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27 January 2023

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

Translated extracts from the Federal Ministry of Finance’s January 2023 monthly report

Federal budget trends up to and including December 2022

Table: Trends in the federal budget

Expenditure (€bn)²

556.6

495.8

480.7

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

 

 

-13.6

Revenue (€bn)³

341.0

356.2

364.7

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

 

 

6.9

Tax revenue (€bn)

313.5

328.4

337.2

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

 

 

7.5

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-215.6

-139.6

-116.0

Financing/use of surplus:

215.6

139.6

116.0

Cash resources (€bn)

-

-

0.0

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

115.4

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 December 2022

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Tax revenue in December 2022

2022 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

Total tax revenue (excluding local authority taxes) was down by 2.4% on the year in December 2022. However, an exceptional factor played a major role in this downwards trend: last year’s baseline figure for import VAT was substantially inflated for technical reasons (see below for details). Overall, revenue from joint taxes declined by 2.2% on the year in December. In addition to the fall in VAT revenue – which was a result of (a) the above-mentioned exceptional factor related to import VAT and (b) the temporary reduction in the VAT rate on gas and district heating – revenue declines were also recorded for non-assessed taxes on earnings and final withholding tax on interest and capital gains. In contrast, wages tax and corporation tax posted revenue gains. Receipts from taxes accruing solely to the Federation fell by 2.1%, with energy duty, motor vehicle tax and electricity duty all recording declines. Revenue from taxes accruing to the Länder was down by 23.1% on the year, primarily due to downwards trends in receipts 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 114.6% higher in December 2022 than in the same month of 2021. 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. However, there can sometimes be substantial year-on-year fluctuations in individual months. Cumulatively, transfers of own resources were 1.0% higher in 2022 than in 2021.

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Overview of fiscal year 2022

In cumulative terms, total tax revenue (excluding local authority taxes) saw a marked year-on-year increase of 7.1% in fiscal year 2022. This is partly due to the low baseline for the first half of 2021, which was a result of the economic effects of the Covid-19 pandemic and the statutory and administrative tax measures that were taken in response (see the article on tax revenue in 2022 [in German only] in the current issue of the monthly report). As a consequence, total tax revenue (excluding local authority taxes) was up by 17.5% on the year in the first half of 2022. In the second half of 2022, however, tax relief measures such as those contained in the 2022 Tax Relief Act (Steuerentlastungsgesetz 2022) and the Energy Duty Reduction Act (Energiesteuersenkungsgesetz) had a dampening effect on tax revenue.

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Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants, which, under the fiscal equalisation system, are paid from the Federation’s revenues to Länder with below-average capacity) saw a year-on-year drop of 11.2% in December 2022. This can be attributed primarily to two legislative changes that came into effect in December 2022. First, the change in the vertical distribution of VAT revenue (Article 1 of the Act Amending the Fiscal Equalisation Act, the Stability Council Act and Other Acts (Gesetz zur Änderung des Finanzausgleichsgesetzes, des Stabilitätsratsgesetzes sowie weiterer Gesetze)) resulted in a €3.3bn rise in Länder revenues at the Federation’s expense. The additional funds will be used for the following purposes:

  • Implementing the second tranche of the “pact for the rule of law” (€110m) and the second tranche of the “pact for the public health service” (€350m)
  • Ex-post accounting of cost-sharing for refugee costs incurred between 1 September 2020 and 31 December 2021 (approx. €542m)
  • Covering the revenue shortfall of the Länder and local authorities for the 2022 bonus for families with children (€800m), which will be borne by the Federation
  • Lump-sum contribution from the Federation to the costs incurred by the Länder and local authorities in connection with refugees (€1,500m)

Second, the Länder received additional subsidies for public transport totalling €1.0bn. These subsidies will increase from 1.8% to 3.0% per year starting in 2023. In this way, the Federation is supporting the Länder in their efforts to make local public transport more attractive and increase the number of passengers significantly. Moreover, receipts from taxes accruing solely to the Federation were down by 2.1% on the year in December 2022, which had a negative impact on the Federation’s revenue.

In contrast, Länder tax receipts (after accounting for supplementary federal grants) recorded a year-on-year increase of 4.0% in December 2022. However, revenue from taxes accruing solely to the Länder posted a significant decline of 23.1%. Local authorities’ take from their share of joint taxes was down by 1.3% on the year.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 4.5% on the year in December 2022. Among other things, this reflects the labour market’s continued robust performance towards the end of the year, despite the overall economic burdens (see the article on economic trends [in German only] in the current issue of the monthly report). Child benefit payments – which are financed from wages tax receipts – rose by 0.4% on the year. On balance, cash receipts from wages tax were up by 5.1% on the year. In cumulative terms, cash receipts from wages tax in fiscal year 2022 were 4.0% higher than in 2021.

