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28 January 2022

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

Translated extracts from the Federal Ministry of Finance’s January 2022 monthly report

Federal budget trends in December 2021

Table: Trends in the federal budget

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.
¹ Figures reflect the 13 December 2021 government draft of a second supplementary federal budget for 2021, which was approved by the Budget Committee on 12 January 2022.
² As per accounts. Including full implementation of the draft supplementary budget for 2021 that was approved by the Budget Committee on 12 January 2022.
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
December 2021

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Tax revenue in December 2021

2021 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

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%.

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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.

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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]).

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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 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%.

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Joint taxes

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Borrowing and guarantees

Borrowing trends for the Federation in December 2021

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

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

Tabelle vergrößern

Guarantees

  

Authorised amount

Amount allocated as of
31 December 2021

Amount allocated as of
31 December 2020

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

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Calendar

Publication schedule¹ of the monthly reports

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

17–18 February 2022
(tbc)

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.