Federal budget trends in August 2021

Table: Trends in the federal budget

Expenditure (€bn)³

441.8

547.7

317.4

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

 

 

+18.9

Revenue (€bn)⁴

311.1

307.3

200.0

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

 

 

+1.7

Tax revenue (€bn)

283.3

284.0

185.6

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

 

 

+4.3

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-130.7

-240.4

-117.4

Financing/use of surplus:

130.7

240.4

117.4

Cash resources (€bn)

-

-

49.4

Seigniorage (€bn)

0.2

0.2

0.2

Movements in reserves⁵ (€bn)

0

0.0

0.0

Net borrowing⁶ (€bn)

130.5

240.2

67.8

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 Nachtrags zum Bundeshaushaltsplan für das Haushaltsjahr 2021) 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
August
2021

to the top

Revenue

Federal revenue for the period from January to August 2021 totalled approximately €200.0bn, up by 1.7% (about €3.4) on the year. Tax receipts (taking into account transfers of own resources to the EU) increased by 4.3% (roughly €7.7bn) on the year. Revenue from income tax and corporation tax rose by 10.4% (roughly €8.7bn), while the yield from value added taxes increased by 12.5% (roughly €8.2bn) on the year. Revenue from the solidarity surcharge was down by 42.6% (approximately €4.9bn), largely due to the abolition this year of the solidarity surcharge for approximately 90% of wages tax and income tax payers. Growth in tax revenue was also tempered by the trend in payments to the EU (GNI-based own resources and VAT-based own resources), which rose by about €6.6bn in year-on-year terms.

The category of “other revenue” was down by 23.0% (roughly €4.3bn) on the year in the January–August 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 eight months of 2021 totalled approximately €317.4bn, up by 18.9% (roughly €50.4bn) on the year. A breakdown by economic category shows that higher spending in the January–August period was driven mainly by consumption spending, which was up by 14.7% (approximately €36.0bn). Ongoing grants to social security funds and subsidies to businesses made up most of this rise. Subsidies to businesses grew by 42.9% (roughly €14.8bn) on the year; most of this increased spending consisted of assistance to businesses affected by the fallout from the pandemic. About €29.5bn of the funds earmarked for this purpose were disbursed by 31 August 2021. Grants to social security funds were up by 14.8% (around €14.6bn) on the year. This includes disbursements to the health fund to cover costs caused by the Covid-19 pandemic, which increased by approximately €10.2bn in the January–August 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 in August totalled €35.6bn, an increase of 67.8% (roughly €14.4bn) over the same period last year. 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 €13.2bn on the year. In contrast, fixed asset investment was down by 48.5% (about €3.1bn) 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 €2.1bn on the year in August 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 €117.4bn for the period from January to August 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 August 2021

2021 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

Total tax revenue (excluding local authority taxes) was up by 8.2% on the year in August 2021. Joint taxes once again posted above-average growth, increasing by 11.6%. Revenue from import VAT, wages tax, assessed income tax and corporation tax also rose on the year, with some taxes showing considerable growth. Revenue from taxes accruing solely to the Federation fell by 8.8% on the year in August, while receipts from taxes accruing to the Länder rose by 17.8%.

to the top

EU own resources

Transfers of own resources to the EU, including customs duties, were up by almost €1.7bn (119.1%) on the year in August 2021. Drawdowns of GNI- and VAT-based own resources were higher than in the same month of 2020 due to the settlement of Germany’s contribution to amending budgets No 1/2021 and No 2/2021 (including financing the response to Covid-19 and adjustments following the final adoption of the multiannual financial framework). 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–August 2021 period

In the eight months from January to August 2021, tax receipts (excluding local authority taxes) increased by 7.0% compared with the same period in 2020. Revenue from joint taxes rose by 9.6%, while receipts from taxes accruing solely to the Federation declined by 8.0%. Revenue from taxes accruing solely to the Länder was up by 12.6%.

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 10.7% on the year in August 2021. The Federation benefited – as did the Länder and local authorities – from growth in overall receipts from joint taxes, which were up by 11.6%; this led to significant year-on-year growth of 14.8% in the Federation’s share of revenue from joint taxes. In contrast, the Federation’s revenue from federal taxes fell by 8.8%. In addition, transfers of own resources to the EU and supplementary federal grants to the Länder both increased, among other things.

Länder tax receipts also rose slightly overall in August 2021 in year-on-year terms, posting an increase of 0.4%. Although joint taxes and Länder taxes experienced strong revenue growth, there was a significant decline in federal subsidies for public transport compared with August 2020. The latter development was mainly due to the fact that the Länder received additional federal subsidies of €2.5bn in August 2020 as part of measures to tackle the economic crisis caused by the pandemic (the opposite effect could be observed with the year-on-year trend in federal tax revenues in August 2021). In contrast, the Länder share of revenue from joint taxes posted significant growth of 9.7%. The yield from taxes that accrue exclusively to the Länder also posted a clear gain of 17.8%. In addition, the Länder received higher supplementary federal grants, which were up by 48.8%. Local authorities’ take from their share of joint taxes was 6.7% 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 4.5% on the year in August, 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). This revenue growth probably mainly reflects the ongoing recovery in the labour market, which can be seen in falling unemployment, rising employment levels and the lowest number of workers participating in the short-time work scheme since the beginning of the crisis (according to extrapolations by the Federal Employment Agency and estimates by the Ifo Institute). Child benefit payments – which are financed from wages tax receipts – rose by 4.9% on the year. The €15 per child increase in child benefit enacted under the Second Family Tax Burden Reduction Act (Zweites Familienentlastungsgesetz) has had an impact in this respect since the start of the year. Overall, there was a 4.4% year-on-year rise in cash receipts from wages tax in August. In cumulative terms, cash receipts from wages tax fell by 0.2% on the year in the first eight months of 2021.