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Corporation tax

Gross receipts from corporation tax climbed by 9.5% on the year in December, a month when prepayments are due. Prepayments for 2022 remained markedly higher than in the previous year. Research and investment allowance payments, which are financed from corporation tax receipts, totalled about €27.0m and thus had only a marginal impact on the yield from corporation tax. On balance, cash receipts from corporation tax were up by approximately 9.3% on the year in December 2022. Cumulative cash receipts from corporation tax recorded a 10.0% year-on-year increase in fiscal year 2022.

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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 1.8%, the increase was markedly less strong than it was for corporation tax. Prepayments recorded a slight gain over last year’s (relatively high) level. Refunds to employees, which are financed from receipts from this tax, increased by 48.3% on the year. However, it should be noted that there has been high volatility in the year-on-year figures several times 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 0.9% on the year in December 2022. Cumulatively, however, cash receipts from assessed income tax were 7.0% higher in fiscal year 2022 than in the previous year.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were down by 19.1% on the year in December 2022. Revenue in this category mainly comes from capital income tax that is imposed on dividend distributions by corporations. The timing of these dividend distributions can vary. December tends to be a low-revenue month for this tax (receipts in December 2022 accounted for 3.7% of the 2022 total). In such months, marked fluctuations in the year-on-year figures can occur. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €136m. Overall, cash receipts from non-assessed taxes on earnings fell by 21.1% on the year in December 2022. Cumulatively, however, cash receipts from non-assessed taxes on earnings grew by 19.0% on the year in fiscal year 2022.

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Final withholding tax on interest and capital gains

In December 2022, revenue from final withholding tax on interest and capital gains was 60.5% lower than in the same month last year. The cumulative figure for fiscal year 2022 as a whole was 34.6% below last year’s (high) level. It is fair to assume that the elevated 2021 baseline reflects 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 posted a marked decline of 10.9% on the year in December 2022. Receipts from (domestic) VAT fell by 7.0%, while receipts from import VAT were down by 17.5%. However, the sharp drop in revenue from import VAT was mainly due to a special factor that negatively affected the 2021 baseline: part of the tax revenue from November 2021 was only reflected in the December 2021 figures. This inflated the baseline significantly, which explains the marked decline recorded for December 2022. If this is factored in, revenue from import VAT actually saw a noticeable increase, in line with the significant year-on-year rise in the value of imported goods. 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. In addition, the temporary reduction in the VAT rate on gas and district heating is likely to have had a noticeable dampening effect on receipts from domestic VAT. For the whole of 2022, revenue from value added taxes recorded a total year-on-year rise of 13.6%.

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Taxes accruing to the Federation

In December 2022, revenue from taxes accruing solely to the Federation was down by 2.1% on the year. The yield from energy duty declined less sharply than in November, but was still 5.5% lower than in December 2021. In contrast, revenue from tobacco duty climbed by 4.2% because some receipts from November 2022 were not recorded until December. Receipts from the solidarity surcharge rose by 4.5% on the year, thanks to growth in revenue from the taxes that make up its tax base. Revenue gains were also posted for insurance tax (up by 4.0%) and aviation tax (up by 35.5% – this surge can be attributed to the low 2021 baseline, which was still related to the pandemic). Year-on-year revenue declines were recorded for motor vehicle tax (down by 1.1%), electricity duty (down by 4.9%), alcohol duty (down by 11.5%) and coffee duty (down by 5.6%). Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes. For fiscal year 2022 as a whole, revenue from taxes accruing solely to the Federation was down by 1.5% on the year.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were down by 23.1% on the year in December 2022, mainly as a result of declines in revenues from real property transfer tax (down by 25.0%) and inheritance tax (down by 24.6%). In the case of real property transfer tax, the negative revenue trend probably reflects the weakening of the real estate market as a result of the sharp rise in construction prices and less favourable financing conditions. Betting and lottery tax revenue fell by 13.6%, while fire protection tax and beer duty recorded year-on-year gains of 7.0% and 1.4%, respectively.

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Borrowing and guarantees

Borrowing trends for the Federation in December 2022

Tabelle vergrößern

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

Tabelle vergrößern

Guarantees

  

Authorised amount

Amount allocated as of
31 December 2022

Amount allocated as of
31 December 2021

in €bn

Export credit guarantees

150.0

119.1

128.0

Loans to foreign debtors, foreign direct investment, EIB loans

60.0

39.7

35.1

Financial cooperation projects

37.0

31.5

29.0

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

550.0

346.6

273.0

International financial institutions

90.0

75.5

75.5

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 and fiscal data

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

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

11–16 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

11–13 May 2023

Meeting of G7 finance ministers and central bank governors in Niigata City, Japan

15–16 May 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium