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21 December 2021

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

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

Federal budget trends in November 2021

Table: Trends in the federal budget
Actual 20202021 target¹

Actual²
November 2021

Expenditure (€bn)³

441.8572.7444.9

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

  +11.9

Revenue (€bn)⁴

311.1332.3277.3

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

  5.0

Tax revenue (€bn)

283.3284.0257.1

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

  7.3

Balance of pass-through funds (€bn)

0.00.00.0

Fiscal balance (€bn)

-130.7-240.4-167.6

Financing/use of surplus:

130.7240.4167.6

Cash resources (€bn)

--76.0

Seigniorage (€bn)

0.20.20.2

Movements in reserves⁵ (€bn)

00.00.0

Net borrowing⁶ (€bn)

130.5240.291.3

Revenue

Federal revenue for the period from January to November 2021 totalled approximately €277.3bn, up by 5.0% (about €13.3bn) on the year, but still about €28.9bn below the figure for the same period in 2019. Tax receipts (taking into account transfers of own resources to the EU) in the first 11 months of the year were up by 7.3% (about €17.4bn) on the year. Revenue from income tax and corporation tax was up by 13.6% (about €15.4bn), while the yield from value added taxes was up by 16.3% (about €14.2bn) on the year. Revenue from the solidarity surcharge was down by 42.7% (about €6.7bn), largely due to the abolition this year of the solidarity surcharge for approximately 90% of wages tax and income tax payers. Tax revenue growth was also tempered by the trend in payments to the EU (GNI-based own resources and VAT-based own resources), which were up by about €7.4bn on the year.

The category of “other revenue” was down by 17.0% (about €4.1bn) on the year in the January–November period. This was mainly due to the fact that the Federation’s share (€2.5bn) of the Bundesbank’s net profits was not remitted. Fines collected by the Federal Cartel Office were also down by about €0.8bn on the year. Furthermore, the figures for the period reflect the absence of dividend payments by Deutsche Bahn. In 2020, Deutsche Bahn paid the Federation a dividend of €650m.

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 11 months of 2021 totalled approximately €444.9bn, up by 11.9% (about €47.3bn) on the year. A breakdown by economic category shows that higher spending in the January–November period was driven mainly by consumption spending, which was up by 8.9% (about €32.2bn). Ongoing grants to social security funds and subsidies to businesses made up most of this rise. Subsidies to businesses climbed by 53.3% (about €23.0bn) on the year. Most of this increase consisted of assistance to businesses affected by the fallout from the coronavirus pandemic. About €35.7bn of the funds earmarked for this purpose were disbursed by 30 November 2021. Grants to social security funds were up by 15.1% (about €19.8bn) on the year. This includes a year-on-year increase of about €13.5bn in disbursements to the health fund to cover pandemic-related costs. These grants also include €3.0bn in disbursements to the health fund’s liquidity reserves for a programme to future-proof hospitals, which was established this year; this is the full amount that was budgeted for this purpose. Ongoing grants to public administrations fell by 24.0% (about €17.4bn) on the year. This decline was influenced by a number of factors, which to some extent offset each other. The most important ones are as follows: As part of the government stimulus package that was adopted in response to the pandemic, a €27.6bn grant was paid into the Energy and Climate Fund in November 2020. In 2021, €2.5bn has been allocated to the fund so far. In addition, pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz) are about €4.0bn lower so far this year than in 2020. Furthermore, a €6.1bn grant that was allocated to the Länder in 2020 to compensate local authorities for shortfalls in trade tax revenue was not repeated in 2021. These reduced expenditures in 2021 were offset to some extent by grants totalling €16.0bn to the special fund for reconstruction aid (Aufbauhilfe 2021), which was established in response to the severe flooding that occurred in July 2021.

Investment spending in the first 11 months of 2021 totalled about €52.0bn, an increase of 40.7% (about €15.0bn) 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 increased by approximately €10.9bn on the year. In contrast, fixed asset investment was down by 47.3% (about €4.4bn) 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 is affecting 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 rose by approximately €3.7bn on the year in November 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).

