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20 May 2022

Overview of federal budgetary and financial data up to and including April 2022

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

Federal budget trends up to and including April 2022

Table: Trends in the federal budget
Actual 2021Actual¹
January to April 2022

Expenditure (€bn)²

556.6155.3

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

 -5.0

Revenue (€bn)³

341.0114.6

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

 23.4

Tax revenue (€bn)

313.5107.2

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

 24.7

Balance of pass-through funds (€bn)

0.00.0

Fiscal balance (€bn)

-215.6-40.7

Financing/use of surplus:

215.640.7

Cash resources (€bn)

-138.8

Seigniorage (€bn)

0.20.0

Movements in reserves⁴ (€bn)

00.0

Net borrowing⁵ (€bn)

215.4-98.2

Until the 2022 budget has been promulgated in the Federal Law Gazette, the German government is working on the basis of an interim budget, which is based primarily on Article 111 of the Basic Law (see the article “Vorläufige Haushaltsführung 2022” (“2022 Interim Budget Management”) in the German version of the January 2022 monthly report). Given that the targets for the 2022 federal budget have not been determined, no target values are included in the following tables.

Revenue

Federal revenue in the period from January to April 2022 totalled approximately €114,6bn, up by 23.4% (about €21.7bn) on the year. Tax receipts (taking into account transfers of own resources to the EU) increased by 24.7% (roughly €21.3bn) on the year. The yield from value added taxes was up by 35.0% (approximately €11.9bn) on the year. Revenue from income tax and corporation tax rose by 11.9% (about €5.4bn). Payments to the EU (GNI-based own resources and VAT-based own resources) were down by about €3.5bn on the year, which also contributed to the increase in tax revenue.

The category of “other revenue” recorded a gain of 6.7% (about €0.5bn) on the year in the January–April period.

Expenditure

Federal expenditure in the first four months of 2022 totalled approximately €155.3bn, down by 5.0% (about €8.2bn) compared with the same period last year. A breakdown by economic category shows that consumption spending was at almost the same level as in the same period last year, dropping by just 0.4% (about €0.6bn). However, opposing trends could also be observed. Firstly, ongoing subsidies to social security funds were up by €5.3bn on the year, which increased spending levels. This includes higher federal payments to the health fund and the long-term care insurance compensation fund to cover pandemic-related costs of around €7.4bn, and the elimination of €3.0bn in grants for a programme to future-proof hospitals. Secondly, spending on subsidies for the procurement of Covid-19 vaccines rose by around €2.1bn on the year in the January–April 2022 period. In addition, interest expenditure was up by 125.5% (around €2.9bn) on the year; this was largely the result of higher grants to the special fund for final payments on inflation-indexed federal securities. The reduction in spending compared with the same period last year was mainly due to lower subsidies to companies, which fell by 38.3% (around €8.9bn). Assistance to businesses affected by the fallout from the coronavirus pandemic amounted to roughly €5.4bn in the first four months of 2022, compared with approximately €14.3bn in the same period last year. Moreover, grants to public administrations fell by 16.4% (about €2.9bn) on the year, due mainly to the fact that in 2021 a €2.5bn grant to the Energy and Climate Fund was allocated in March, which increased the baseline figure.

Investment spending totalled about €10.6bn in the first four months of 2022, down by 41.7% (roughly €7.6bn) on the year. This was mainly because the liquidity assistance provided to the Federal Employment Agency in the January–April period was around €7.5bn lower than in the same period last year. At the end of the 2021 budget year, the assistance granted over the course of the year that was not repaid by the end of the budget year was converted into a subsidy for the Federal Employment Agency. Fixed asset investment remained roughly at the same level as last year.

Budget balance

The federal budget recorded a deficit of approximately €40.7bn for the January–April 2022 period.

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. This is especially true towards the start of the year. It should also be borne in mind that an interim budget is currently in place.

