the year, reflecting dividend distribution dates. The cumulative result provides a more solid basis for analysis: Cash receipts from non-assessed taxes on earnings were up by 13.4% on the year in the first quarter of 2019.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains once again posted a sharp decline, falling by 43.6% on the year in March. In cumulative terms, cash receipts from final withholding tax on interest and capital gains dropped by 53.2% in year-on-year terms in the first quarter of 2019. The proportion of revenue from this tax that relates to capital gains as a share of the total income from this tax type is not recorded for statistical purposes. However, it is probably significantly lower than it was in 2018.

Value added taxes (VAT)

Receipts from value added taxes posted a relatively moderate gain of 1.1% in March 2019 compared with March 2018. Receipts from domestic VAT rose by only 0.1%, while import VAT revenue increased by 3.8%. The take from VAT tends to be very volatile over the course of any given year. Cumulative cash receipts from value added taxes were up by 1.9% on the year in the first quarter of 2019, an increase which must be regarded as moderate, given current trends in disposable income.

Taxes accruing to the Federation

The Federation's total tax receipts were up sharply by 10.7% on the year in March 2019. This was largely due to the shift in insurance tax and tobacco duty revenue from February to March for technical reasons. The shift distorts the trend when a comparison is made with March 2018. Tobacco duty revenue was up by 27.4% on the year, while insurance tax receipts rose by 87.9%. Other taxes posting revenue growth included solidarity surcharge (up by 4.1%) and energy duty (up by 1.0%). In contrast, receipts from motor vehicle tax and electricity fell by 5.1% and 9.2% respectively. Trends in revenue from other taxes had only a minor impact on the overall results for taxes accruing to the Federation.

Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder rose by 10.2% in March 2019 compared with the same month last year. This was driven mainly by higher receipts from real property transfer tax (up by 5.8%) and inheritance tax (up by 28.9%). Revenue gains were also recorded for fire protection tax (up by 0.5%) and betting and lottery tax (up by 0.8%). Receipts from beer duty were down by 7.2% on the year; this was due to ongoing refunds as a result of the European Court of Justice’s judgment of 17 May 2018 (C-30/17) on flavoured beer and mixed beverages containing beer.

Borrowing and guarantees

Debt trends for the Federation and its special funds (in €m)

 

Authorised

amount

Amount allocated

as of 31 March 2019

Amount allocated

as of 31 March 2018

in €bn

Export credit guarantees

148.0

118.8

119.5

Loans to foreign debtors, foreign direct investment, EIB loans

58.0

44.2

42.9

Financial cooperation projects

28.5

23.6

20.3

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

125.0

105.5

102.3

International financial institutions

80.0

60.1

60.1

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

Calendar

Publication schedule
Monthly report Reporting period Publication date

May 2019 issue

April 2019

20 May 2019

June 2019 issue

May 2019

20 June 2019

July 2019 issue

June 2019

22 July 2019

August 2019 issue

July 2019

22 August 2019

September 2019 issue

August 2019

20 September 2019

October 2019 issue

September 2019

21 October 2019

November 2019 issue

October 2019

21 November 2019

December 2019 issue

November 2019

20 December 2019

Key dates on the fiscal and economic policy agenda

16–17 May 2019

Eurogroup and ECOFIN Council meetings in Brussels

8–9 June 2019

Meeting of G20 finance ministers and central bank governors in Fukuoka, Japan

13–14 June 2019

Eurogroup and ECOFIN Council meetings in Luxembourg

28-29 June 2019

G20 summit in Osaka, Japan

8–9 July 2019

Eurogroup and ECOFIN Council meetings in Brussels