Federal budget trends up to and including February 2020

Table: Trends in the federal budget

Expenditure (€bn)2

343.2

362.0

65.9

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

 

 

+1.5

Revenue (€bn)3

356.5

351.0

47.6

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

 

 

+11.8

Tax revenue (€bn)

329.0

325.0

44.0

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

 

 

+10.7

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

13.3

-11.0

-18.3

Financing/use of surplus:

-13.3

11.0

18.3

Cash resources (€bn)

-

-

72.4

Seigniorage (€bn)

0.2

0.3

0.0

Movements in reserves4 (€bn)

-13.5

10.6

0.0

Net borrowing5 (€bn)

0.0

0.0

-54.0

Any discrepancies in totals are due to rounding.
1As per accounts.
2With the exception of expenditure on the repayment of debt incurred on the credit market, allocations to reserves and expenditure made to cover a cash deficit. Excluding expenditure from internal offsetting.
3With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting.
4Negative values denote accumulation of reserves.
5(-) debt repayment; (+) borrowing
Source: Federal Ministry of Finance

Actual 2019

2020 target

Actual1

February 2020

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Revenue

Federal revenue in the first two months of 2020 totalled €47.6bn, up by 11.8% (about €5.0bn) over the same period last year. Tax revenue (including transfers of EU own resources to the EU) was up by 10.7% (about €4.3bn) on the year.

Other revenue recorded a year-on-year gain of 26.3% (about €0.8bn). This was primarily due to the administrative fines paid to the Federal Cartel Office; receipts from the distance-based commercial vehicle toll were higher on the year as well.

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Expenditure

Federal expenditure in the first two months of 2020 totalled approximately €65.9bn, an increase of 1.5% (about €1.0bn) over the same period last year. Federal spending is separated into consumption and investment spending. Consumption spending was up by 2.7% on the year in the first two months of 2020. Two key factors driving this trend were (a) grants for the permanent discontinuation of subsidised coal mining, which were due in 2020 and have now been fully disbursed (an increase of about €1bn on the year) and (b) higher payments to social security funds (an increase of about €0.9bn on the year). Interest expenditure was down on the year by 8.3%.

Investment spending stood at €3.8bn after the first two months of 2020, a decline of 14.8% (or €0.7bn) compared with the same period last year. This is attributable mainly to the discontinuation of compensation payments from the Federation to the Länder (the Federation and Länder agreed to end these payments as part of the reorganisation of financial relations between government levels that took effect at the start of 2020). Instead of receiving compensation payments, the Länder now receive a higher share of VAT revenue. Construction investment was up on the year by about €0.3bn, or 44.7%.

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Fiscal balance

The federal budget recorded a deficit of €18.3bn for the January–February 2020 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 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.

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Trends in federal expenditure by function

Trends in federal expenditure by function

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Trends in federal expenditure by economic category

Trends in federal expenditure by economic category

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Trends in federal revenue

Trends in federal revenue

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Tax revenue in February 2020

2020 trends in tax revenue (excluding local authority taxes)

Total tax revenue (excluding local authority taxes) in February 2020 was up by 6.6% over the same month last year. This positive trend was driven by another significant year-on-year increase in receipts from joint taxes (up by 5.7%), as wages tax and value added taxes posted major revenue growth on the year. Corporation tax and assessed income tax also recorded gains as a result of assessments from previous years. As in January, the yield from withholding tax on interest and capital gains also saw major growth. In contrast, revenue from non-assessed taxes on earnings was down sharply on the year. The yield from taxes accruing solely to the Federation rose significantly on the year. Revenue from taxes accruing to the Länder surged by 13.5%.

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EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €3.1bn in February 2020, a year-on-year decline of 50.7%. In January, the European Commission had already drawn down an additional twelfth of the amount earmarked for the entire year, for the purpose of financing its functions. In February, the Commission drew down a significantly lower amount of VAT and GNI-based own resources compared with February 2019. Monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time. However, monthly requisitions are generally in line with the financial framework for the current year.

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Cumulative overview of the January–February 2020 period

Tax revenue increased by 7.1% overall in the first two months of 2020. This upward trend was reflected in receipts from joint taxes (up by 6.5%), taxes accruing to the Länder (up by 11.8%), and taxes accruing to the Federation (up by 9.8%).

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Distribution among the Federation, Länder and local authorities

The Federation’s overall tax revenue (after accounting for supplementary federal grants to the Länder) was up significantly in February 2020 over the same month last year, by 21.9%. One factor here was the marked year-on-year gain that the Federation’s tax receipts recorded in February. For example, revenue from purely federal taxes was up by 9.8%. In addition, the Federation’s share of joint taxes also recorded a solid increase of 3.8%, thanks to high receipts from joint taxes. However, the reorganisation of the fiscal equalisation system, which came into effect on 1 January 2020, changed the distribution of VAT revenue to the Federation’s disadvantage. This tempered year-on-year growth in the Federation’s share of VAT revenue, which rose by only 2.1% in February. In addition, supplementary federal grants to the Länder were markedly higher on the year in February 2020. However, the main explanatory factor for the high growth rate in February is not the increase in tax revenue, but rather the sharp year-on-year decline in transfers of own resources from the federal budget to the European Union in February.

