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22 December 2022

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

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

Federal budget trends up to and including November 2022

Table: Trends in the federal budget

Expenditure (€bn)²

556.6

495.8

426.1

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

 

 

-4.2

Revenue (€bn)³

341.0

356.2

311.4

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

 

 

12.3

Tax revenue (€bn)

313.5

328.4

288.8

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

 

 

12.3

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-215.6

-139.6

-114.8

Financing/use of surplus:

215.6

139.6

114.8

Cash resources (€bn)

-

-

164.5

Seigniorage (€bn)

0.2

0.2

0.1

Movements in reserves⁴ (€bn)

0.0

0.5

0.5

Net borrowing⁵ (€bn)

215.4

138.9

-50.3

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 November 2022

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Revenue

Federal revenue for the period from January to November 2022 totalled approximately €311.4bn, up by 12.3% (about €34.1bn) on the year. Tax receipts increased by 12.3% (roughly €31.7bn) on the year. This was mainly the result of higher revenues from value added taxes, income tax and corporation tax. At the same time, total tax receipts were reduced by the impact of the Energy Duty Reduction Act (Energiesteuersenkungsgesetz), which reduced revenue from energy duty by 10.3% (€3.0bn) in year-on-year terms, as well as by additional allocations to the Länder for public transport to offset pandemic-related revenue losses (€1.2bn) and to finance the 9-euro ticket scheme (€2.5bn). For further information about tax revenues, please refer to the article “Tax revenues in November 2022” [in German only] in the current German-language edition of the monthly report.

The category of “other income” recorded a gain of 12.0% (about €2.4bn) on the year in the January–November period. This increase was partly due to higher income from business activities and interest, totalling around €339m, and, in particular, other administrative revenue, fees and other charges, as well as subsidies from the EU, which totalled around €1.4bn.

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Expenditure

Federal expenditure in the first 11 months of 2022 totalled approximately €426.1bn, down by 4.2% (about €18.8bn) on the year. A breakdown by economic category shows that consumption spending remained roughly constant year-on-year (down by 0.1% or about €0.5bn). There were several contrasting trends overall. For example, ongoing subsidies to social security funds were up by 9.4% or about €14.2bn on the year, which increased spending levels. This includes higher federal payments (totalling roughly €13.7bn) 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 €2.9bn on the year in the January–November 2022 period. Operating expenditure was also up by 13.5% (roughly €4.1bn) on the year, due partly 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 11 months of 2022. Due to the general increase in interest rates, interest expenditure grew by about €11.6bn on the year from a relatively low baseline. The main factors that caused expenditure to decline overall on the year were subsidies to companies, which fell by 39.8% (around €26.3bn), and grants to public administrations, which fell by 18.7% (approximately €10.3bn). The main reason for the sharp fall in subsidies to companies was the decline in pandemic-related assistance to businesses, which amounted to roughly €11.2bn in the first 11 months of 2022 after totalling around €35.7bn during the same period of 2021. The one-off grant of €16.0bn that was allocated to the special fund for reconstruction aid (Aufbauhilfe 2021) in September 2021 explains the significant year-on-year decline in grants to public administrations. On the other hand, grants to the special fund for digital infrastructure and the Climate and Transformation Fund rose by €2.0bn and €3.4bn on the year respectively.

Investment spending totalled roughly €33.8bn in the first 11 months of 2022, down by 35.1% (about €18.2bn) on the year. This decline was mainly due to a reduction in the liquidity assistance provided to the Federal Employment Agency, which was down by roughly €16.1bn on the year in the January–November 2022 period. 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–November period remained roughly at the same level as last year, increasingly only by 1.2% (€0.1bn).

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Fiscal balance

The federal budget recorded a deficit of approximately €114.8bn for the January–November 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 November 2022

2022 trends in tax revenue (excluding local authority taxes)

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Total tax revenue (excluding local authority taxes) was up by 2.0% on the year in November 2022. However, exceptional factors influenced the year-on-year trend for some tax types, especially import VAT and corporation tax. Overall, revenue from joint taxes rose by 5.5% on the year in November, which was the result of higher revenue from value added taxes and, in particular, wages tax. The other joint taxes posted revenue losses in November, some of which were considerable. Revenue from taxes accruing solely to the Federation fell by 7.2%. In particular, some of the high-revenue federal taxes, such as energy duty, tobacco duty and the solidarity surcharge, recorded sharp falls in receipts. Receipts from taxes accruing to the Länder were down by 30.9%, due to declines 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, including customs duties, were down by 1.0% on the year in November and by 2.6% in the January–November period, on a cumulative basis. 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.

