Federal budget trends in July 2021

Table: Trends in the federal budget

Expenditure (€bn)³

441.8

547.7

283.2

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

 

 

+20.6

Revenue (€bn)⁴

311.1

307.3

176.4

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

 

 

+0.7

Tax revenue (€bn)

283.3

284.0

163.7

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

 

 

+3.2

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-130.7

-240.4

-106.8

Financing/use of surplus:

130.7

240.4

106.8

Cash resources (€bn)

-

-

62.2

Seigniorage (€bn)

0.2

0.2

0.2

Movements in reserves⁵ (€bn)

0

0.0

0.0

Net borrowing⁶ (€bn)

130.5

240.2

44.4

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
July 2021

to the top

Revenue

Federal revenue for the period from January to July 2021 totalled approximately €176.4bn, up by 0.7% (about €1.3bn) on the year. Tax receipts (taking into account transfers of own resources to the EU) increased by 3.2% (roughly €5.1bn) on the year. Revenue from income tax and corporation tax rose by 9.8% (roughly €7.5bn), while the yield from value added taxes rose by 12.4% (roughly €7.0bn) on the year. Revenue from the solidarity surcharge was down by 40.4% (approximately €4.2bn), 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 €4.8bn in year-on-year terms.

The category of “other revenue” was down by 23.5% (roughly €3.9bn) on the year in the January–July period. This was mainly due to the fact that the Federation’s share (€2.5bn) of the Bundesbank’s net profits was not remitted.

to the top

Expenditure

Measures to counteract the Covid-19 pandemic and its effects are having a significant impact on budget execution in 2021. Federal expenditure in the first seven months of 2021 totalled approximately €283.2bn, up by 20.6% (roughly €48.3bn) on the year. A breakdown by economic category shows that higher spending in the January–July period was driven mainly by consumption spending, which was up by 15.1% (approximately €33.0bn). Ongoing grants to social security funds and subsidies to businesses made up most of this rise. Subsidies to businesses grew by 38.9% (roughly €12.4bn) on the year; most of this increased spending consisted of assistance to businesses affected by the fallout from the pandemic. About €27.0bn of the funds earmarked for this purpose were disbursed by 31 July 2021. Grants to social security funds were up by 15.1% (around €13.2bn) on the year. This includes disbursements to the health fund to cover costs caused by the Covid-19 pandemic, which increased by approximately €9.1bn in the January–July period in year-on-year terms. These grants also include €3.0bn in disbursements to the health fund’s liquidity reserves for a programme to future-proof hospitals, which was only established this year; this is the amount that was budgeted for this purpose.

Investment spending totalled approximately €32.0bn, an increase of 91.5% (roughly €15.3bn) over July 2020. The main factor driving this increase was liquidity assistance provided to the Federal Employment Agency, which was booked in the form of loans and was up by approximately €14.6bn on the year. In contrast, fixed asset investment was down by 49.3% (about €2.7bn) due to a decline in spending on construction projects. The year-on-year decline in construction spending is due mainly to a special factor that will affect the entire year: since the beginning of 2021, investments in trunk road construction have been outsourced to Autobahn GmbH des Bundes (Federal Autobahn GmbH). The necessary funds are being provided to Autobahn GmbH des Bundes in the form of investment grants, which were up by approximately €1.7bn on the year in July 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).

to the top

Fiscal balance

The federal budget recorded a deficit of €106.8bn for the period from January to July 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

Tabelle vergrößern

Trends in federal expenditure by economic category

Tabelle vergrößern

Trends in federal revenue

Tabelle vergrößern

to the top

Tax revenue in July 2021

2021 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

Total tax revenue (excluding local authority taxes) was up by 12.5% on the year in July 2021. Receipts from joint taxes posted an above-average rise of 17.5%. This was mainly due to the large increase in revenue from import VAT, which climbed by 112.1% on the year in July. Because the payment date was close to the end of the month, a significant proportion of the import VAT payments for June 2021 were only reflected in the revenue figures for the following month. Large revenue growth was also recorded for wages tax, assessed income tax and corporation tax. Revenue from taxes accruing solely to the Federation fell by 15.8% on the year in July, while receipts from taxes accruing to the Länder rose by 21.0%.