Budget balance

The federal budget recorded a deficit of €167.6bn for the period from January to November 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 November 2021

2021 trends in tax revenue (excluding local authority taxes)

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Trend in November 2021

Total tax revenue (excluding local authority taxes) was up by 15.4% on the year in November 2021. This increase was largely due to higher revenue from joint taxes, which was up by 17.7% on the year. Taxes posting year-on-year revenue gains – some of them significant – included wages tax, value added taxes, assessed income tax and corporation tax. These gains likely reflect the economic recovery in the second and third quarters of 2021, which has led to current rates of unemployment and short-time work that are much lower, and employment levels that are higher, than at any time so far during the pandemic (see the article [in Germany only] on economic trends in the current issue of the Finance Ministry’s monthly report). These positive trends have had a particularly important impact on wages tax revenue. In addition, the baseline figure for VAT revenue (in November 2020) was reduced significantly by the temporary cut in VAT rates in the second half of 2020. Revenue from taxes accruing solely to the Federation was down by 3.1% on the year in November, while receipts from taxes accruing to the Länder surged by 42.7%.

EU own resources

Transfers of own resources to the EU, including customs duties, were down by about €1.3bn (28.2%) on the year in November 2021, partly due to the fact that the figure for November 2020 was affected by a special factor (the retroactive settlement of Germany’s contribution to an EU amending budget). In general, monthly requisitions are based on the annual EU budget that is in force for the respective year. Such requisitions can be subject to fluctuations, however, especially when amending budgets take effect.

Cumulative overview of the January–November 2021 period

In the 11 months from January to November 2021, total tax receipts (excluding local authority taxes) were up by 10.2% over the same period in 2020. Revenue from joint taxes rose by 13.4%, while receipts from taxes accruing solely to the Federation fell by 7.2%. Revenue from taxes accruing solely to the Länder grew by 14.1%.

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 27.2% on the year in November 2021. The Federation’s take from joint taxes grew by 22.6%. This was higher than the increase in overall revenue from joint taxes, which was up by 17.7%. This discrepancy is due to the fact that the Federation’s share of VAT revenue increased by 18.1%, even though overall VAT revenue was up by just 10.2%. Under section 1 (1) of the Fiscal Equalisation Act (Finanzausgleichgesetz), the Federation receives 52.81% of overall VAT revenue. This share is reduced by annual fixed amounts that the Federation allocates to the Länder and local authorities. Because the amounts of these allocations are fixed for a given year, this means that when VAT revenue goes up, the Federation’s share of VAT revenue goes up as well. Furthermore, the fixed amount that the Federation paid to the Länder in November 2021 was lower than the amount it paid in November 2020. Other trends in November 2021: Revenue from taxes accruing solely to the Federation was down by 3.1%. Supplementary federal grants to the Länder increased. Own resources payments to the EU were lower on the year.

Länder tax receipts posted a strong year-on-year gain of 16.6% in November 2021. Due to the above-described mechanism for distributing VAT revenue, the Länder posted lower rates of year-on-year growth for VAT revenue (5.8%) and revenue from joint taxes (14.9%) than the Federation. The yield from taxes that accrue exclusively to the Länder surged by 42.7%. In addition, supplementary federal grants to the Länder increased by 8.8% on the year, and federal subsidies to the Länder for public transport rose by 3.5%.

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Joint taxes

Wages tax

Gross revenue from wages tax was up by 5.5% on the year in November 2021, 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 upward trend reflects the marked improvement in conditions on the labour market compared with last year. Child benefit payments – which are financed from wages tax receipts – were up by 1.0% on the year (child benefit payments were increased at the beginning of 2021). Overall, cash receipts from wages tax posted a year-on-year gain of 7.4% in November. In cumulative terms, cash receipts from wages tax were up by 4.2% on the year in the first 11 months of 2021.

Corporation tax

On balance, the gross yield from corporation tax (payments less refunds) was roughly +€2.0bn in November 2021, compared with a gross total of about €130m in November 2020. The gross figure for corporation tax revenue was then modified to account for small outgoing payments of the tax allowance for research and small incoming repayments of investment allowance. On balance, these payments totalled around €5.4m and had only a minimal impact on cash receipts from corporation tax. Cumulatively, cash receipts from corporation tax were up by 89.7% on the year in the first 11 months of 2021.

Assessed income tax

Gross receipts from assessed income tax were up by about €1.2bn on the year in November 2021. Employee refunds (which are subtracted from the gross figure) totalled €1.0bn, down by 0.4% compared with the same month last year. 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, the yield from assessed income tax in November 2021 totalled approximately +€1.1bn, compared with last November’s total of roughly €128m. In cumulative terms, cash receipts from assessed income tax were up by 23.8% on the year in the first 11 months of 2021.

