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22 June 2021

Overview of federal budgetary and financial data up to and including May 2021

Translated extracts from the Federal Ministry of Finance’s June 2021 monthly report

Federal budget trends in May 2021

Table: Trends in the federal budget

Expenditure (€bn)³

441.8

547.7

201.3

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

 

 

+23.3

Revenue (€bn)⁴

311.1

307.3

113.3

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

 

 

-4.8

Tax revenue (€bn)

283.3

284.0

104.5

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

 

 

-2.0

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-130.7

-240.4

-88.0

Financing/use of surplus:

130.7

240.4

88.0

Cash resources (€bn)

-

-

60.8

Seigniorage (€bn)

0.2

0.2

0.0

Movements in reserves⁵ (€bn)

0

0.0

0.0

Net borrowing⁶ (€bn)

130.5

240.2

27.2

Any discrepancies in totals are due to rounding.
¹ Supplementary budget pursuant to the Act Adopting a Supplement to the Federal Budget for the 2021 Fiscal Year (Gesetz über die Feststellung eines Zweiten Nachtrags zum Bundeshaushaltsplan für das Haushaltsjahr 2020) of 3 June 2021 (Federal Law Gazette I No 29, p. 1410).
² As per accounts.
³ With 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.
⁴ With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting.
⁵ Negative values denote accumulation of reserves.
⁶ (-) debt repayment; (+) borrowing.
Source: Federal Ministry of Finance

Actual 2020

2021 target¹

Actual²
May 2021

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Revenue

Federal revenue for the first five months of the year totalled roughly €113.3bn, down by 4.8% (about €5.7bn) on the year. Tax revenue (also taking into account transfers of own resources to the EU) declined by 2.0% (about €2.1bn) compared with the same period in 2020. Receipts from value added taxes rose by 8.6% (around €3.5bn) on the year. Revenue from the solidarity surcharge fell by 40.3% (approximately €2.8bn), largely due to the abolition this year of the solidarity surcharge for approximately 90% of wages tax and income tax payers. Payments to the EU (GNI-based own resources and VAT-based own resources) increased by about €3.2bn in year-on-year terms.

The category of “other revenue” also posted a decline of 28.9% (about €3.6bn) on the year during the January-May period. This was mainly due to the fact that the Federation’s share of the Bundesbank’s net profits was not remitted. In the previous year, the Bundesbank transferred approximately €5.9bn to the Federation, of which €2.5bn remained in the federal budget. The other €3.4bn had to be allocated to the special investment and redemption fund to repay the fund’s debts.

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Expenditure

In 2020, extraordinary measures were taken to fight the coronavirus pandemic and to mitigate its economic and social consequences. Budget execution in 2021 will also be heavily influenced by measures to counteract the pandemic and its effects.

Federal expenditure in the first five months of 2021 totalled approximately €201.3bn, up by 23.3% (roughly €38.0bn) on the year. A breakdown by economic category shows that higher spending in the January–May period was driven mainly by consumption spending, which was up by 16.7% (approximately €25.6bn). Ongoing grants to public administrations and social security funds made up most of this rise. Grants to public administrations rose by 41.5% (about €6.2bn), partly due to a year-on-year rise of approximately €1.8bn in pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz). A total of €4.5bn was made available for this purpose up until the end of May 2021. The allocation of approximately €2.5bn to the energy and climate fund also contributed to the rise in grants to public administrations. Last year, the allocation to the energy and climate fund from the federal budget was not made until November. Grants to social security funds were up by 22.7% (around €13.8bn) on the year. This includes roughly €8.7bn in disbursements to the health fund to cover costs caused by the Covid-19 pandemic, and €3.0bn in disbursements to the health fund’s liquidity reserves for a programme to future-proof hospitals. Interest expenditure was up by 31.9% (about €0.8bn) on the year.

