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22 September 2022

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

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

Table: Trends in the federal budget

Expenditure (€bn)²

556.6

495.8

314.0

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

 

 

-1.1

Revenue (€bn)³

341.0

356.2

227.8

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

 

 

13.9

Tax revenue (€bn)

313.5

328.4

212.1

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

 

 

14.2

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-215.6

-139.6

-86.2

Financing/use of surplus:

215.6

139.6

86.2

Cash resources (€bn)

-

-

146.3

Seigniorage (€bn)

0.2

0.2

0.1

Movements in reserves⁴ (€bn)

0.0

0.5

0.0

Net borrowing⁵ (€bn)

215.4

138.9

-60.2

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 August 2022

Revenue

Federal revenue for the period from January to August 2022 totalled approximately €227.8bn, up by 13.9% (about €27.8bn) on the year. Tax receipts (including EU own resources, which are subtracted from the total) increased by 14.2% (about €26.4bn) on the year. Revenue from value added taxes rose by 22.7% (about €16.7bn), while receipts from income tax and corporation tax grew by 13.1% (about €12.1bn). Federal revenue fell as a result of a year-on-year increase of approximately €4.1bn in public transport subsidies to the Länder. These additional subsidies are being used to offset revenue losses in the public transport sector resulting from the Covid 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).

The category of “other revenue” recorded a gain of 9.9% (about €1.4bn) on the year in the January–August period.

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Expenditure

Federal expenditure in the first eight months of 2022 totalled approximately €314.0bn, down by 1.1% (about €3.4bn) compared with the same period last year. A breakdown by economic category shows that consumption spending was up by 3.5% (about €9.9bn) over the same period last year. There were several contrasting trends overall. For example, ongoing subsidies to social security funds were up by about €11.4bn on the year, which increased spending levels. This includes higher federal payments (totalling roughly €11.8bn) to the health fund and the long-term care insurance compensation fund to cover pandemic-related costs, and lower spending due to the elimination of €3.0bn in grants for a programme to future-proof hospitals. In addition, spending on subsidies for the procurement of Covid vaccines rose by around €3.1bn on the year in the January–August 2022 period. Operating expenditure was also up by 14.5% (roughly €3.0bn) on the year, 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 eight months of 2022. The overall rise in interest rates meant that interest expenditure more than doubled on the year, increasing by around €8.7bn. The year-on-year decline in federal expenditure is mainly due to lower subsidies to companies, which fell by 41.3% (or around €20.4bn). Assistance to businesses affected by the fallout from the Covid pandemic amounted to roughly €9.2bn in the first eight months of 2022, compared with approximately €29.5bn in the same period last year.

Investment spending totalled about €22.3bn in the first eight months of 2022, down by 37.4% (roughly €13.3bn) on the year. This was mainly because the liquidity assistance provided to the Federal Employment Agency in the January–August period was around €13.6bn 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–August period remained roughly at the same level as in the same period last year.

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Fiscal balance

The federal budget recorded a deficit of approximately €86.2bn for the January–August 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.

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 August 2022

2022 trends in tax revenue (excluding local authority taxes)

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Total tax revenue (excluding local authority taxes) was down by 2.6% on the year in August 2022. Revenue from joint taxes declined by 1.4%, while wages tax and value added taxes recorded only small revenue gains. The weak growth in revenue from wages tax is partly due to the effects of the 2022 Tax Relief Act (Steuerentlastungsgesetz 2022). All other joint taxes posted declines in revenue. Receipts from taxes accruing solely to the Federation fell by 12.3%. The cut in energy duty rates set out in the Energy Duty Reduction Act (Energiesteuersenkungsgesetz) is resulting in substantially lower energy duty receipts in the three months from August to October. Receipts from taxes accruing to the Länder declined by 1.7%, primarily due to the drops in revenue from real property transfer tax and inheritance tax, the two highest-yielding Länder taxes.

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EU own resources

Transfers of own resources to the EU, excluding customs duties, were up by 4.7% on the year in August 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 EU budget is similar to last year’s in terms of volume.