Länder tax receipts were up by 8.0% on the year in February 2020. This was due mainly to higher yields from the share of joint taxes allocated to the Länder, which were up by 7.3% on the year. Receipts from taxes that accrue only to the Länder were also up sharply on the year in February, by 13.5%. Local authorities’ take from their share of joint taxes was 7.0% higher than in February 2019.

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Joint taxes

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Wages tax

Wages tax receipts continued to grow in February 2020, with gross revenue increasing by 4.9% on the year. Child benefit payments, which are financed from wages tax receipts, rose by 4.0% on the year due to a €10 per child increase in monthly child benefit that came into effect in July 2019. On balance, cash receipts from wages tax increased by 5.4% on the year in February 2020 and by 4.9% on the year in cumulative terms over the first two months of 2020.

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Corporation tax

Gross revenue from corporation tax was approximately €11m in February, a month when revenue from this tax tends to be low. In February of 2019, refunds of corporation tax totalled approximately €32m. Taxpayer refunds of investment allowance slightly exceeded payouts in February. However, this had only a negligible impact on results. On balance, cash receipts from corporation tax stood at roughly €11m in February 2020. In cumulative terms, cash receipts from corporation tax rose to approximately €1.1bn in the first two months of 2020.

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Assessed income tax

Gross receipts from assessed income tax posted a substantial year-on-year increase of 9.9% in February 2020. Employee refunds were down by 12.8% on the year in February; after these are subtracted from the gross figure (along with investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount), net cash receipts from assessed income tax increased by 47.5% in February 2020 over the same period in 2019. In cumulative terms, cash receipts from assessed income tax were up by 47.0% on the year in the January–February 2020 period.

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Non-assessed taxes on earnings

February 2020 saw an 18.9% year-on-year decline in gross receipts from non-assessed taxes on earnings. Refunds by the Federal Central Tax Office, which are financed from this revenue, fell by 21.6% to approximately €84m. As a result, cash receipts from non-assessed taxes on earnings were down by 18.6% on the year. Cumulative cash receipts from non-assessed taxes on earnings in January and February 2020 were up by 10.3% on the year.

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Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains climbed by 32.9% on the year in February 2020. There are no statistics breaking down this figure into its two components, but it can be assumed that the rise is attributable to the contribution made by capital gains. In cumulative terms, cash receipts from withholding tax on interest and capital gains were up by 38.0% on the year in the January–February 2020 period.

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Value added taxes

Receipts from value added taxes were up by 5.1% on the year in February 2020. Receipts from domestic VAT rose substantially by 7.3% on the year, while import VAT revenue fell by 2.3%. Cumulative cash receipts from value added taxes were up by 3.2% on the year in the first two months of 2020.

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Federal taxes

In February 2020, revenue from taxes accruing solely to the Federation was up by 9.8% over the same month last year. Insurance tax posted particularly noticeable revenue growth of 16.7% on the year. Insurance tax receipts had declined markedly in February 2019, because some of the revenue from that month was not reflected in cash receipts until March 2019. Energy duty revenue also posted a strong gain of 10.6%. Receipts from the solidarity surcharge climbed by 5.7% on the year thanks to growth in revenues from income and corporation tax (which constitute its tax base). Revenue gains were also recorded for electricity duty (up by 11.7%), alcohol duty (up by 2.3%) and aviation tax (up by 5.5%). In contrast, tobacco duty revenue was down on the year by 4.9% in February. Receipts also fell for coffee duty (down by 2.6%) and sparkling wine duty (down by 8.7%). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

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Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder increased again significantly in February 2020, by 13.5% on the year. This was mainly due to substantial growth in revenue from real property transfer tax (up by 16.4%) and inheritance tax (up by 9.8%). The yield from fire protection tax increased by 6.0%, while receipts from betting and lottery tax were up by 7.8%. Revenue from beer duty was up as well, by 3.7%.

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Borrowing and guarantees

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

Guarantees
 

Authorised amount

Amount allocated
as of

31 December 2019

Amount allocated
as of

31 December 2018

in € bn

Export credit guarantees

148.0

119.4

120.7

Loans to foreign debtors, foreign direct investment, EIB loans

58.0

42.8

42.7

Financial cooperation projects

28.5

25.6

22.8

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

125.0

115.8

104.7

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Calendar

Publication schedule1 of the monthly reports 
Monthly reportReporting periodPublication date
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

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.

24–25 April 2020

Eurogroup and informal ECOFIN meetings in Zagreb, Croatia

18–19 May 2020

 

Eurogroup and ECOFIN Council meetings in Brussels

11–12 June 2020

Eurogroup and ECOFIN Council meetings in Luxembourg