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21 November 2019

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

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

Federal budget trends up to and including October 2019

Table: Trends in the federal budget

 

Actual 20182019 targetActual1 October 2019

Expenditure (€bn)2

336.7

356.4

284.0

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

+3.2

Revenue (€bn)3

347.6

350.6

280.1

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

 

 

+1.5

Tax revenue (€bn)

322.4

325.5

257.0

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

+0.8

Balance of pass-through funds(€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

10.9

-5.8

-3.8

Financing/use of surplus

-10.9

5.8

3.8

Cash resources (€bn)

-

-

68.8

Seigniorage (€bn)

0.3

0.3

0.2

Movements in reserves4 (€bn)

-11.2

5.5

0.0

Net borrowing5 (€bn)

0.0

0.0

-65.2

Revenue

Federal revenue for the period from January to October 2019 totalled approximately €280.1bn, representing a 1.5% rise (around €4.1bn) over the same period in 2018.

Tax revenue (including transfers of EU own resources to the EU) increased by 0.8% (approximately €2.1bn) compared with the same period last year. Other revenue was up by 9.4% (roughly €2.0bn) on the year in the January–October period. This increase is attributable mainly to higher revenue from the distance-based commercial vehicle toll (up by about €2.0bn) and an increase in allocations from the Bundesbank’s profits (up by about €0.5bn).

Expenditure

Federal expenditure in the first 10 months of 2019 totalled approximately €284bn, up by 3.2% (about €8.8bn) over the same period last year. Federal spending is separated into consumption and investment spending.

Consumption spending was up by 2.6% (about €6.4bn) on the year during the January–October period. This figure includes a 3.9% (€6.3bn) year-on-year increase in ongoing grants to “other areas”, which was driven primarily by higher subsidies to companies (up by 7.4% or €1.6bn) and by higher subsidies to social security funds (up by 3.7% or €3.9bn). In contrast, ongoing grants for pensions and benefits were down slightly on the year, by 1.1%, mainly as a result of a 2.7% fall in spending on basic income support for jobseekers. The rise in consumption spending was also tempered by a decline in interest expenditure, which was down by 24.2% on the year.

Investment spending totalled approximately €25.9bn in the January–October period, representing an increase of 10.1% over the same period last year. Fixed asset investment rose markedly in year-on-year terms, by 14.3% or €1.0bn. Construction spending in particular was up on the year (by €0.3bn). Spending on financial assistance was also significantly higher than in 2018 (+8.2%). This was driven by factors including higher expenditure for programmes to promote digital technology and on a new home ownership-related child benefit. It should be noted, however, that payments of this new child benefit only started on 1 January 2019.

Fiscal balance

The federal budget recorded a deficit of €3.8bn for the period from January to October 2019.

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.

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 October 2019

2019 trends in tax revenue (excluding local authority taxes)

Total tax revenue (excluding local authority taxes) was up by 2.3% on the year in October 2019. This increase was mainly driven by higher receipts from joint taxes. The relatively small increase in revenue from wages tax is due to a technical effect. Revenue from non-assessed taxes on earnings posted strong year-on-year growth, most likely due to fluctuations in dividend distribution dates. Year-on-year revenue gains were also recorded for final withholding tax on interest and capital gains and for value added taxes. Receipts from taxes that accrue solely to the Federation rose on the year in October. The shifting of some tobacco duty revenue from September to October means that the figures for the year-on-year trend for this tax are distorted. Receipts from taxes accruing to the Länder posted a clear increase of 5.0%.

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €2.6bn in October 2019, a year-on-year increase of 6.0%. Transfers to the EU are based on the planned financial framework for 2019. The overall volume of the 2019 EU budget is higher than that of the 2018 budget. In addition, monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time.

Cumulative overview of the January-October 2019 period

Total tax receipts were up by 3.0% on the year in the first 10 months of 2019. Revenue from joint taxes grew by 3.2%. Taxes accruing to the Federation posted an increase of 1.0%, while taxes accruing to the Länder were up by 7.1%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) rose by 1.7% on the year in October 2019. This increase was driven partly by a 1.3% increase in revenue from the Federation’s share of joint taxes, even though the actual percentage of joint tax revenue that is allocated to the Federation is lower in 2019 than it was in 2018. A 2.9% increase in revenue from taxes accruing solely to the Federation also contributed to the positive trend.

The tax revenue collected by the Länder in October posted a year-on-year increase of 2.2%. This gain was due mainly to the yield from the share of joint taxes allocated to the Länder, which was up by 2.2% on the year, partly due to the higher percentage of VAT revenue that is going to the Länder in 2019. Revenue from taxes that accrue only to the Länder was also up on the year in October, by 5.0%. The share of joint taxes allocated to local authorities was up by 4.2% on the year in October.

