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20 December 2019

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

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

Federal budget trends up to and including November 2019

Table: Trends in the federal budget

 

Actual 20182019 targetActual1 November 2019

Expenditure (€bn)2

336.7

356.4

313.4

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

+3.0

Revenue (€bn)3

347.6

350.6

306.2

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

 

 

+1.9

Tax revenue (€bn)

322.4

325.5

281.1

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

+1.2

Balance of pass-through funds(€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

10.9

-5.8

-7.2

Financing/use of surplus

-10.9

5.8

7.2

Cash resources (€bn)

-

-

60.5

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

-53.5

Revenue

Federal revenue in the period from January to November 2019 totalled approximately €306.2bn, a year-on-year gain of 1.9% (about €5.6bn).

Tax revenue (including transfers of EU own resources to the EU) increased by 1.2% (approximately €3.3bn) compared with the same period last year. Other revenue was up by 10.2% (roughly €2.3bn) on the year in the January–November period. This 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 January–November 2019 period totalled approximately €313.4bn, a rise of 3.0% (about €9.0bn) over the same period last year. Federal spending is separated into consumption and investment spending.

Consumption spending was up by 2.4% (about €6.6bn) on the year over the January–November period. Both human resources expenditure and operating expenditure posted significant year-on-year increases (up by 6.3% and 10.7%, respectively). The latter category includes military procurement spending, which saw a surge of 21.2% (about €1.9bn) on the year. Ongoing grants to “other areas” were also higher than in 2018 (up by 3.7%, or approximately €6.6bn), with particularly marked increases in grants to companies (up by 6.7%, or about €1.7bn) and to social security funds (up by 3.7%, or about €4.4bn). In contrast, ongoing grants for pensions and benefits were down slightly on the year, by 1.1%, mainly as a result of a 2.6% decline 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 27.1% on the year.

Investment spending totalled approximately €29.6bn in the January–November period, a rise of 8.7% (roughly €2.4bn) over 2018. This was partly a result of year-on-year increases in fixed asset investment (up by 13.5%, or €1.1bn) and in expenditure on financial assistance (up by 6.7%, or €1.3bn). Within the latter category, the rise was driven primarily by higher spending on programmes to promote digital technology, nationwide broadband expansion, and the 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 €7.2bn for the period from January to November 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 any given 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 November 2019

2019 trends in tax revenue (excluding local authority taxes)

Total tax revenue (excluding local authority taxes) was up by 5.5% on the year in November 2019. This increase was mainly driven by higher receipts from joint taxes. The relatively large rise in revenue from wages tax is due to a one-off technical effect. Revenue from non-assessed taxes on earnings and from final withholding tax on interest and capital gains also posted year-on-year growth. The take from value added taxes rose significantly, and revenue from taxes accruing to the Federation was also higher than in November 2018. Receipts from taxes accruing to the Länder saw a marked increase of 8.8%

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €1.3bn in November 2019, a sharp decline of 50.6% on the year. Both GNI-based and VAT-based own resources were lower than in November 2018. In February each year, large transfers are made to the EU for agricultural payments. Usually, these transfers are then reduced over the course of the year (generally until August). This was not the case this year, resulting in the unusually low transfers of own resources seen this month. 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-November 2019 period

Total tax receipts were up by 3.2% on the year in the January–November 2019 period. Revenue from joint taxes grew by 3.4%. Taxes accruing to the Federation posted an increase of 1.2%, while taxes accruing to the Länder were up by 7.2%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) rose by 10.9% on the year in November 2019. This can be attributed primarily to the lower transfers of own resources to the EU, as described above. November 2019 also saw a 4.3% 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 3.6% climb in revenue from taxes accruing solely to the Federation also contributed to the positive trend.

The tax revenue collected by the Länder (after accounting for supplementary federal grants) grew by 6.1% on the year in November. This gain was due mainly to the yield from the share of joint taxes allocated to the Länder, which was up by 6.6% 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 November, by 8.8%. The share of joint taxes allocated to local authorities was 9.3% higher than in November 2018.

Joint taxes

Wages tax

Wages tax receipts increased at a very healthy rate in November, with gross revenue up by 7.0% on the year, following an understated rise in the previous month. This can be attributed to a shift of wages tax revenue from previous months to the current month, which was a result of a technical adjustment in one Land. Child benefit payments, which are financed from wages tax receipts, rose by 8.5% on the year owing, among other things, to an increase in monthly child benefit of €10 per child starting in July this year. On balance, cash receipts from wages tax rose by 7.1% on the year in November 2019. Cumulative cash receipts for the January–November 2019 period were up significantly, by 5.8% on the year.

Corporation tax

Approximately €0.6bn in corporation tax refunds was paid out in November, which tends to be a low-revenue month for this tax. In November 2018, refunds totalled €0.2bn, 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 5.7% on the year for the January–November 2019 period. 

Assessed income tax

As with corporation tax, receipts from assessed income tax in November were determined mainly by assessment activity. Gross receipts from this tax climbed to around €0.8bn, a year-on-year rise of 19.2%. Employee refunds fell slightly, by 0.5%. After subtracting investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, the refund volume in November 2019 was approximately €0.3bn, which was lower than last year. In cumulative terms, cash receipts from assessed income tax were up by 5.1% on the year in the January–November 2019 period.

Non-assessed taxes on earnings

November 2019 saw a 3.0% year-on-year rise in gross receipts from non-assessed taxes on earnings. After factoring in a 18.6% 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 were up by 7.0% in November. 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–November 2019 period, cash receipts from non-assessed taxes on earnings were up by 1.0% 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 13.8% in November 2019. In cumulative terms, cash receipts from this tax were down by 27.5% in January–November 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 5.8% on the year in November 2019. Domestic VAT revenue rose by 9.1% in year-on-year terms, while receipts from import VAT declined by 2.8%. Cumulative cash receipts from value added taxes rose by 3.8% on the year in the period from January to November 2019.

Taxes accruing to the Federation

The yield from taxes accruing solely to the Federation saw a year-on-year increase of 3.6% in November 2019. Revenue from tobacco duty rose by 13.0%. Receipts from the solidarity surcharge climbed by 7.0% on the year thanks to growth in revenues from income and corporation tax (which constitute its tax base). Significant revenue gains were also posted for energy duty (up by 2.2%), insurance tax (up by 3.1%) and electricity duty (up by 2.1%). In contrast, revenue drops were recorded for motor vehicle tax (down by 5.7%) and aviation tax (down by 2.9%). Changes in revenue from other taxes had only a minor impact on the overall results for federal taxes.

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up by 8.8% on the year in November 2019. This was mainly due to growth in revenue from real property transfer tax (up by 6.6%) and inheritance tax (up by 22.6%). Fire protection tax, beer duty, and betting and lottery tax all posted declines in revenue (down by 4.4%, 13.3% and 2.9%, 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
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

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

16–17 April 2020

Meeting of G20 finance ministers and central bank governors in Washington, D.C.

17–19 April 2020

Spring meetings of the IMF and World Bank in Washington, D.C.