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Cumulative overview of the January–November 2022 period

In cumulative terms, total tax revenue (excluding local authority taxes) grew markedly by 8.7% in the first 11 months of 2022. 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-19 pandemic and by the statutory and administrative tax measures that were taken in response. In the first half of 2022 alone, total tax revenue (excluding local authority taxes) was up by 17.5% on the year. In the first five months of the second half of 2022, the tax relief that was granted under, for example, the 2022 Tax Relief Act (Steuerentlastungsgesetz 2022) and the Energy Duty Reduction Act tangibly hindered the rise in revenues. The notable growth in tax revenue so far this year is due to the sharp increase in receipts from joint taxes, which were up by 10.6% on the year. In contrast, receipts from taxes whose revenue goes either specifically to the Federation or the Länder fell slightly, by 1.4% and 2.9% respectively.

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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 8.9% on the year in November 2022. This increase was driven mainly by higher revenue from joint taxes, which grew by 11.9% on the year. This was due to a 5.5% year-on-year increase in overall revenue from joint taxes in November, as well as a reduction in the fixed amounts of VAT revenue that are paid to the Länder as part of the fiscal equalisation system. These fixed amounts were very high in November 2021 due to the compensation payments that were made to the Länder and local authorities to offset revenue losses resulting from tax measures adopted to mitigate the effects of the pandemic. In contrast, a substantial drop in receipts from federal taxes, which were down by 7.2% on the year, had a negative impact on the Federation’s revenue results. Furthermore, the supplementary grants and public transport subsidies that the Federation pays to the Länder were slightly higher in November than in the same period of last year.

Länder tax receipts (after accounting for supplementary federal grants) recorded a year-on-year decline of 2.3% in November 2022. Revenue from taxes accruing solely to the Länder was down significantly by 30.9%, but this decline was offset somewhat by higher receipts from joint taxes. However, the Länder’s share of revenue from joint taxes rose by only 1.5%, which was lower than the increase in the Federation’s share. This was due to the above-mentioned adjustment in the fixed payments of VAT revenue. Local authorities’ take from their share of joint taxes was down by 4.0% on the year.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 3.7% on the year in November 2022. The labour market, which plays a key role in determining revenues from this tax, continued to be fundamentally stable, despite the difficult economic situation (see the article [in German only] on economic trends in the current issue of the Finance Ministry’s monthly report). Child benefit payments – which are financed from wages tax receipts – rose by 2.0% on the year in November. On balance, cash receipts from wages tax were up by 3.6% on the year. Partly thanks to the strong upwards trend in the first half of the year, cumulative cash receipts from wages tax were up by 3.9% on the year in the January–November 2022 period, despite the revenue-reducing impact of tax relief measures and the energy price allowance paid out to employees in September.

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Corporation tax

Gross corporation tax revenue amounted to approximately €0.1bn in November 2022, compared with revenue of €2.0bn in November 2021. Revenue in this month is strongly influenced by the revenue administration’s assessment activities. This also regularly causes significant fluctuations in revenue from month to month. However, the current very sharp drop in revenue from corporation tax is due to an exceptional factor which increased receipts in 2021. Research and investment allowance payments, which are financed from corporation tax receipts, totalled about €20.0m and thus had only a marginal impact on the yield from corporation tax. On balance, cash receipts from corporation tax totalled approximately €0.1bn in November 2022. Cumulatively, cash receipts from corporation tax rose by 10.2% on the year in the first 11 months of 2022.

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Assessed income tax

Gross receipts from assessed income tax were down by 2.0% on the year in November. As is the case with corporation tax, the revenue trend in November is strongly influenced by the revenue administration’s assessment activities. Refunds to employees, which are financed from this revenue, increased by 51.0% on the year. However, it should be noted that there have repeatedly been high year-on-year changes of this type in recent years. Investment allowance payments, research allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, are also deducted from the gross figure. On balance, cash receipts from assessed income tax fell by 49.4% on the year in November 2022. Cumulatively, receipts from assessed income tax were up by 9.3% on the year in the first 11 months of 2022.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were down by 10.7% on the year in November 2021. Revenue in this category mainly comes from capital income tax that is imposed on dividend distributions by corporations. Shifts in dividend distribution dates frequently occur over the course of the year. November is not a month when revenue from non-assessed taxes on earnings tends to be high. In such months, marked fluctuations in the year-on-year results can occur. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €43m (down by 35.8% on the year). Overall, cash receipts from non-assessed taxes on earnings fell by 9.4% on the year in November. In cumulative terms, cash receipts from non-assessed taxes on earnings were up by 28.2% on the year in the first 11 months of 2022.

