Federal budget trends in December 2021
Expenditure (€bn)³ |
441.8 |
572.7 |
556.6 |
---|---|---|---|
Year-on-year change in % (year to date) |
|
|
+26.0 |
Revenue (€bn)⁴ |
311.1 |
332.3 |
341.0 |
Year-on-year change in % (year to date) |
|
|
9.6 |
Tax revenue (€bn) |
283.3 |
284.0 |
313.5 |
Year-on-year change in % (year to date) |
|
|
10.7 |
Balance of pass-through funds (€bn) |
0.0 |
0.0 |
0.0 |
Fiscal balance (€bn) |
-130.7 |
-240.4 |
-215.6 |
Financing/use of surplus: |
130.7 |
240.4 |
215.6 |
Cash resources (€bn) |
- |
- |
0.0 |
Seigniorage (€bn) |
0.2 |
0.2 |
0.2 |
Movements in reserves⁵ (€bn) |
0 |
0.0 |
0.0 |
Net borrowing⁶ (€bn) |
130.5 |
240.2 |
215.4 |
Any discrepancies in totals are due to rounding. | |||
Actual 2020 |
2021 target¹ |
Actual² |
Tax revenue in December 2021
Total tax revenue (excluding local authority taxes) was up by 19.5% on the year in December 2021. This can largely be attributed to the 25.0% year-on-year rise in revenue from joint taxes. 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, as a result of which GDP for 2021 as a whole grew by a total of 2.7% (see the article [in German only] on economic trends in the current issue of the Finance Ministry’s monthly report). Another reason for the gains recorded in December 2021 is the fact that the December 2020 baseline figure for VAT revenue was reduced significantly by the temporary cut in VAT rates in the second half of 2020. In addition, revenue from import VAT shifted from November to December 2021 for technical reasons, leading to a significant revenue increase. Overall, receipts from joint taxes in December 2021 were significantly higher than anticipated, even taking into account the special factors. In contrast, revenue from taxes accruing solely to the Federation was down by 6.0% on the year in December. Receipts from taxes accruing to the Länder surged by 10.9%.
EU own resources
Transfers of own resources to the EU, including customs duties, were down by about €2.3bn (65.7%) on the year in December 2021, partly due to the fact that the baseline figure for December 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. However, depending on the EU’s financing needs at any given time, such requisitions can be subject to fluctuations, for example when amending budgets take effect.
Overview of fiscal year 2021
Total tax receipts (excluding local authority taxes) in 2021 were up by 11.5% on the year. Revenue from joint taxes rose by 15.0%, while receipts from taxes accruing solely to the Federation fell by 7.1%. Receipts from taxes accruing solely to the Länder grew by 13.8% (see the article on tax revenue in fiscal year 2021 in this issue of the Finance Ministry’s monthly report [in German only]).
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 25.9% on the year in December 2021. The Federation’s take from joint taxes grew by 30.2%. This was higher than the increase in overall revenue from joint taxes, which totalled 25.0%. This discrepancy is due to the fact that the Federation’s share of VAT revenue increased by 61.1%, even though overall VAT revenue posted a somewhat smaller increase of 40.5%. 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. Other trends in December 2021: revenue from taxes accruing solely to the Federation was down by 6.0% on the year. Supplementary federal grants to the Länder increased, as did federal subsidies to the Länder for public transport. Meanwhile, federal transfers of own resources to the EU were down on the year (see above).
Länder tax receipts also posted a strong year-on-year gain of 21.7% in December 2021. Due to the mechanism for distributing VAT revenue described above, the Länder posted lower rates of growth for VAT revenue (up by 28.6%) and revenue from joint taxes (up by 23.1%) than the Federation. Moreover, the yield from taxes that accrue exclusively to the Länder rose by 10.9%, while supplementary federal grants to the Länder increased by 8.8% and federal subsidies to the Länder rose by 29.0%.
Joint taxes
Wages tax
Gross revenue from wages tax was up by 5.4% on the year in December 2021, despite the reductions in revenue caused by tax relief measures for taxpayers in 2021 (i.e. the increase in the basic personal allowance and the related shift in the other tax thresholds). This upward trend primarily reflects the marked improvement in labour market conditions compared with December 2020. Child benefit payments, which are financed from wages tax receipts, were up by 4.7% on the year in December 2021 as a result of the increase in child benefit that came into effect at the beginning of 2021. Overall, cash receipts from wages tax posted a year-on-year gain of 5.5% in December 2021. In cumulative terms, cash receipts from wages tax in fiscal year 2021 were 4.4% higher than in 2020.