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Overview of the January–August 2022 period

On a cumulative basis, the January–August 2022 period was marked by a strong year-on-year increase of 12.8% in tax revenues overall (excluding local authority taxes). This is partly due to the fact that the 2021 baseline, especially in the first half of the year, was impacted by the economic effects of the Covid pandemic and by the statutory and administrative tax measures that were taken in response. In the January–August 2022 period, receipts from joint taxes were up by 14.8% on the year, revenue from federal taxes was up by 1.4% and the yield from taxes accruing to the Länder was up by 4.3%. In July and August 2022, the tax relief measures adopted in response to high energy prices (child bonus, raise of the basic personal allowance and the standard allowance for employees, and the temporary reduction in energy duty) led to revenue shortfalls which can be expected to continue in the coming months. The September figures will be particularly affected, as the disbursement of the energy price allowance will substantially lower receipts from both wages tax and assessed income tax.

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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) declined by 2.2% on the year in August 2022. The main factor here is the 12.3% year-on-year fall in receipts from federal taxes, which can be attributed primarily to the decline in revenue from energy duty. Despite the lower receipts from joint taxes, the Federation’s yield from its share of these taxes increased by 3.4%. The shares of revenue from value added taxes that were allocated to the Länder under the fiscal equalisation system were substantially lower in August 2022 than in the same month of 2021. As a result, the Federation’s share of VAT revenue in August 2022 was approximately 47.3%, up from approximately 43.2% last year. The supplementary grants and the subsidies for public transport paid by the Federal government to the Länder as well as the transfers of own resources to the EU from the federal budget were somewhat higher in August 2022 than in the same month last year.

Länder tax receipts (after accounting for supplementary federal grants) recorded a year-on-year decline of 3.9% in August 2022. Revenue from taxes accruing solely to the Länder declined by 1.7%, and receipts from the Länder share of joint taxes were also lower, falling by 4.9% on the year. Mirroring the Federation’s revenue trends, the Länder saw a decline in their share of value added tax receipts, from about 53.1% in August 2021 to about 49.9% in August 2022, as a result of the lower fixed VAT amounts under the fiscal equalisation system.

Local authorities’ take from their share of joint taxes was down by 5.4% on the year. Local authorities’ fixed VAT amounts under the fiscal equalisation system also experienced a year-on-year decline, with their share of value added tax receipts falling from approximately 3.7% to approximately 2.8%.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by only 1.8% on the year in August 2022. Cash receipts from wages tax posted a year-on-year rise of 1.7%. Due to the statutory filing period, wages tax for July was remitted to the revenue authorities in August, and July’s labour market trends were strong despite the difficult economic conditions. Employment increased further from an already high level, and short-time working continued to decline. In combination with gross wage and salary rises, this resulted in increased wages tax receipts. As was also the case in the previous month, the relatively weak wages tax revenue trends in August 2022 can be attributed to the effects of the increase in the basic personal allowance and the standard income tax allowance for employees, a change adopted with retroactive effect from 1 January 2022 by means of the 2022 Tax Relief Act. Many employers carried out the associated wages tax refunds for the first half of 2022 in July 2022. Due to the trend in the first half of the year, cash receipts from wages tax were up by 9.7% on the year in cumulative terms in the January–August 2022 period.

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Corporation tax

Corporation tax refunds totalling approximately €0.1bn were paid out in August 2022, compared with €0.5bn in receipts from corporation tax in August 2021. Significant revenue fluctuations are often observed in months in which receipts are strongly influenced by assessment activities. Research and investment allowance payments, which are financed from corporation tax receipts, totalled about €16.6m and thus had only a marginal impact on the yield from corporation tax. As a result, gross receipts and cash receipts from corporation tax both totalled €0.1bn in August 2022. Cumulatively, cash receipts from corporation tax rose by 12.1% on the year in the first eight months of 2022.

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Assessed income tax

Receipts from assessed income tax in August, which were also strongly influenced by assessment activities, rose by 3.3% on the year in gross terms. Refunds to employees, which are financed from this revenue, increased by 11.0% 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 fell by 10.7% on the year in August 2022. Cumulatively, receipts from assessed income tax rose by 16.8% on the year in the first eight months of 2022.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings declined by 15.3% on the year in August 2022, following a rise of 86.4% in the previous month. The tax revenue in this category is strongly influenced by receipts from capital income taxes in connection with dividend distributions by corporations. Shifts in dividend distribution dates frequently occur throughout the year. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €51m (up by 11.1% on the year). Overall, cash receipts from non-assessed taxes on earnings fell by 16.0% on the year in August 2022. Revenue from non-assessed taxes on earnings does not tend to be high in August. The cumulative result for the year to date provides a more solid basis for analysis: cash receipts from non-assessed taxes on earnings rose by 38.3% on the year in the first eight months of 2022.

