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20 July 2023

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

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

Federal budget trends up to and including June 2023

Table: Trends in the federal budget
Actual 20222023 targetActual¹
January to June 2023

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)



Federal revenue in the first half of 2023 totalled approximately €181.4bn, up by 3.3% (€5.8bn) on the year. Federal tax revenue stood at €168.6bn and was thus 2.4% (€4.0bn) higher than in the same period of 2022. Further information on tax revenues is provided in the article “Tax revenues and economic environment in June 2023” (in German only) in the current edition of the monthly report.

The category of “other income” recorded a gain of 17.1% (€1.9bn) on the year in the first half of 2023. Within this category, interest revenue from the Federation’s cash management system was up by €0.5bn, while revenue from fees and other income from guarantees increased by €0.4bn. In addition, Germany received €0.6bn in disaster relief from the EU Solidarity Fund to help repair the damage caused by the severe floods in summer 2021.


Federal expenditure in the first half of 2023 totalled €229.2bn, up by 0.6% (€1.5bn) on the year. Broken down by economic category, investment spending was up by 35.5% (€5.5bn), while consumption spending was down by 1.9% (€4.1bn) on the year.

As in previous months, the significant rise in investment spending is due to a special factor: a €6.3bn loan 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 4.9% (€0.8bn) on the year. This can be attributed to a decline in liquidity assistance to the Federal Employment Agency, which was down by roughly €2.9bn on the year. Fixed asset investment fell slightly on the year by €0.1bn.

In the category of consumption spending, contrasting trends could be observed: due to the general increase in interest rates, interest expenditure rose sharply, by €19.7bn. In contrast, ongoing grants and subsidies declined by 15.1% (€25.2bn) 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 totalled €1.3bn, a decline of €18.7bn. Pandemic-related assistance to businesses totalled €0.3bn, down by €6.4bn on the year. Pandemic-related compensation payments under section 21 of the Hospital Financing Act (Krankenhausfinanzierungsgesetz) amounted to only about €36,000 in the first half of 2023, €4.1bn less than in the same period last year. The decline in ongoing grants and subsidies was offset somewhat by a €2.8bn increase in spending on citizen’s benefit and a €1.1bn increase in spending on housing benefit. In addition, expenditure to enhance security, defence and stability in partner countries rose by €2.2bn.

Fiscal balance

The federal budget recorded a deficit of €47.8bn for the January–June 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 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 2023

2023 trends in tax revenue (excluding local authority taxes)

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Tax revenue trends

Total tax revenue

Overall tax revenue (excluding local authority taxes) was down by 7.3% on the year in June 2023 (see the table “2023 trends in tax revenue (excluding local authority taxes)”). In particular, the yield from joint taxes fell by 7.8%. However, this year-on-year decline is significantly overstated due to a special effect that increased last year’s baseline for import VAT revenue (see below). After adjusting the June 2022 baseline to account for the estimated impact of this special effect, the decline in total tax revenue would amount to only about 3½% (or about 3¼% in the case of joint taxes). In particular, revenue from non-assessed taxes on earnings contracted significantly on the year by over 27%. Tax relief measures – especially the provisions to curb bracket creep contained in the Inflation Compensation Act (Inflationsausgleichsgesetz) – continue to reduce overall tax revenue.

Revenue from taxes accruing solely to the Federation fell by about 1%, due mainly to a decline in revenue from energy duty on natural gas as a heating fuel, which in turn was most likely related to (a) the billing cycle for consumers who make annual payments, which are usually posted to government accounts in June every year and (b) reductions in gas consumption. Receipts from electricity duty declined as well. In contrast, tobacco duty, motor vehicle tax, insurance tax and the solidarity surcharge all posted year-on-year revenue gains in June.

The decline in receipts from taxes accruing to the Länder, which has persisted since the second half of 2022, continued in June 2023. However, the rate of contraction (about 13½% on the year) was lower than in the previous eight months. The main factors at play here were (a) a 19% year-on-year increase in inheritance tax revenue (which tends to fluctuate over the course of the year) and (b) a 33% year-on-year drop in receipts from real property transfer tax, which continues to post sharply lower yields. Revenue from real property transfer tax has remained steady in recent months, however. The year-on-year rates of change are expected to diminish in the second half of the year, because the revenue declines that started in mid-2022 will gradually shift the baseline.