Corporation tax
Gross receipts from corporation tax surged by 41.2% on the year in December, a month when prepayments are due and revenue therefore tends to be high. This increase can be attributed primarily to a rise in prepayments for 2021, to which the marked economic recovery is likely to have contributed. Research and investment allowances were funded from gross receipts from corporation tax. On balance, these payments totalled approximately €5.7m and thus had only a minimal impact on cash receipts from corporation tax. Cumulatively, cash receipts from corporation tax were up by 73.6% on the year in fiscal year 2021.
Assessed income tax
Gross revenue from assessed income tax also recorded a year-on-year rise in December, a month when prepayments are due, although at 18.4%, the increase was less strong than it was for corporation tax. Employee refunds (which are subtracted from the gross figure) were down by 21.9% on the 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, cash receipts from assessed income tax were up by 19.7% on the year in December 2021. Cumulative cash receipts from assessed income tax increased by 22.7% on the year in fiscal year 2021.
Non-assessed taxes on earnings
Gross receipts from non-assessed taxes on earnings recorded a 70.5% year-on-year rise in December 2021. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €40m (down by 75.7% on the year). Overall, cash receipts from non-assessed taxes on earnings were up by 78.9% in December 2021 compared with the same month last year. Cumulatively, cash receipts from non-assessed taxes on earnings grew by 27.4% on the year in fiscal year 2021.
Final withholding tax on interest and capital gains
Revenue from final withholding tax on interest and capital gains grew by 55.3% on the year in December 2021. In cumulative terms, cash receipts surged by 48.3% on the year in fiscal year 2021, as economic trends apparently led investors to realise gains from their investments in securities.
Value added taxes
Revenue from value added taxes was up by 40.5% on the year in December 2021. Receipts from domestic VAT grew by 13.1%, while the yield from import VAT increased by 137.8%. 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 accounting-related revenue shift was a key contributing factor behind the very sharp year-on-year increase in import VAT receipts recorded in December 2021. In addition, imports from the UK have been subject to import VAT since January 2021, which further contributed to the year-on-year rise in import VAT receipts in 2021. Another factor worth noting is that cash receipts from value added taxes were low in December 2020 due to the temporary cut in VAT rates in the second half of 2020. Finally, the current VAT revenue figures also reflect the marked economic recovery that occurred over the course of 2021. Cumulatively, cash receipts from value added taxes were up by 14.3% on the year in 2021.
Taxes accruing to the Federation
In December 2021, revenue from taxes accruing solely to the Federation was down by 6.0% compared with the same month last year, mainly due to the abolition of the solidarity surcharge for a large majority of wages tax and income tax payers from 1 January 2021 onwards. Revenue from the solidarity surcharge was down by 31.9% on the year. Revenue losses were also recorded for tobacco duty (down by 3.0%) and motor vehicle tax (down by 6.4%). Other taxes posted year-on-year revenue gains, some of them significant: insurance tax receipts were up by 1.8%, electricity duty revenue was up by 7.2%, and aviation tax revenue surged by 111.3%, although the latter remains significantly below pre-crisis levels. 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 7.1% on the year in fiscal year 2021.
Taxes accruing to the Länder
Receipts from taxes accruing solely to the Länder were up by 10.9% on the year in December 2021. Taxes recording revenue gains included real property transfer tax (up by 10.9%), inheritance tax (up by 11.1%), fire protection tax (up by 3.7%) and betting and lottery tax (up by 14.2%). The increase in receipts from betting and lottery tax was mainly due to substantial proceeds from the new online poker tax and virtual slots tax, which have been levied since 1 July 2021. Receipts from beer duty rose by 0.4%. In cumulative terms, revenue from taxes accruing solely to the Länder was up by 13.8% on the year in fiscal year 2021.
Borrowing and guarantees
Borrowing trends for the Federation (budget and special funds, excluding loan financing) in December 2021
Tabelle vergrößern
|
Authorised amount |
Amount allocated as of |
Amount allocated as of |
---|---|---|---|
in €bn | |||
Export credit guarantees |
155.0 |
128.0 |
125.3 |
Loans to foreign debtors, foreign direct investment, EIB loans |
75.0 |
35.1 |
37.0 |
Financial cooperation projects |
35.0 |
29.0 |
30.0 |
Food stockpiling |
0.7 |
0.0 |
0.0 |
Domestic guarantees |
430.0 |
273.0 |
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 |
Calendar
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 |
---|
17–18 February 2022 |
Meeting of G20 finance ministers and central bank governors in Bali, Indonesia |
---|---|
25–26 February 2022 |
Eurogroup and informal ECOFIN meetings in Paris |
14–15 March 2022 |
Eurogroup and ECOFIN Council meetings in Brussels |
4–5 April 2022 |
Eurogroup and ECOFIN Council meetings in Brussels |
18–24 April 2022 |
Spring meetings of the IMF and World Bank in Washington, D.C. |
21–23 April 2022 |
Meeting of G20 finance ministers and central bank governors in Washington, D.C. |
23–24 May 2022 |
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. |