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21 April 2023

Overview of federal budgetary and financial data up to and including March 2023

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

Federal budget trends up to and including March 2023

Table: Trends in the federal budget

Expenditure (€bn)²




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




Revenue (€bn)³




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




Tax revenue (€bn)




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




Balance of pass-through funds (€bn)




Fiscal balance (€bn)




Financing/use of surplus:




Cash resources (€bn)




Seigniorage (€bn)




Movements in reserves⁴ (€bn)




Net borrowing⁵ (€bn)




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 2022

2023 target

January to March 2023

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Federal revenue for the period from January to March 2023 (first quarter) totalled approximately €88.5bn, up by 1.3% (around €1.1bn) on the year. About half of this increase was driven by higher tax revenues, which grew by 0.6% (around €0.5bn) on the year. Further information on tax revenues is provided in the article “Tax revenues in March 2023” [in German only] in the current edition of the monthly report.

The category of “other income” recorded a gain of 13.3% (about €0.6bn) on the year in the first quarter of 2023. Within this category, interest revenue from the Federation’s cash management system was up by around €0.2bn. In addition, revenue from fees and other income from foreign guarantees and from distance-based commercial vehicle tolls increased by approximately €0.1bn each.

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Federal expenditure in the first quarter of 2023 totalled approximately €118.5bn, up by 2.4% (about €2.8bn) on the year. A breakdown by economic category shows that the increase in expenditure was driven by investment spending, which was 56.1% (about €5.0bn) higher than in March 2022. This significant increase is mainly due to a special factor: a loan of approximately €6.3bn that was granted to the IMF’s Resilience and Sustainability Trust in January 2023 was recorded as an investment item, as required under budget law. After adjusting for this effect, investment spending was down by 15.2% (€1.3bn) on the year. This outcome can be attributed to a decline in liquidity assistance to the Federal Employment Agency, which was down by roughly €1.9bn on the year. Fixed asset investment remained basically unchanged year-on-year.

Consumption spending was down by approximately 2.1% (about €2.2bn) on the year in the first quarter of 2023. There were several contrasting trends overall. Due to the general increase in interest rates, interest expenditure rose sharply, by about €8.7bn. In contrast, ongoing grants and subsidies declined by 14.1% (about €12.3bn) on the year, mainly because much less funding had to be made available to combat the adverse effects of the Covid-19 pandemic than in 2022. For example, federal payments to the health fund to cover pandemic-related costs declined by about €9.1bn, to €1.1bn. Pandemic-related assistance to businesses totalled roughly €0.1bn, down by about €3.9bn on the year. Pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz) amounted to around €0.5M in the first quarter of 2023, about €3.0bn less than in the same period last year.

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Fiscal balance

The federal budget recorded a deficit of approximately €30.1bn for the January–March 2023 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 is especially true towards the start 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 March 2023

2023 trends in tax revenue (excluding local authority taxes)

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Tax revenue trends

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Overall tax revenue

Overall tax revenue (excluding local authority taxes) was down by 1.5% on the year in March 2023 (see Table 1). The main reason for this was a 1.2% drop in receipts from joint taxes, which was largely caused by tax relief measures. Receipts from taxes accruing to the Federation climbed by almost 6% on the year, due to higher revenue from energy duty and tobacco duty in particular. Revenue from taxes accruing to the Länder fell sharply, by around 25% on the year, mainly due to downwards trends in receipts from real property transfer tax and inheritance tax, the two highest-yielding Länder taxes.