to the top

Corporation tax

Gross revenue from corporation tax amounted to €0.5bn in August 2021, compared with €0.01bn in August 2020. Significant year-on-year fluctuations in revenue from this tax can often be observed in months when the revenue level is not mainly determined by prepayments for the current year. In addition, year-on-year comparisons are currently difficult to make because of the impact that pandemic-related measures have had on revenue. The tax allowance for research and development is refunded, and investment allowance payments are financed, from gross revenue from corporation tax. Together these amounted to around €700,000, meaning that on balance the impact on cash receipts from corporation tax was minimal. Cumulatively, cash receipts from corporation tax increased by 90.5% in year-on-year terms in the first eight months of 2021.

to the top

Assessed income tax

Gross revenue from assessed income tax amounted to approximately €1.8bn in August, representing a year-on-year rise of 72.1%. 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 10.4% lower on the year in August. 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 €0.6bn in August 2021. In cumulative terms, cash receipts from assessed income tax were up by 15.4% on the year in the first eight months of 2021.

to the top

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were up by 25.9% on the year in August 2021. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €46m (down by 80.0% on the year). Overall, cash receipts from non-assessed taxes on earnings were up by 47.2% in August 2021 compared with the same month last year. Cumulatively, cash receipts from non-assessed taxes on earnings were up by 21.1% on the year in the first eight 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 29.5% on the year in August 2021. Cumulative cash receipts from this tax were up by 43.0% on the year in the first eight months of 2021.

to the top

Value added taxes

Revenue from value added taxes was up by 8.5% on the year in August 2021, with receipts from domestic VAT recording a slight gain of 0.3%. However, it is important to note that the baseline figure in August 2020 was artificially high as a result of tax measures to mitigate the impact of the Covid-19 pandemic. Revenue from domestic VAT in August 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 August 2020 exceeded the deferrals granted that month. The high revenue level in August 2021 therefore probably also reflects the tangible economic recovery. Receipts from import VAT were up by 42.3% on the year in August 2021. This is likely a consequence of the fact that nominal imports of goods have risen sharply again since the beginning of the crisis, and have even been noticeably above pre-crisis levels since spring 2021. Cumulatively, cash receipts from value added taxes rose by 9.5% on the year in the first eight months of 2021.

to the top

Taxes accruing to the Federation

In August 2021, revenue from taxes accruing solely to the Federation was down by 8.8% compared with the same month last year. Electricity duty, tobacco duty and energy duty all posted significant declines in revenue, falling by 2.9%, 1.3% and 3.6%, respectively. Revenue from the solidarity surcharge was also down, posting a decline of 63.5% on the year. Revenue increased noticeably in the case of insurance tax (+1.8%), motor vehicle tax (+1.2%) and aviation tax (+128.5%). The rise in receipts from aviation tax probably reflects the fact that air traffic at German airports has recently been higher than in the same period last year. 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 8.0% on the year in the January–August period.

to the top

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up markedly in August 2021, rising by 17.8% on the year. Revenue from real property transfer tax, inheritance tax, fire protection tax and betting and lottery tax rose by 23.5%, 10.8%, 5.8% and 19.6%, respectively. Receipts from beer duty fell by 10.9%. In cumulative terms, cash receipts from taxes accruing solely to the Länder were up by a total of 12.6% on the year in the first eight months of 2021.

to the top

Borrowing and guarantees

Borrowing trends for the Federation in August 2021

Tabelle vergrößern

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

Tabelle vergrößern

Borrowing trends for the Federation (loan financing) in August 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

October 2021 issue

September 2021

21 October 2021

November 2021 issue

October 2021

19 November 2021

December 2021 issue

November 2021

21 December 2021

January 2022 issue

December 2021

28 January 2022

February 2022 issue

January 2022

22 February 2022

March 2022 issue

February 2022

22 March 2022

April 2022 issue

March 2022

22 April 2022

May 2022 issue

April 2022

20 May 2022

June 2022 issue

May 2022

21 June 2022

July 2022 issue

June 2022

21 July 2022

August 2022 issue

July 2022

19 August 2022

September 2022 issue

August 2022

22 September 2022

October 2022 issue

September 2022

20 October 2022

November 2022 issue

October 2022

22 November 2022

December 2022 issue

November 2022

22 December 2022

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

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.

29 or 30 October 2021

Joint finance and health ministers’ meeting in Rome

30–31 October 2021

G20 summit in Rome

8–9 November 2021

Eurogroup and ECOFIN Council meetings in Brussels

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