Investment spending totalled €22.5bn, an increase of 123.6% (roughly €12.4bn) over May 2020. The main factor driving this increase was liquidity assistance provided to the Federal Employment Agency (roughly €12.1bn so far this year). In contrast, fixed asset investment was down by 50.0% (about €1.7bn) due to a decline in spending on construction projects. About half of the year-on-year decline in construction spending can be attributed to a special factor that will affect spending over the whole year: as of 2021, investments in trunk road construction are being outsourced to Autobahn GmbH des Bundes (Federal Autobahn GmbH). These funds are being provided to Autobahn GmbH des Bundes in the form of investment grants, which were up by approximately €0.9bn on the year in May 2021. Approximately €5.5bn has been earmarked for these investment grants in 2021. As a result, about €4.7bn less has been budgeted for construction investment in 2021 than in 2020 (and about €4.2bn less than the amount that was actually spent on construction investment in 2020).

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Fiscal balance

The federal budget recorded a deficit of €88.0bn for the five-month period from January to May 2021.

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

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Trends in federal expenditure by economic category

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Trends in federal revenue

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Tax revenue in May 2021

2021 trends in tax revenue (excluding local authority taxes)

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Total tax revenue (excluding local authority taxes) was up by 19.1% on the year in May 2021. However, it is important to note the low baseline figure, as May 2020 saw a significant drop in tax receipts as a result of tax measures to mitigate the pandemic’s impact (e.g. deferrals). Compared with May 2019, i.e. the corresponding month before the crisis, tax revenue in May 2021 was down by 4.6%, approximately €2.4bn. Total receipts from joint taxes rose by 23.0% on the year in May 2021. Revenue from taxes accruing solely to the Federation was up by 5.1% on the year in May, while receipts from taxes accruing to the Länder increased by 12.0%.

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EU own resources

Transfers of own resources to the EU, including customs duties, were down by almost €0.7bn (18.1%) on the year in May 2021. Monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year.

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Overview of the January–May 2021 period

In the five months from January to May 2021, tax receipts (excluding local authority taxes) increased by 4.2% compared with the same period in 2020. Revenue from joint taxes rose by 6.4%, while receipts from taxes accruing solely to the Federation declined by 8.3%. Revenue from taxes accruing solely to the Länder was up by 8.6%.

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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 29.1% on the year in May 2021. Revenue from purely federal taxes was up by 5.1%, while federal transfers of own resources to the EU declined, both of which contributed to boosting the Federation’s tax revenue. In contrast, supplementary grants that the Federation pays to the Länder were slightly down on the year in May.

Länder tax receipts also increased markedly on the year in May 2021, by 20.4%. The revenue from joint taxes that is allocated to the Länder rose by 23.7%. In addition, the yield from taxes that accrue exclusively to the Länder posted a robust gain of 12.0%. Local authorities’ take from their share of joint taxes was 3.3% higher than in the same period last year.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 8.3% in year-on-year terms in May 2021, despite the various tax relief measures that had a negative impact on receipts (the increase in the basic personal allowance and the related shift in the other tax thresholds). Cash receipts in May included wages tax that was remitted for April 2021. Although businesses clearly continued to avail themselves of the short-time work scheme (cf. the report on economic trends in the present issue of the monthly report), they did so to a lesser degree than in April 2020, which was the peak month of short-time work uptake during the pandemic. Nevertheless, May saw an 8.0% year-on-year decline in overall cash receipts from wages tax. Key factors here were (a) the €15 rise in child benefit enacted under the Second Family Tax Burden Reduction Act (Zweites Familienentlastungsgesetz) and (b) the disbursement of a €150 child bonus, which was financed from the May 2021 wages tax revenue. In cumulative terms, cash receipts from wages tax were down by 3.3% on the year in the first five months of 2021.

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Corporation tax

Corporation tax refunds totalling approximately €21m were paid out in May 2021, down from the approximately €225m refunded in the same month of 2020. Part of this difference can most likely be attributed to pandemic-related measures taken on the basis of secondary legislation, including deferrals and lump-sum reductions of prepayments that had already been made, which had the effect of noticeably reducing last year’s baseline. Because of their low volume, investment allowance payments had hardly any influence on receipts in May 2021. Cumulatively, cash receipts from corporation tax increased by 97.5% in year-on-year terms in the first five months of 2021.