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 April 2022

2022 trends in tax revenue (excluding local authority taxes)

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Total tax revenue (excluding local authority taxes) was up by 9.9% on the year in April 2022. This is primarily a result of the 11.6% year-on-year rise in revenue from joint taxes. Most types of taxes, such as value added taxes and wages tax, recorded tangible revenue growth compared with their 2021 baselines, which were significantly impacted by the economic fallout from the Covid-19 pandemic. Receipts from federal taxes increased by 3.1% on the year in April 2022, while receipts from taxes accruing to the Länder fell by 0.5%. The war in Ukraine has not yet had a noticeable effect on tax revenues in Germany.

The ongoing strong upwards trend in tax revenues, which is also apparent when compared with the trend in the tax bases, is reflected in the Working Party on Tax Revenue Estimates’ most recent tax revenues forecast of 10–12 May 2022. At the same time, the outlook for future revenue trends is currently very unpredictable, given the war in Ukraine and uncertainties about the further course of the pandemic, especially in relation to possible supply chain disruptions caused by the situation in China. The Working Party’s forecasts are published on the Finance Ministry’s website (in German). A detailed article on the forecasts will appear in the next edition of the German version of the monthly report.

EU own resources

Transfers of own resources to the EU, excluding customs duties, were up by approximately 16.5% on the year in April 2022. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year and are distributed relatively evenly across individual months. The 2022 annual budget is similar to last year’s in terms of volume. However, so far this year the drawdown of EU own resources has been 24.0% lower in cumulative terms than in the same period last year. As a result, requisitions in the rest of the year can also be expected to be somewhat higher than in the equivalent period of 2021.

Overview of the January–April 2022 period

Overall, the first four months of 2022 were marked by a relatively strong increase in tax revenues, which rose by 16.2% on the year. This was partly due to the fact that receipts in the same period of 2021 were impacted by the economic effects of the Covid-19 pandemic and by the statutory and administrative tax measures that were taken in response. In January–April 2022, receipts from joint taxes rose by 18.5% on the year, revenue from federal taxes increased by 2.6% and the yield from taxes accruing to the Länder was up by 11.8%.

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 9.4% on the year in April 2022. This increase was mainly due to growth in revenue from joint taxes. The Federation’s take from joint taxes grew by 13.2%, which was higher than the 11.6% increase in overall revenue from joint taxes. This was due to the fact that, once again, there was a moderate change in the distribution of VAT revenue in the Federation’s favour in comparison with the same period last year. In addition, revenue from taxes accruing solely to the Federation was up by 3.1% on the year. Supplementary federal grants to the Länder and federal subsidies to the Länder for public transport recorded year-on-year increases.

Länder tax receipts also increased markedly on the year in April 2022, by 9.4%. Total Länder revenue from joint taxes also rose substantially, by 10.9%. Mirroring the higher payments made by the Federation, the Länder saw an increase in receipts from supplementary federal grants (+12.6%) and from federal subsidies for public transport (+6.4%). In contrast, the yield from taxes that accrue exclusively to the Länder posted a slight drop of 0.5%. Local authorities’ take from their share of joint taxes was 6.3% higher than in the same period last year.

Joint taxes

Wages tax

Gross revenue from wages tax was up by 7.5% in year-on-year terms in April 2022. This upwards trend primarily reflects the improvement in labour market conditions compared with April 2021: there has been a significant decline in short-time work, and employment has risen further (see the article on domestic economic trends from a fiscal policy perspective in the current German edition of the monthly report). Child benefit payments – which are financed from wages tax receipts – fell slightly, by 2.7% on the year. Overall, cash receipts from wages tax posted a year-on-year gain of 9.7% in April 2022. In cumulative terms, cash receipts from wages tax were up by 10.3% on the year in the first four months of 2022.

Corporation tax

In April 2022, gross revenue from corporation tax fell slightly on the year, by 1.5%. However, year-on-year revenue fluctuations of this kind are common in months such as April and should not be interpreted as indications of the future course of revenue trends. Payments of research and investment allowances, which are financed from gross receipts, amounted to just €6.9m, meaning they had only a marginal impact on cash receipts from corporation tax. Cash receipts from corporation tax were down by 2.2% on the year in April 2022. In cumulative terms, cash receipts from corporation tax were up by 8.3% on the year in the first four months of 2022.