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Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains was down by 59.9% on the year in November 2022 and, in cumulative terms, down by 31.2% on the year in the January–November 2022 period. It is fair to assume that the January–November 2021 baseline was influenced by relatively high capital gains generated through sales of shares, given the high share prices at the time.

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Value added taxes

Revenue from value added taxes was up sharply, by 22.8% on the year, in November 2022. Receipts from domestic VAT fell slightly by 3.8%. In contrast, the yield from import VAT surged by 177.7% on the year. However, the very high increase in revenue from import VAT was mainly due to a special factor in the previous year. Part of the tax revenue from November 2021 was only reflected in the December 2021 figures because the deadline for paying import VAT was later than usual. The very low 2021 baseline figure resulted in an extremely high rate of increase in November 2022. At the same time, the considerable rise in revenue from import VAT also reflects the significant year-on-year increase in the value of imported goods (see the article [in German only] on economic trends in the current issue of the Finance Ministry’s monthly report). Because import VAT can be deducted as input tax from (domestic) VAT, rising import VAT receipts tend to 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 significantly magnified by revenue shifts that have occurred on several occasions since the beginning of 2021, with some cash receipts from value added taxes not being recorded until the subsequent month.

To a significant extent, the strong cumulative year-on-year rise of 16.5% in the January–November 2022 period can be attributed to this weak baseline, which was caused by the temporary reduction in VAT rates and the economic effects of the pandemic, among other things (cf. the relevant analysis in the October 2022 edition of the monthly report).

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Taxes accruing to the Federation

In November 2022, revenue from taxes accruing solely to the Federation was down by 7.2% on the year. This is primarily attributable to a sharp 11.1% year-on-year decline in energy duty receipts. Retail fuel prices rose considerably in September, the month that largely determined November cash receipts, following the expiry of the temporary reduction in the rate of energy duty. Consumers may have brought forward fuel purchases in anticipation of price rises. In addition, avoidance strategies, such as shopping around for the best fuel prices, avoiding driving, and using public transport, may have led to lower sales. Revenue from tobacco duty fell by 14.5% because some receipts from November 2022 were not recorded until December. Receipts from the solidarity surcharge were down significantly, by 14.7% on the year, due to a drop in revenue from the taxes that make up its tax base. Yields from alcohol duty and motor vehicle tax also fell on the year, by 3.2% and 3.2% respectively. In contrast, revenue gains were posted by insurance tax (up by 4.7%), coffee duty (up by 9.5%) and aviation tax (up by 22.9%). 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 by 30.9% on the year in November 2022, mainly as a result of declines in revenues from real property transfer tax (down by 27.5%) and inheritance tax (down by 42.1%). Pronounced year-on-year fluctuations in revenue from inheritance tax occur on a regular basis. In the case of real property transfer tax, the negative revenue trend may have been influenced by high property prices and less favourable financing conditions, among other factors. Revenue from betting and lottery tax was down by 1.4% on the year, and receipts from beer duty fell by 5.3%. In contrast, revenue from fire protection tax rose by 8.4% in year-on-year terms.

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Borrowing and guarantees

Borrowing trends for the Federation in November 2022

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

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

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Guarantees

  

Authorised amount

Amount allocated as of
30 September 2022

Amount allocated as of
30 September 2021

in €bn

Export credit guarantees

150.0

121.6

126.9

Loans to foreign debtors, foreign direct investment, EIB loans

60.0

36.2

35.7

Financial cooperation projects

37.0

30.7

31.9

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

550.0

302.7

312.3

International financial 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

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

16–17 January 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

13–14 February 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

23–26 February 2023

Meeting of G20 finance ministers and central bank governors in Bangalore, India

13–14 March 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

10–17 April 2023

Spring meetings of the International Monetary Fund and the World Bank Group with meeting of G20 finance ministers and central bank governors in Washington, D.C.

28–29 April 2023

Eurogroup and informal ECOFIN meetings in Stockholm, Sweden