to the top

EU own resources

Transfers of own resources to the EU, including customs duties, were up by just under €0.3bn (15.8%) on the year in July 2021. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year.

to the top

Overview of the January–July 2021 period

In the seven months from January to July 2021, tax receipts (excluding local authority taxes) increased by 6.8% compared with the same period in 2020. Revenue from joint taxes rose by 9.3%, while receipts from taxes accruing solely to the Federation declined by 7.9%. Revenue from taxes accruing solely to the Länder was up by 11.9%.

to the top

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 15.7% on the year in July 2021.

The Federation’s share of joint taxes rose by 27.7% in year-on-year terms. This outcome was partly the result of a sharp rise in receipts from joint taxes. It was also due to a considerable increase in the Federation’s share of VAT revenue as the result of a low baseline: in July 2020, the Federation posted reduced VAT receipts because it transferred part of its share to the Länder in accordance with the Second Coronavirus Tax Assistance Act (Zweites Corona-Steuerhilfegesetz). The Federation’s revenue from taxes accruing solely to the Federation declined sharply, by 15.8%. In addition, transfers of own resources to the EU and supplementary federal grants to the Länder both increased.

Länder tax receipts also increased markedly on the year in July 2021, by 10.4%. The revenue from joint taxes that is allocated to the Länder only rose by 10.6%; here, the 2020 baseline was boosted significantly by the above-mentioned transfer of VAT revenues by the Federation. In contrast, the yield from taxes that accrue exclusively to the Länder posted a clear gain of 21.0%. In addition, the Länder received higher supplementary federal grants, which increased by 48.8%. Local authorities’ take from their share of joint taxes was 7.6% higher than in the same period last year.

to the top

Joint taxes

to the top

Wages tax

Gross revenue from wages tax was up by 8.1% on the year in July, despite the reductions in revenue caused by tax relief measures for taxpayers in the current year (i.e. the increase in the basic personal allowance and the related shift in the other tax thresholds). Receipts in July included wages tax that was remitted for June 2021. Revenue growth was driven by a) the decline in the number of employees participating in the short-time work scheme, which in July 2021 fell to its lowest level since February 2020, and b) an increase in the number of people in employment, which in June rose by around 100,000 in year-on-year terms. Child benefit payments – which are financed from wages tax receipts – rose by 8.5% on the year. Since 1 January 2021, the €15 per child increase in child benefit enacted under the Second Family Tax Burden Reduction Act (Zweites Familienentlastungsgesetz) has also served to reduce wages tax revenue totals. Overall, there was a 8.0% year-on-year rise in cash receipts from wages tax in July. In cumulative terms, cash receipts from wages tax were down by 0.9% on the year in the first seven months of 2021.

to the top

Corporation tax

Gross receipts from corporation tax amounted to around €0.7bn in July 2021. In July 2020, refunds of around €0.3bn were paid out. Year-on-year tax revenue fluctuations of this kind are common. In addition, it is difficult to make a comparison with the previous year because of the impact that pandemic-related measures had on revenue. Research and investment allowances were funded from gross receipts. These payments totalled around €1m and therefore had only a minimal impact on cash receipts from corporation tax, which amounted to approximately €0.7bn in July 2021. Cumulatively, cash receipts from corporation tax increased by 86.4% in year-on-year terms in the first seven months of 2021.

to the top

Assessed income tax

Revenue from assessed income tax in July was mainly generated from assessment activities. Gross receipts from this tax increased by 31.0% to approximately €1.9bn. As with corporation tax, the year-on-year comparison is influenced by the impact of pandemic-related measures. Employee refunds, which are subtracted from the gross figure, were 17.4% lower on the year in July. Investment allowance payments, research allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, are also subtracted from the gross figure. On balance, receipts of assessed income tax amounted to approximately €0.5bn in July 2021. In cumulative terms, cash receipts from assessed income tax were up by 12.3% on the year in the first seven months of 2021.