Assessed income tax

Like corporation tax receipts, revenue from assessed income tax in April 2022 was also influenced by assessment activities. Here too, significant year-on-year fluctuations can occur. Gross receipts from assessed income tax rose by 2.2% on the year in April. Employee refunds declined by 10.6% on the year. Investment allowance payments, research allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, were also deducted from the gross figure. On balance, cash receipts from assessed income tax were up by 74.7% on the year in April 2022. In cumulative terms, cash receipts from assessed income tax increased by 18.3% on the year in the first four months of 2022.

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings recorded a 17.7% year-on-year rise in April 2022. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €68m (down by 22.0% on the year). Overall, cash receipts from non-assessed taxes on earnings were up by 20.4% in April 2022 compared with the same month last year. Cumulatively, cash receipts from non-assessed taxes on earnings rose by 20.7% on the year in the first four months of 2022.

Final withholding tax on interest and capital gains

In April 2022, revenue from final withholding tax on interest and capital gains was 19.0% lower than in the same month last year. Taken cumulatively, cash receipts from final withholding tax on interest and capital gains were down by 14.7% on the year in the first four months of 2022.

Value added taxes

Revenue from value added taxes increased by 13.4% on the year in April 2022. Receipts from domestic VAT grew by 8.9% on the year in April 2022. Cash receipts originated primarily from transactions that occurred in February. The level of domestic economic activity was much lower in February 2021 than in February 2022 as a result of the pandemic and the lockdown, which explains the revenue growth this year. In addition, consumption levels were lower in early 2021 due to purchases having been brought forward because of the temporary VAT reduction in the second half of 2020; this may also have reduced the 2021 baseline somewhat. Receipts from import VAT grew by 25.0% on the year in April 2022. This is related to a significantly higher level of imports of goods compared with the same period last year, which is partly due to the very sharp increase in import prices. Cumulatively, cash receipts from value added taxes rose by 29.1% on the year in the first four months of 2022; this was in part the result of significantly lower baselines in 2021 because of the Covid-19 pandemic and the tax measures that were taken in response.

Taxes accruing to the Federation

In April 2022, revenue from taxes accruing solely to the Federation was up by 3.1% compared with the same month last year. Revenue from the solidarity surcharge recorded a year-on-year rise of 28.2% in April as a result of higher receipts from the taxes which constitute its tax base. The sharp increase in receipts from energy duty, which were up by 14.6%, was largely the result of a low baseline in 2021. Revenue from this tax is still lower than it was in the pre-pandemic period. The yield from aviation tax posted extremely high growth of 166.2%, which is also due to a very low baseline. Despite the upwards trend, receipts from this tax are still far short of pre-pandemic levels. In contrast, yields from insurance tax and tobacco duty fell on the year, by 7.1% and 18.0% respectively. Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes.

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were down in April 2022, by 0.5% on the year. Revenue from real property transfer tax fell by 2.5% on the year, while the yield from inheritance tax was down by 3.2%. The increase in receipts from betting and lottery tax, which were up by 26.5%, was mainly due to proceeds from the new online poker tax and virtual slots tax, which have been levied since 1 July 2021. Revenue from fire protection tax was up by 1.5%, while receipts from beer duty fell slightly on the year, by 0.2%.

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Borrowing and guarantees

Borrowing trends for the Federation in April 2022

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Borrowing trends for the Federation (budget and special funds, excluding loan financing) in April 2022

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Borrowing trends for the Federation (loan financing) in April 2022

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Guarantees
  Authorised amountAmount allocated as of
31 March 2022
Amount allocated as of
31 March 2021
in €bn

Export credit guarantees

155.0126.6121.9

Loans to foreign debtors, foreign direct investment, EIB loans

75.035.436.0

Financial cooperation projects

35.030.832.2

Food stockpiling

0.70.00.0

Domestic guarantees

430.0282.1302.9

International financial institutions

110.075.568.6

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
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

18–20 May 2022

Meeting of G7 finance ministers and central bank governors in Bonn and Königswinter, Germany

23–24 May 2022

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

16–17 June 2022

Eurogroup and ECOFIN Council meetings in Luxembourg

11–12 July 2022

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

22-23 August 2022

Meeting of the finance ministers of Germany, Austria, Switzerland, Luxembourg and Liechtenstein in Switzerland