Joint taxes

Wages tax

Wages tax receipts increased at a noticeably slower rate than in previous months, with gross revenue rising by 2.2% on the year in October 2019. The October result is understated due to a shifting of some wages tax revenue to the following month as a result of a technical adjustment in one Land. Child benefit payments, which are financed from wages tax receipts, rose by 6.9% on the year due to an increase in monthly child benefit of €10 per child from July onwards. On balance, cash receipts from wages tax rose by 1.2% on the year in October 2019. Cumulative cash receipts for the January–October 2019 period were up sharply, by 5.7% on the year.

Corporation tax

Around €144m in corporation tax refunds were paid out in October, which is generally a low-revenue month for this tax. In October 2018, refunds totalled €101m, meaning that this month’s result represents a slight decrease in year-on-year terms. Investment allowance payments now have only a marginal impact on results. Cumulative cash receipts were down by 4.1% on the year for the January–October 2019 period.

Assessed income tax

Like corporation tax, receipts from assessed income tax in October were determined mainly by assessment activity. Gross receipts from this tax climbed to around €1.2bn (a year-on-year rise of 24.0%). Employee refunds also increased slightly, by 2.8% on the year. After subtracting investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, the refund volume in October 2019 was approximately €32m, which was lower than last year. In cumulative terms, cash receipts from assessed income tax were up by 4.7% on the year in the first 10 months of 2019.

Non-assessed taxes on earnings

October 2019 saw a 9.6% year-on-year rise in gross receipts from non-assessed taxes on earnings. Taking into account a slight increase of 1.6% in refunds paid out by the Federal Central Tax Office, which are financed from this revenue, cash receipts from non-assessed taxes on earnings rose by 10.6%. 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: over the January–October 2019 period, cash receipts from non-assessed taxes on earnings were up by 0.7% on the year.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains recorded a year-on-year increase of 18.3% in October 2019. In cumulative terms, cash receipts from this tax were down by 30.0% on the year in the first 10 months of 2019. There are no statistics breaking down this figure into its two components, but it can be assumed that capital gains have so far made a significantly smaller contribution to overall revenue from this tax than they did in 2018.

Value added taxes (VAT)

Receipts from value added taxes were up by 2.6% on the year in October 2019. Domestic VAT revenue was up by 1.5% in year-on-year terms, while receipts from import VAT grew by 6.2%. Cumulative cash receipts from value added taxes were up by 3.5% on the year in the period from January to October 2019.

Taxes accruing to the Federation

Receipts from taxes accruing solely to the Federation were up by 2.9% on the year in October 2019. Receipts from tobacco duty rose by 14.2%. However, around €300 million in revenue from tobacco duty from September was not reflected in cash receipts until October, which means the current results for October are inflated. Receipts from solidarity surcharge also climbed by 3.9% on the year, benefiting from growth in revenues from income and corporation tax (which constitute its tax base). Receipts from motor vehicle tax and insurance tax also posted substantial gains, up by 5.3% and 5.9%, respectively. In contrast, revenue drops were recorded for energy duty (-2.2%) and aviation tax (-8.7%). 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

Receipts from taxes accruing solely to the Länder were up by 5.0% on the year in October 2019. This increase was mainly due to growth in revenue from real property transfer tax (up by 13.4%) and fire protection tax (up by 13.4%). Receipts from beer duty rose by 3.6%, while revenues from inheritance tax and betting and lottery tax both fell (by 10.1% and 2.2% respectively).

Borrowing and guarantees

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

Guarantees
 

Authorised

amount

Amount allocated

as of 30 September 2019

Amount allocated

as of 30 September 2018

in €bn

Export credit guarantees

148.0

119.4

120.3

Loans to foreign debtors, foreign direct investment, EIB loans

58.0

43.0

42.8

Financial cooperation projects

28.5

24.9

21.1

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

125.0

104.8

101.1

International financial institutions

80.0

60.1

60.0

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

Calendar

Publication schedule1 of the monthly reports 
Monthly reportReporting periodPublication date
December 2019 issueNovember 201920 December 2019
January 2020 issueDecember 201931 January 2020
February 2020 issueJanuary 202021 February 2020
March 2020 issueFebruary 202020 March 2020
April 2020 issueMarch 202021 April 2020
May 2020 issueApril 202022 May 2020
June 2020 issueMay 202019 June 2020
July 2020 issueJune 202021 July 2020
August 2020 issueJuly 202020 August 2020
September 2020 issueAugust 202022 September 2020
October 2020 issueSeptember 202022 October 2020
November 2020 issueOctober 202020 November 2020
December 2020 issueNovember 202022 December 2020
Key dates on the fiscal and economic policy agenda

4–5 December 2019

Eurogroup and ECOFIN Council meetings in Brussels

20–21 January 2020

Eurogroup and ECOFIN Council meetings in Brussels

17–18 February 2020

Eurogroup and ECOFIN Council meetings in Brussels

22–23 February 2020

Meeting of G20 finance ministers and central bank governors in Riyadh, Saudi Arabia.

16–17 March 2020

Eurogroup and ECOFIN Council meetings in Brussels