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were down by 12.9% on the year in November 2021. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €68m (+12.5% on the year). Overall, cash receipts from non-assessed taxes on earnings fell by 13.0% on the year in November. Cumulatively, cash receipts from non-assessed taxes on earnings were up by 19.5% on the year in the first 11 months of 2021.

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains grew by 24.8% on the year in November 2021. Cumulative cash receipts from this tax were up by 47.4% on the year in the first 11 months of 2021.

Value added taxes

Revenue from value added taxes was up by 10.2% on the year in November 2021. Receipts from domestic VAT grew by 21.4%, while the yield from import VAT fell by 28.2%. Starting in 2021, the due date for paying import VAT was moved to the 26th day of the month. Depending on how many working days remain until the end of a given month, some revenue may not be posted to government accounts until the following month. This type of accounting-related revenue shift was the main reason for the year-on-year decline in import VAT receipts in November 2021.

In addition, it is important to keep in mind that cash receipts from value added taxes in November 2020 were comparatively low, particularly due to the temporary cut in VAT rates in the second half of 2020. Nevertheless, the current VAT revenue figures do also reflect the marked economic recovery that has occurred over the course of 2021: taking into account the above-mentioned revenue shift that resulted from the change in due dates, VAT receipts in November 2021 were likely even slightly higher than the total for the pre-pandemic month of November 2019. In cumulative terms, cash receipts from value added taxes were up by 11.7% in the first 11 months of 2021.

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Taxes accruing to the Federation

In November 2021, revenue from taxes accruing solely to the Federation was down by 3.1% compared with the same month last year, mainly due to the partial elimination of the solidarity surcharge from 1 January 2021 onwards. Revenue from the solidarity surcharge was down by 52.6% on the year. Energy duty revenue also fell slightly on the year by 1.8%. In contrast, several taxes posted robust revenue gains, including tobacco duty (+12.7%), insurance tax (+4.1%), electricity duty (+2.1%) and especially aviation tax (+832.9%). While air traffic at German airports has increased significantly following the sharp contraction caused by the onset of the pandemic, aviation tax receipts in November 2021 were still 10.5% below pre-pandemic levels (November 2019). Furthermore, the growth in air traffic has currently stalled, presumably due to the recent increase in infection rates. 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 7.2% on the year in the first 11 months of 2021.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up by 42.7% on the year in November 2021. Taxes recording revenue gains included real property transfer tax (+23.6%), inheritance tax (+94.5%), fire protection tax (+6.2%) and betting and lottery tax (+18.2%). The increase in receipts from the betting and lottery tax was mainly due to the substantial proceeds from the new online poker tax and virtual slots tax, which have been levied since 1 July 2021. Receipts from beer duty fell by 8.3%. In cumulative terms, overall cash receipts from taxes accruing solely to the Länder were up by 14.1% on the year in the first 11 months of 2021.

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Borrowing and guarantees

Borrowing trends for the Federation in November 2021

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

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

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Guarantees
  Authorised amountAmount allocated as of
30 September 2021
Amount allocated as of
30 September 2020
in €bn

Export credit guarantees

155.0126.9125.6

Loans to foreign debtors, foreign direct investment, EIB loans

75.035.740.6

Financial cooperation projects

35.031.928.6

Food stockpiling

0.70.00.0

Domestic guarantees

430.0312.3273.2

International financial institutions

110.068.668.6

Treuhandanstalt successor organisations

1.01.01.0

Interest compensation guarantees

15.015.015.0

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Calendar

Publication schedule¹ of the monthly reports
Monthly reportReporting periodPublication date
January 2022 issueDecember 202128 January 2022
February 2022 issueJanuary 202222 February 2022
March 2022 issueFebruary 202222 March 2022
April 2022 issueMarch 202222 April 2022
May 2022 issueApril 202220 May 2022
June 2022 issueMay 202221 June 2022
July 2022 issueJune 202221 July 2022
August 2022 issueJuly 202219 August 2022
September 2022 issueAugust 202222 September 2022
October 2022 issueSeptember 202220 October 2022
November 2022 issueOctober 202222 November 2022
December 2022 issueNovember 202222 December 2022
Key dates on the fiscal and economic policy agenda

17–18 January 2022

Eurogroup and ECOFIN Council meetings in Brussels

17–18 February 2022
(tbc)

Meeting of G20 finance ministers and central bank governors in Jakarta, Indonesia

25–26 February 2022

Eurogroup and informal ECOFIN meetings in Paris

14–15 March 2022

Eurogroup and ECOFIN Council meetings in Brussels