to the top

Non-assessed taxes on earnings

The gross yield from non-assessed taxes on earnings fell by 6.2% on the year in July 2021. In 2020, pandemic-related restrictions led to many shareholders’ meetings being postponed to the second half of the year, which in turn shifted the timing of dividend payments. This was the main cause of a 28.9% decline in gross revenue from this tax in the first half of 2020. This led in turn to a significant increase in receipts in the first half of 2021, when they climbed by 27.0%. Taking July into account, cumulative gross revenue in the year to date only increased by 18.0%. A further weakening of the cumulative growth rate can be expected over the remaining course of 2021. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €53m (down by 56.3% on the year). Overall, cash receipts from non-assessed taxes on earnings declined by 4.6% on the year in July 2021. Cumulatively, cash receipts from non-assessed taxes on earnings were up by 19.0% on the year in the first seven months of 2021.

to the top

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains was up by 45.0% on the year in July 2021. Cumulative cash receipts from this tax were up by 44.7% on the year in the first seven months of 2021.

to the top

Value added taxes

Revenue from value added taxes was up by 19.9% on the year in July 2021, while receipts from domestic VAT recorded a decline of 3.9%. Revenue from domestic VAT in July 2020 was significantly higher than would otherwise have been the case, as a result of deferrals granted as part of measures to combat the pandemic: the deferred taxes that fell due in July exceeded the deferrals granted that month. The decline in revenue from domestic VAT in July 2021 was caused by the inflated baseline.

Starting in 2021, the due date for paying import VAT was moved to the 26th day of the month. As a result, some revenue for June was not posted to government accounts until July. Following a 24.7% year-on-year decline in import VAT receipts in June, revenue climbed by 112.1% on the year in July. Cumulatively, cash receipts from value added taxes rose by 9.7% on the year in the first seven months of 2021.

to the top

Taxes accruing to the Federation

In July 2021, revenue from taxes accruing solely to the Federation was down by 15.8% compared with the same month last year. Receipts from tobacco duty and energy duty were down significantly on the year, by 25.8% and 8.6%, respectively. The decline in tobacco duty revenue is partly due to a comparatively high baseline figure in July 2020. In addition, month-to-month shifts in the timing of revenue collection are not unusual. On a cumulative basis, tobacco duty revenue in the January–July period was basically unchanged on the year, increasing by 0.2%. Revenue from the solidarity surcharge also fell, by 61.4% on the year. Revenue increased significantly in the case of insurance tax (+3.6%), motor vehicle tax (+3.7%) and electricity duty (+6.7%). 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 7.9% on the year in the January–July period.

to the top

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up markedly in July 2021, rising by 21.0% on the year. Revenue gains were recorded for real property transfer tax (+22.0%), inheritance tax (+30.9%), fire protection tax (+12.5%) and beer duty (+12.7%). Betting and lottery tax revenue fell by 21.8%. In cumulative terms, cash receipts from taxes accruing solely to the Länder were up by a total of 11.9% on the year in the first seven months of 2021.

to the top

Borrowing and guarantees

Borrowing trends for the Federation in July 2021

Tabelle vergrößern

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

Tabelle vergrößern

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

Tabelle vergrößern

Guarantees

 

Authorised amount

Amount allocated as of
30 June 2021

Amount allocated as of
30 June 2020

in €bn

Export credit guarantees

155.0

122.2

124.7

Loans to foreign debtors, foreign direct investment, EIB loans

75.0

37.6

41.7

Financial cooperation projects

35.0

32.1

26.5

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

430.0

303.8

274.3

International financial institutions

110.0

68.6

68.6

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

to the top

Calendar

Publication schedule¹ of the monthly reports

Monthly report

Reporting period

Publication date

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

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

Source: Federal Ministry of Finance

Key dates on the fiscal and economic policy agenda

10–11 September 2021

Eurogroup and informal ECOFIN meetings in Ljubljana, Slovenia

4–5 October 2021

Eurogroup and ECOFIN Council meetings in Luxembourg

15–16 October 2021

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

15–17 October 2021

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

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