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Assessed income tax

Gross receipts from assessed income tax rose by 27.3% on the year in May 2021. As with corporation tax, it is likely that pandemic-related tax measures lowered the 2020 baseline in a noticeable way. Employee refunds declined by 22.9% on the year in May. 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 totalled approximately -€218m in May 2021 (compared with -€999m in May 2020). In cumulative terms, cash receipts from assessed income tax were up by 5.5% on the year in the first five months of 2021.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were up by 76.4% on the year in May 2021. Refunds by the Federal Central Tax Office, which are financed from this revenue, totalled about €49m (down by 32.9% on the year). Overall, cash receipts from non-assessed taxes on earnings grew by 82.7% in May 2021 compared with the same period last year. Cumulatively, cash receipts from non-assessed taxes on earnings were up by 4.1% on the year in the first five months of 2021.

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Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains grew by 99.2% on the year in May 2021. Cumulative cash receipts from this tax were up by 41.4% on the year in the first five months of 2021.

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Value added taxes

Revenue from value added taxes rose by 37.8% in year-on-year terms in May 2021. Receipts from domestic VAT were up by 34.7%, and receipts from import VAT were up by 46.8%. Two factors played a role in this increase: first, the comprehensive pandemic-related tax relief for businesses (e.g. tax deferrals and postponed enforcement measures), which had a significant impact on last year’s revenue in particular. Second, import VAT is probably benefiting from the gradual recovery of foreign trade, which plummeted last spring as a result of the pandemic, while domestic VAT is likely to be experiencing a boost due to the significant year-on-year growth in retail sales recorded in March and April 2021. Cumulatively, cash receipts from value added taxes rose by 8.9% on the year in the first five months of 2021.

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Taxes accruing to the Federation

In May 2021, revenue from taxes accruing solely to the Federation was up by 5.1% on the year. Significant revenue gains were posted for energy duty (up by 17.8%), electricity duty (up by 10.4%), motor vehicle tax (up by 12.0%), tobacco duty (up by 21.7%) and alcohol duty (up by 48.8%). It is fair to assume that energy duty receipts were affected by the very sharp pandemic-related drop in mobility in spring 2020. Although mobility remains noticeably restricted this spring, it is nonetheless above the level seen around the same time last year. Revenue from the solidarity surcharge fell by 54.6%, mainly as a result of its near-complete abolition. Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes. In cumulative terms, cash receipts from taxes accruing solely to the Federation were down by 8.3% on the year in the January–May period.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up sharply in May 2021, by 12.0% on the year. Some of these taxes posted significant revenue growth, including real property transfer tax (up by 17.8%), fire protection tax (up by 10.4%) and betting and lottery tax (up by 16.4%). Receipts from beer duty climbed by 124.7%. Inheritance tax revenue posted a slight decline of 1.0%. In cumulative terms, cash receipts from taxes accruing solely to the Länder were up by a total of 8.6% on the year in the first five months of 2021.

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Borrowing and guarantees

Borrowing trends for the Federation in May 2021

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Borrowing trends for the Federation (budget and special funds, excluding loan financing) in May 2021

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Borrowing trends for the Federation (loan financing) in May 2021

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Guarantees

 

Authorised amount

Amount allocated as of 31 March 2021

Amount allocated as of 31 March 2020

in €bn

Export credit guarantees

155.0

121.9

126.1

Loans to foreign debtors, foreign direct investment, EIB loans

75.0

36.0

41.9

Financial cooperation projects

35.0

32.2

26.8

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

430.0

302.9

197.8

International financial institutions

110.0

68.6

60.1

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

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Calendar

Publication schedule¹ of the monthly reports

July 2021 issue

June 2021

22 July 2021

August 2021 issue

July 2021

20 August 2021

September 2021 issue

August 2021

21 September 2021

October 2021 issue

September 2021

21 October 2021

November 2021 issue

October 2021

19 November 2021

December 2021 issue

November 2021

21 December 2021

¹ In accordance with the IMF’s Special Data Dissemination Standard Plus (SDDS Plus); see http://dsbb.imf.org
Source: Federal Ministry of Finance

Monthly report

Reporting period

Publication date

Key dates on the fiscal and economic policy agenda

9–10 July 2021

Meeting of G20 finance ministers and central bank governors in Venice, Italy

12–13 July 2021

Eurogroup and ECOFIN Council meetings in Brussels

10–11 September 2021

Eurogroup and informal ECOFIN meetings in Ljubljana, Slovenia

Due to the coronavirus pandemic, dates and the format of meetings will be specified at short notice prior to the respective meetings.