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22 May 2020

Overview of fed­er­al bud­getary and fi­nan­cial da­ta up to and in­clud­ing April 2020

Translated extracts from the Federal Ministry of Finance’s May 2020 Monthly Report

Federal budget trends up to and including April 2020

Table: Trends in the federal budget

Expenditure (€bn)3

343.2

484.5

134.7

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

 

 

+16.8

Revenue (€bn)4

356.5

317.5

105.0

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

 

 

-1.4

Tax revenue (€bn)

329.0

291.5

91.2

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

 

 

-4.7

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

13.3

-167.0

-29.7

Financing/use of surplus:

-13.3

167.0

29.7

Cash resources (€bn)

-

-

95.1

Seigniorage (€bn)

0.2

0.3

0.1

Movements in reserves5 (€bn)

-13.5

10.6

0.0

Net borrowing6 (€bn)

0.0

156.0

-65.5

Any discrepancies in totals are due to rounding.

1 Including supplementary budget in accordance with Bundestag decision of 27 March 2020.
2As per accounts.
3With 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.
4With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting.
5Negative values denote accumulation of reserves.
6(-) debt repayment; (+) borrowing

Source: Federal Ministry of Finance

Actual 2019

2020 target1

Actual2
April 2020

Revenue

Federal revenue in the period from January to April 2020 totalled approximately €105.0bn, down by 1.4% (about €1.5bn) on the year. Tax revenue (including transfers of EU own resources to the EU) was 4.7% (about €4.5bn) lower than in the same period last year. Receipts from value added taxes suffered a particularly sharp decline, clearly already caused by the impact of the Covid-19 pandemic.

Other revenue recorded a year-on-year gain of 27.8% (about €3.0bn). This includes an increase of approximately €3.4bn in the Federation’s share of the Bundesbank’s net profit under the “revenue from business activities” heading. The portion of this amount that exceeds the €2.5bn estimate contained in the federal budget must be allocated to the special investment and redemption fund to repay the fund’s debts. This year, this allocation totals approximately €3.4bn. Allocations from the Institute for Federal Real Estate were lower than in April 2019, however, which had a dampening effect on revenue from business activities. In contrast, administrative revenue from fees (e.g. the distance-based commercial vehicle toll) and from fines (e.g. the Federal Cartel Office’s revenue) was up on the year.

Expenditure

Federal expenditure in the first four months of 2020 totalled around €134.7bn, an increase of 16.8% (roughly €19.3bn) over the same period last year. The year-on-year rise in total expenditure is attributable to a substantial increase in consumption spending in the form of ongoing subsidies to companies. Most of this spending consisted of immediate assistance for small companies and self-employed individuals affected by the fallout from the Covid-19 pandemic. By the end of April, €14.6bn had been spent for this purpose – nearly a third of the €50bn earmarked. Payments to social security funds exceeded last year’s figure by 3.3% (€1.6bn). Interest expenditure fell by 29.2% (€1.7bn) on the year, easing the pressure on the expenditure side to a small degree.

Investment spending stood at €8.1bn after the first four months of 2020, a decline of 5.6% (€0.5bn) compared with the same period last year. This was mainly driven by lower spending resulting from 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. Investment spending in the area of construction saw a year-on-year rise of 29.0% (approximately €0.4bn).

Fiscal balance

The federal budget recorded a deficit of €29.7bn for the four-month period from January to April 2020.

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 April 2020

2020 trends in tax revenue (excluding local authority taxes)

Total tax revenue in April 2020 (excluding local authority taxes) was down by 25.3% on the year, reflecting the first effects of the Covid-19 pandemic. The decline was primarily driven by a fall in receipts from joint taxes by nearly a third. Value added taxes were the most significant contributing factor, with revenue down by 37.6% after special prepayments had to be refunded. Assessed income tax, corporation tax and aviation tax also posted substantial declines in revenue. The latter collapsed by 95.2% as air traffic ground to an almost complete halt due to the pandemic. However, total revenue from taxes accruing solely to the Federation recorded a slight rise on the year. Taxes accruing to the Länder declined by 5.7%. The effects of the current Covid-19 pandemic and the tax measures implemented in response to the crisis are already reflected in the April figures. However, the economic impact of the shutdown, which started in mid-March, will not affect tax revenue until the coming months.

EU own resources

Transfers of own resources to the EU, including customs duties, totalled approximately €2.6bn in April 2020, a year-on-year drop of 38.6%. 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 April, the Commission drew down a significantly lower amount of VAT-based and GNI-based own resources compared with April 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.

Overview of the January–April 2020 period

Tax revenue declined by 3.1% overall in the first four months of 2020. Revenue from joint taxes was down by 4.6% on the year during this period. Receipts from taxes accruing to the Länder recorded an 8.6% rise, while revenue from taxes accruing to the Federation grew by 2.1%.

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) posted a substantial drop of 32.3% on the year in April 2020. This was driven mainly by the 35.2% fall in the Federation’s take from its share of joint taxes. Two factors were at play here: first, receipts from joint taxes were significantly lower than in April 2019. Second, 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 further exacerbated the year-on-year drop in the Federation’s receipts from value added taxes. In addition, supplementary federal grants to the Länder were markedly higher in April 2020 than in the same month of 2019 (up by 39.8%). However, the Federation benefited from higher total tax receipts from purely federal taxes and lower transfers of own resources to the EU compared with April 2019.
Länder tax receipts were down by 25.4% on the year in April 2020. This was due mainly to a 31.5% year-on-year decline in the yield from the share of joint taxes allocated to the Länder. Revenue from taxes accruing solely to the Länder was also down, by 5.7%. The local authorities’ take from joint taxes fell by 13.7% on the year.

Joint taxes

Wages tax

Wages tax receipts declined in April 2020, with gross revenue decreasing by 1.6% on the year. This is a result of the massive take-up of the German government’s short-time work scheme (Kurzarbeit), generating lower wages tax payments. Child benefit payments, which are financed from wages tax receipts, rose by 5.5% 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 declined by 2.9% on the year in April 2020. On a cumulative basis, cash receipts from wages tax rose by 2.8% on the year in January–April 2020.

Corporation tax

Corporation tax refunds totalling approximately €2.5bn were paid out in April, generally a low-revenue month for this tax. Under tax measures launched to address the effects of the Covid-19 pandemic, companies applied for and were granted reductions in prepayments, which is partly reflected in the volume of refunds. This measure strengthens the liquidity of companies. Taxpayer paybacks of investment allowance slightly exceeded payouts in April. However, this had only a negligible impact on results. The resulting cash receipts from corporation tax stood at approximately €2.5bn in May 2019. In cumulative terms, cash receipts from corporation tax in the January–April 2020 period dropped to about €6bn, a decline of 34.3% on the year.

Assessed income tax

Gross receipts from assessed income tax posted a substantial year-on-year decline of 49.8% in April 2020. This, too, was driven by the tax measures introduced to mitigate the effects of the Covid-19 pandemic. Employee refunds were up by 26.8% on the year in April; 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 stood at approximately 0.7bn. In cumulative terms, cash receipts from assessed income tax were down by 5.1% on the year in the January–April 2020 period.

Non-assessed taxes on earnings

April 2020 saw a 21.1% year-on-year drop in gross receipts from non-assessed taxes on earnings. In the case of this tax, however, the decline is unrelated to the pandemic. Rather, it can be attributed to a shift in the timing of cash receipts as a result of differences in dividend payment dates compared with 2019. Refunds by the Federal Central Tax Office, which are financed from this revenue, totalled about €110m. As a result, cash receipts from non-assessed taxes on earnings were down by 25.0% on the year. Cumulative cash receipts from non-assessed taxes on earnings in the first four months of the year were up by 8.8% on the year.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains climbed by 14.9% on the year in April 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 57.2% on the year in the January–April 2020 period.

Value added taxes

Receipts from value added taxes declined by 37.6% on the year in April 2020. Receipts from domestic VAT recorded a substantial year-on-year drop of 48.1%, while import VAT revenue fell by 9.6% on the year. The main contributing factors here were refunds of special VAT prepayments and tax deferrals. Due to the time lag with which sales show up in the cash statistics, the massive drops in sales experienced in March and especially April will not be reflected in VAT revenue until the coming months. In cumulative terms, cash receipts from value added taxes were down by 9.2% on the year in the January–April 2020 period.

Taxes accruing to the Federation

In April 2020, revenue from taxes accruing solely to the Federation was 1.4% higher than in the same month last year. Tobacco duty posted particularly high revenue growth of 63.6% on the year. It can be assumed that this is the result of a shift or increase in purchases of excise stamps for tobacco products in connection with the shutdown. Further significant revenue increases were recorded for insurance tax (up by 5.4%) and motor vehicle tax (up by 12.1%). In contrast, energy duty and alcohol duty posted declines in revenue (down by 8.4% and 10.3%, respectively). Global air traffic has ground to an almost complete halt as a result of the shutdown. This, in combination with the tax deferrals granted, led to a 95.2% collapse in aviation tax revenue. Receipts from the solidarity surcharge declined by 22.7% as a result of drops in revenues from income and corporation tax (which constitute its tax base). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.

Taxes accruing to the Länder

Revenue from taxes accruing solely to the Länder declined by 5.7% on the year in April 2020 due to significant declines in receipts from real property transfer tax (down by 8.4%), beer duty (down by 27.0%) and betting and lottery tax (down by 26.0%). Revenue from inheritance tax increased by 7.8% on the year.

Borrowing and guarantees

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

Guarantees

Authorised amount

Amount allocated
as of
31 March 2020

Amount allocated
as of
31 March 2019

in € bn

Export credit guarantees

160.0

126.1

118.8

Loans to foreign debtors, foreign direct investment, EIB loans

80.0

41.9

44.2

Financial cooperation projects

35.0

26.8

23.6

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

430.0

197.8

105.5

International financial institutions

100.0

60.1

60.1

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

 Calendar

Publication schedule1 of the monthly reports 
Monthly reportReporting periodPublication date
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
11–12 June 2020

Eurogroup and ECOFIN Council meetings

9–10 July 2020

Eurogroup and ECOFIN Council meetings

18–19 July 2020

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