Tax relief measures
The tax relief measures introduced by the federal government are noticeably reducing tax revenue. These measures are primarily contained in the Inflation Compensation Act (Inflationsausgleichsgesetz), which aims to moderate tax increases due to bracket creep and to grant families targeted tax relief. Changes to tax rates will lead to estimated tax relief of more than €12bn in 2023, which will also reduce tax revenue by the same amount. In addition, the increase in child benefit will provide extra support for families totalling over €6bn in 2023. The 2022 Annual Tax Act (Jahressteuergesetz 2022) includes, among other things, a provision making 100% of pension contributions deductible as special expenses, up to a maximum amount, beginning in 2023. This will provide estimated relief of more than €3bn in 2023. Another law temporarily reduces the VAT rate on gas supplies via the natural gas network and on supplies of heat via heating networks from 19% to 7%, for the period from 1 October 2022 to 31 March 2024. This will lead to relief of almost €8bn in 2023.

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Allocation of tax revenue to the different levels of government

The Federation’s tax receipts (after accounting for supplementary federal grants that, under the fiscal equalisation system, are paid from the Federation’s revenues to Länder with below-average capacity) fell by around 2% on the year in March 2023. Although receipts from federal taxes rose, the Federation’s share of revenue from joint taxes stagnated. However, the downwards trend in the Federation’s share of this revenue was less pronounced than the overall fall in receipts from joint taxes. This was due to the impact of fixed payments in the vertical distribution of VAT revenue from the Federation to the Länder. Furthermore, supplementary federal grants to the Länder and federal subsidies to the Länder for public transport both increased on the year. Transfers of own resources to the EU from the federal budget, which can be subject to pronounced year-on-year fluctuations, also increased significantly in March 2023 in comparison with March 2022. Länder tax receipts also fell by more than 3% on the year in March, due to decreases in revenue from both joint taxes and taxes accruing solely to the Länder. Mirroring the Federation’s trend, the rate of decline in Länder VAT revenue was higher than the rate of decline in overall VAT revenue. Local authorities’ take from their share of joint taxes was down by approximately 3% on the year.

The impact of fixed payments in the vertical distribution of VAT revenue from the Federation to the Länder
Under section 1 (1) of the Fiscal Equalisation Act (Finanzausgleichsgesetz), the Federation receives 52.81% of overall VAT revenue. This share is subsequently reduced by annual fixed amounts that the Federation allocates to the Länder and local authorities under vertical financial equalisation arrangements. In March 2023, the Federation’s share of VAT revenue rose slightly in year-on-year terms, despite the fact that VAT revenue fell overall. This corresponds to an increase in the Federation’s share of VAT revenue compared with March 2022, due to the impact of the fixed payments. These payments were down on the year, because in 2022 the Länder received considerable additional funds under the Act to Improve Quality and Participation in Child Daycare (KiTa-Qualitäts- und -Teilhabeverbesserungsgesetz) as well as a post-pandemic catch-up programme for children and young people for 2021 and 2022.

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Observations relating to specific taxes

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Wages tax

Gross revenue from wages tax was down slightly on the year in March 2023. This decline was mainly the result of extensive tax relief measures. For example, in order to offset bracket creep, the basic personal allowance was increased as of 1 January 2023 and tax bracket thresholds were adjusted. These measures were introduced by the Inflation Compensation Act. Estimates indicate that gross revenue from wages tax would have increased by more than 4% if it hadn’t been for the reduction in tax revenue caused by the Inflation Compensation Act and the 2022 Annual Tax Act. In addition, the Inflation Compensation Act increased child benefit payments as of 1 January 2023. As a result, child benefit payments – which are financed from gross wages tax revenue – posted a clear year-on-year increase in March 2023. On balance, cash receipts from wages tax were down by around 5% on the year in March.

This rate of decline was relatively low, given the extensive tax relief measures and higher child benefit payments. This was due to the trend on the labour market, which remained stable. According to the latest figures, employment rose by almost 1%, or 423,000 persons, in February in year-on-year terms. Based on current estimates, there has been a significant year-on-year decline in short-time work, which has significantly reduced the negative impact of short-time work on wages tax revenue.

