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21 July 2022

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

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

Table: Trends in the federal budget

Expenditure (€bn)²

556.6

495.8

227.7

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

 

 

-7.3

Revenue (€bn)³

341.0

356.2

175.6

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

 

 

19.4

Tax revenue (€bn)

313.5

328.4

164.7

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

 

 

20.3

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-215.6

- 139.6

-52.1

Financing/use of surplus:

215.6

139.6

52.1

Cash resources (€bn)

-

-

122.1

Seigniorage (€bn)

0.2

0.2

0.1

Movements in reserves⁴ (€bn)

0

0.5

0

Net borrowing⁵ (€bn)

215.4

138.9

-70.0

Any discrepancies in totals are due to rounding.
¹ As per accounts.
² 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.
³ 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.
⁴ Negative values denote accumulation of reserves.
⁵ (-) debt repayment; (+) borrowing
Source: Federal Ministry of Finance

Actual 2021

2022 target

Actual¹
January to June 2022

The Act Adopting the Federal Budget for the 2022 Fiscal Year (Haushaltsgesetz 2022) was promulgated in the Federal Law Gazette on 22 June 2022.

Revenue

Federal revenue in the first half of 2022 totalled €175.6bn, up by 19.4% (about €28.6bn) on the year. Tax receipts (including EU own resources that are subtracted from the total) were up by 20.3% (about €27.8bn) on the year. Revenue from value added taxes rose by 30.4% (about €15.9bn), while receipts from income tax and corporation tax grew by 16.7% (about €12.1bn). Payments to the EU (GNI-based own resources and VAT-based own resources) were down by about €2.3bn on the year, which also contributed to the increase in tax revenue.

The category of “other revenue” recorded a gain of 7.7% (about €0.8bn) on the year in the January–June period.

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Total expenditure

Federal expenditure in the first six months of 2022 totalled approximately €227.7bn, down by 7.3% (about €17.9bn) compared with the same period last year. A breakdown by economic category shows that consumption spending was down by 2.8% (about €6bn) on the year. There were several contrasting trends overall. For example, ongoing subsidies to social security funds were up by about €10.1bn on the year, which increased spending levels. This included higher federal payments (totalling roughly €11.2bn) to the health fund and the long-term care insurance compensation fund to cover pandemic-related costs, and the elimination of about €3bn in grants for a programme to future-proof hospitals. In addition, spending on subsidies for the procurement of Covid-19 vaccines rose by around €2.0bn on the year in the January–June period. Operating expenditure was also up on the year by 14.8% (roughly €2.2bn), due mainly to costs incurred in connection with the build-up and release of gas reserves. Approximately €1.5bn was spent for this purpose in the first six months of 2022. The reduction in spending compared with the same period last year was mainly due to lower subsidies to companies, which fell by 44.4% (around €16.7bn). Assistance to businesses affected by the fallout from the coronavirus pandemic amounted to roughly €6.8bn in the first half of 2022 compared with approximately €23.0bn in the same period last year. Moreover, grants to public administrations were down by 14.1% (about €3.4bn) on the year, due mainly to the fact that in 2021 a €2.5bn grant was allocated to the Energy and Climate Fund, which increased the baseline figure. In addition, pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz) declined by about €1.0bn.

Investment spending totalled about €15.6bn in the first six months of 2022, down by 43.3% (roughly €11.9bn) on the year. This was mainly because the liquidity assistance provided to the Federal Employment Agency in the January–June period was around €11.0bn 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 in the January-June period was down by roughly 6.0% (about €0.1bn) on the year.

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Fiscal balance

The federal budget recorded a deficit of roughly €52.1bn in the first half of 2022.

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 June 2022

2022 trends in tax revenue (excluding local authority taxes)

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Total tax revenue (excluding local authority taxes) was up by 26.3% on the year in June 2022. This outcome was driven mainly by a 29.6% year-on-year rise in revenue from joint taxes. Almost half of the revenue increase was attributable to value added taxes, and particularly to import VAT, which for technical reasons was posted at a later date. A considerable increase in dividend distributions led to a sharp rise in receipts from non-assessed taxes on earnings in June. Corporation tax and assessed income tax posted significant revenue gains, largely due to tax prepayments that fall due in June. The robust labour market ensured strong growth in receipts from wages tax. Final withholding tax on interest and capital gains was the only joint tax that posted a decrease. Revenue from taxes accruing solely to the Federation was up by 9.7% on the year in June, while receipts from taxes accruing to the Länder fell slightly by 1.0%.

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EU own resources

Transfers of EU own resources rose by 64.0% on the year in June 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 7.2% 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.

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Cumulative overview of the January–June 2022 period

In the first half of 2022, total tax revenue (excluding local authority taxes) was up by 17.5% on the year. This is partly due to the fact that the 2021 baseline was impacted by the economic effects of the Covid-19 pandemic and by the statutory and administrative tax measures that were taken in response. In the first six months of 2022, receipts from joint taxes were up by 19.9% on the year, while revenue from federal taxes was up by 3.9% and the yield from Länder taxes was up by 9.1%.

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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 15.1% on the year in June 2022. This outcome was driven mainly by a hefty 32.4% increase in the Federation’s take from joint taxes. Revenue from purely federal taxes grew at a comparatively weaker rate of 9.7%, but this had only a slight dampening effect on the Federation’s overall revenue growth. In contrast, factors that did significantly cut into the Federation’s overall revenue in June 2022 included higher transfers of EU own resources from the federal budget (which were up by over €1.1bn) and a €3.7bn increase in public transport subsidies to the Länder. The transfers of additional federal subsidies for public transport to the Länder in June were based on the Seventh Act Amending the Local Public Transport Act (7. Gesetz zur Änderung des Regionalisierungsgesetzes) of 25 May 2022. The additional funds are being used to offset revenue losses in the public transport sector resulting from the Covid-19 pandemic and to finance the 9-euro ticket scheme (a temporary reduced-rate public transport ticket costing €9 per month in the months of June, July and August 2022). Supplementary federal grants to the Länder increased by 12.6%.

Länder tax receipts (after accounting for supplementary federal grants) were up by 37.1% on the year in June 2022, significantly outpacing the Federation. The overall share of revenue from joint taxes that was allocated to the Länder was somewhat lower than the Federation’s due to a slight decrease in the Länder share of VAT revenue. The slight 1% decline in receipts from taxes accruing solely to the Länder also had a negative impact on Länder tax revenue totals. On the other hand, the above-mentioned disbursement of federal subsidies to the Länder for public transport significantly boosted Länder revenue. The increase in supplementary federal grants also had a positive impact on Länder revenue. Local authorities’ take from their share of joint taxes was 12.7% higher than in the same period last year.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 10.6% on the year in June 2022. This result reflects, in particular, the ongoing positive trends on the labour market (for more information, see the article “Konjunkturentwicklung aus finanzpolitischer Sicht” [“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 – were down by 3.4% on the year. Overall, cash receipts from wages tax posted a year-on-year gain of 13.7% in June 2022. In cumulative terms, cash receipts from wages tax were up by 14.7% on the year in the first six months of 2022.

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Corporation tax

Gross receipts from corporation tax were up by 29.5% in June 2022, the month in which second prepayment instalments for 2022 were due. Prepayments for the current year rose by over 26% on the year. Back-payments and refunds from assessments were nearly equal, a slight improvement on the year. Payments of research and investment allowances, which are financed from gross receipts, totalled only about €11m and thus had only a marginal impact on cash receipts from corporation tax. Cash receipts from corporation tax were up by 29.3% on the year. In cumulative terms, cash receipts from corporation tax were up by 17.6% on the year in the first six months of 2022.

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Assessed income tax

Revenue from assessed income tax in June 2022 was also influenced by prepayments for the current year. Gross receipts from assessed income tax were up by 8.7% on the year in June. Prepayments for the current year rose by roughly 8%. Employee refunds declined by 40.7% 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 13.4% on the year in June 2022. In cumulative terms, cash receipts from assessed income tax were up by 18.4% on the year in the first six months of 2022.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were up by 55.8% on the year in June 2022. In May, a number of large corporations held shareholders’ meetings, where many approved significant increases in dividend distributions. The capital income tax revenue from these dividend distributions was remitted to the revenue authorities in June. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €35m (down by 72.5% on the year). Overall, cash receipts from non-assessed taxes on earnings were up by 59.1% on the year in June 2022. Cumulatively, cash receipts from non-assessed taxes on earnings rose by 31.5% on the year in the first half of 2022.

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Final withholding tax on interest and capital gains

In June 2022, revenue from final withholding tax on interest and capital gains was 51.7% lower than in the same month last year. Taken cumulatively, cash receipts from final withholding tax on interest and capital gains were down by 20.0% on the year in the first six months of 2022.

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Value added taxes

Revenue from value added taxes was up by 55.4% on the year in June 2022. This sharp increase was due to the unusually high 267.6% increase in import VAT receipts, which in turn was largely due to technical reasons. Receipts from domestic VAT also grew markedly by 9.2% on the year in June 2022. The growth in import VAT revenue was caused primarily by the fact that, since 2021, the deadline for remitting the tax to the authorities is now the 26th of each month; this means that, in some months, part of the revenue is not recorded until the following month due to the time needed for processing. The high growth rate is due partly to revenue shifts from June 2021 to July 2021, which significantly lowered the baseline, as well as to revenue shifts from May 2022 to June 2022. However, even when adjusted for the above-mentioned effects, import VAT revenue was still significantly higher on the year. This is due in part to the continued substantial year-on-year increase in the value of goods imports, and especially due to the sharp rise in import prices.

Cumulatively, cash receipts from value added taxes were up by 25.7% on the year in the first six months of 2022. These cash receipts originated largely from transactions that took place from November 2021 to April 2022. Economic activity during this period was higher than during the same period in 2020/2021, which was strongly affected by the pandemic and the measures taken at that time to mitigate its effects; this explains part of the revenue growth recorded in the first half of 2022. Furthermore, the tax measures taken in connection with the Covid-19 pandemic significantly lowered the baseline figures for 2021.

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Taxes accruing to the Federation

In June 2022, revenue from taxes accruing solely to the Federation was up by 9.7% compared with the same month last year. Revenue from the solidarity surcharge increased significantly by 43.3% on the year thanks to growth in revenue from the taxes that make up its tax base, especially non-assessed taxes on earnings. Other taxes also posted revenue gains, including energy duty (+3.2%), electricity duty (+13.5%), insurance tax (+7.1%), alcohol duty (+19.0%), and aviation tax (+541.1%). The sharp increase in aviation tax revenue was due to the very low baseline figure from 2021 as a result of the pandemic. In June (as already in May), tax receipts thus regained the pre-pandemic levels achieved in May and June of 2019. However, this comparison does not take into account the large increase in tax rates starting on 1 April 2020. The additional revenue expected from this tax rate increase was about €0.8bn a year. Yields from tobacco duty and motor vehicle tax fell on the year, by 10.8% and 5.2% respectively. Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were down in June 2022, by 1.0% on the year. Taxes posting revenue gains on the year included real property transfer tax (+5.1%), betting and lottery tax (+6.6%), fire protection tax (+9.3%) and beer duty (0.6%). Revenue from inheritance tax was down by 13.5% on the year.

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Borrowing and guarantees

Borrowing trends for the Federation in June 2022

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

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

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Guarantees

  

Authorised amount

Amount allocated as of
30 June 2022

Amount allocated as of
30 June 2021

in €bn

Export credit guarantees

150.0

124.0

122.2

Loans to foreign debtors, foreign direct investment, EIB loans

60.0

35.7

37.6

Financial cooperation projects

37.0

30.8

32.1

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

550.0

287.1

303.8

International financing institutions

90.0

75.5

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

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

22-23 August 2022

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

9–10 September 2022

Eurogroup and informal ECOFIN meetings in Prague, Czech Republic

3–4 October 2022

Eurogroup and ECOFIN Council meetings in Luxembourg

13–14 October 2022

Meeting of G20 finance ministers and central bank governors in Washington, D.C.

13–15 October 2022

Annual meetings of the IMF and World Bank in Washington, D.C.

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