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Final withholding tax on interest and capital gains

In August 2022, revenue from final withholding tax on interest and capital gains was 48.7% lower than in the same month last year. Cumulatively, revenue from this tax fell by 24.7% on the year in the January–August 2022 period.

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Value added taxes

Revenue from value added taxes was up by 1.3% on the year in August 2022. Receipts from domestic VAT declined by 5.4%, while the yield from import VAT increased by 20.9%.

The marked growth in receipts from import VAT reflects the substantial year-on-year increase in the value of imported goods, which is mainly due to the very sharp rise in import prices. Because import VAT is deducted as input tax from (domestic) VAT, rising import VAT receipts generally result in weaker revenue trends for (domestic) VAT.

The yield from value added taxes tends to be subject to strong fluctuations over the course of the year. This has been magnified by a shift that has occurred on several occasions since the beginning of 2021, with some cash receipts from value added taxes not being recorded until the subsequent month.

With respect to domestic VAT, the cash result for August could be a sign that high inflation is increasingly putting pressure on real consumption and contributing to slower growth in VAT revenue. For example, the GfK consumer climate index has deteriorated markedly (see the article “Konjunkturentwicklung aus finanzpolitischer Sicht” [“Domestic economic trends from a fiscal policy perspective”] in the current German edition of the monthly report).

When analysing the trends over the course of the year to date, it is important to consider the special factors affecting the 2021 baseline. In January 2021, the shift in the deadline for filing returns and paying import VAT resulted in a tax revenue shortfall of almost €5bn. Moreover, receipts from value added taxes in the first months of 2021 were substantially reduced by the Covid pandemic, the measures taken to contain it, and the tax measures adopted in connection with the pandemic. The strong cumulative year-on-year rise of 18.1% in the January–August period can be attributed to this weak baseline.

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Taxes accruing to the Federation

In August 2022, revenue from taxes accruing solely to the Federation was down by 12.3% on the year. This is primarily attributable to a sharp 33.2% year-on-year decline in energy duty receipts as a result of the temporary reduction in energy duty for fuel, as set out in the Energy Duty Reduction Act. The associated monthly tax revenue shortfalls in the August–October period are expected to exceed €1bn. Yields from tobacco duty and coffee duty also fell on the year, by 5.6% and 7.7% respectively. Receipts from the solidarity surcharge climbed by 7.3% on the year, thanks to growth in revenue from the taxes that make up its tax base. Revenue gains were also posted by insurance tax (up by 2.7%), motor vehicle tax (up by 5.3%), electricity duty (up by 2.2%) and aviation tax (up by 69.3%). The very strong increase in receipts from aviation tax is the result of the rebound in aviation activities following very low levels in the previous years due to the pandemic.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were down by 1.7% on the year in August 2022, mainly as a result of declines in revenue from real property transfer tax (down by 2.7%) and inheritance tax (down by 2.6%). The 8.5% increase in receipts from betting and lottery tax 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 3.9% on the year, while receipts from beer duty rose by 1.2%.

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Borrowing and guarantees

Borrowing trends for the Federation in August 2022

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

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Borrowing trends for the Federation (loan financing) in August 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

October 2022 issue

September 2022

20 October 2022

November 2022 issue

October 2022

22 November 2022

December 2022 issue

November 2022

22 December 2022

January 2023 issue

December 2022

27 January 2023

February 2023 issue

January 2023

21 February 2023

March 2023 issue

February 2023

21 March 2023

April 2023 issue

March 2023

21 April 2023

May 2023 issue

April 2023

19 May 2023

June 2023 issue

May 2023

22 June 2023

July 2023 issue

June 2023

20 July 2023

August 2023 issue

July 2023

24 August 2023

September 2023 issue

August 2023

21 September 2023

October 2023 issue

September 2023

20 October 2023

November 2023 issue

October 2023

21 November 2023

December 2023 issue

November 2023

21 December 2023

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

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., USA

13–15 October 2022

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

26 October 2022

Franco-German Council of Ministers in Rouen, France

7–8 November 2022

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

13 November 2022

Joint meeting of G20 health ministers and finance ministers in Bali, Indonesia

5–6 December 2022

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

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