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Taxes on earnings

The first instalment of 2023 prepayments for assessed income tax and corporation tax fell due in March. Corporation tax prepayments for the current year posted year-on-year growth of over 10%. However, retroactive prepayments for 2022 declined considerably. In addition, an exceptional refund was made in one case. The result was that cash receipts from corporation tax only rose by around 2% on the year in March 2023. Assessed income tax prepayments for 2023 rose only slightly, by ½%. However, it must be taken into account that the tax rate change as a result of the Inflation Compensation Act was already reflected in the prepayments, reducing them substantially. The prepayments would probably have risen by over 3% if it hadn’t been for the tax rate change. The refunds that resulted from the revenue administration’s assessment activities rose more sharply than back payments. As a result, cash receipts from assessed income tax fell by approximately 2% on the year in March.

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Value added taxes

Revenue from value added taxes was down slightly, by almost 1% on the year, in March 2023. Although receipts from domestic VAT fell by over 8%, revenue from import VAT was up by almost 9%. In both 2022 and 2023, some import VAT revenue was shifted into March from the preceding month, because the due date for paying import VAT (the 26th of each month) leaves only a few working days in February for the federal revenue administration to process payments. The current growth in revenue from import VAT is inflated, because the amount of cash receipts that were shifted to March was somewhat higher in 2023 than in 2022. Revenue from import VAT rose by around 10% in year-on-year terms in the first quarter of 2023. This growth was significantly lower than in the final quarter of 2022, when revenue was up by almost 30% on the year. This is consistent with the downwards trend in nominal imports of goods since mid-2022, which is partly due to price-related factors. However, an uptick in imports was observed again recently, with imports rising by around 4% on the year in February 2023.

Furthermore, the temporary reduction in the VAT rate on gas and district heating had a noticeable dampening effect on the year-on-year revenue trend for domestic VAT in March. The trend in the retail sector has also been very subdued in recent months due to high inflation, and this has had an impact on VAT revenue as well. Real retail sales (excluding motor vehicles) fell by about 1% on the year in February 2023, adjusted for working days and seasonal factors. Nominal sales (the decisive figure for tax revenue) increased by almost 3% on the year. This growth was much lower than the inflation rate, due to a decline in the volume of goods sold. The retail sector is not expected to provide any significant boost to VAT revenue in the near future.

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Real property transfer tax

The year-on-year drop in receipts from taxes accruing solely to the Länder is mainly the result of the decline in revenues from real property transfer tax. Here, the distinctly 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. With a view to construction investment levels, no improvement can currently be expected in this sector. Although construction investment continues to be driven by the high demand for housing, particularly in metropolitan areas, levels of new and existing orders in the construction sector point to a clear downwards trend. The number of building permits issued has also declined significantly. The increasing lack of skilled workers is curbing construction activity, on top of construction costs and shortages of materials. In their Joint Economic Forecast published on 6 April 2023, the leading German economic research institutes predicted that construction investment will decline by 4.9% overall in 2023.

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Borrowing and guarantees

Borrowing trends for the Federation in March 2023

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Borrowing trends for the Federation (budget and special funds, excluding loan financing) in March 2023

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Authorised amount

Amount allocated as of
31 March 2023

Amount allocated as of
31 March 2022

in €bn

Export credit guarantees




Loans to foreign debtors, foreign direct investment, EIB loans




Financial cooperation projects




Food stockpiling




Domestic guarantees




International financial institutions




Treuhandanstalt successor organisations




Interest compensation guarantees




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Publication schedule¹ of the monthly reports and fiscal data

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

Source: Federal Ministry of Finance

Monthly report

Reporting period

Publication date

Key dates on the fiscal and economic policy agenda

28–29 April 2023

Eurogroup and informal ECOFIN meetings in Stockholm, Sweden

11–13 May 2023

Standalone meeting of G7 finance ministers and central bank governors in Niigata, Japan

15–16 May 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

15–16 June 2023

Eurogroup and ECOFIN Council meetings in Luxembourg

13–14 July 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

17–18 July 2023

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