Apportionment of tax revenue among the different levels of government

Year-on-year revenue from joint taxes fell significantly for the Federation and the Länder in June 2023. Nevertheless, the Federation’s overall tax receipts (after the apportionment of VAT revenue and the subtraction of supplementary federal grants) climbed by 3% on the year in June. This is because the baseline figure from June 2022 was significantly reduced by extra payments (€3.7bn) of public transport subsidies from the Federation to the Länder. Conversely, these extra subsidies inflated the June 2022 baseline for the Länder. As a result, Länder tax receipts fell by over 16% on the year in June, a higher rate of decline than would have been expected solely on the basis of revenue figures for joint taxes and Länder taxes. Local authorities’ take from their share of joint taxes was down by nearly 2½% on the year.

Apportionment of VAT revenue in June 2023

In June 2023, revenue from value added taxes was distributed as follows among the Federation, Länder and local authorities:

 FederationLänderLocal authorities

Share of total VAT revenue (€21,602m) as per section 1 of the Fiscal Equalisation Act (Finanzausgleichsgesetz)


Plus (+) / minus (-): 1/12 of the fixed payments as per section 1 (2) and (2a) of the Fiscal Equalisation Act (€9,659m)


Share after accounting for the fixed payments


Further details on specific taxes

Wages tax

Gross revenue from wages tax again recorded only a slight year-on-year gain in June 2023, up by just under 1%. As in previous months, this can be attributed to extensive tax relief measures, particularly those set out in the Inflation Compensation Act and the 2022 Annual Tax Act (Jahressteuergesetz 2022). Without these relief measures, gross revenue from wages tax would have risen by an estimated 6% on the year in June 2023. The Inflation Compensation Act also increased the child benefit as of 1 January 2023. As a result, child benefit payments (which are financed from gross wages tax revenue) were up by 16% on the year in June, echoing the increases of previous months. On balance, cash receipts from wages tax were down by just under 2% on the year in June.

Wages tax revenue is being buoyed by employment levels, which – despite their stagnation in recent months – were still up solidly on the year in June, by nearly 1%. In addition, nominal wages have recently recorded inflation-related growth rates of over 5% (data for Q1 2023), but these figures include payments of the inflation compensation bonus, which are tax-exempt. In contrast, year-on-year rates of change in the number of employees doing short-time work appear to have increasingly flattened out, due to the sharp decline in short-time work in spring 2022. As a result, short-time work – which, according to company notifications, is currently most prevalent in the manufacturing sector – is probably no longer significantly affecting year-on-year changes in wages tax revenue.

Taxes on earnings

The second instalment of 2023 prepayments for assessed income tax and corporation tax fell due in June. So far, corporation tax prepayments for 2023 are up by over 7% on the year. At the same time, however, the negative balance between back-payments and refunds also increased. Research allowance and investment allowance payments (which are financed from corporation tax revenue) were low in relation to overall receipts. On balance, net revenue from corporation tax climbed by nearly 5% on the year in June.

As was already the case in the first quarter, receipts from prepayments of assessed income tax in the first half of 2023 grew at a slower pace than receipts from corporation tax prepayments. Prepayments of assessed income tax were up by just under 2% on the year in June 2023. However, it should be noted that June prepayments of assessed income tax already included the tax rate change enacted under the Inflation Compensation Act and were lower as a result. If the tax rate had not been changed, prepayments would likely have increased by about 5%. Refunds resulting from the revenue administration’s assessment activities again increased at a much higher rate than back-payments. In addition, prepayments for past periods were down on the year. After accounting for research allowance, investment allowance and owner-occupied homes premium payments (all of which had a relatively small impact), cash receipts from assessed income tax fell by nearly 2% on the year in June 2023.

June and July are two of the highest-revenue months for non-assessed taxes on earnings. On average during the past 10 years, these two months have accounted for over one-third of the annual yield from these taxes. In 2022, June and July accounted for nearly 45% of the annual total. However, these revenue figures can fluctuate significantly, in particular because corporations often vary the timing of their annual general meetings. This helps explain why receipts from non-assessed taxes on earnings recorded a decline of over 27% in June 2023. Overall, receipts from non-assessed taxes on earnings are expected to increase this year, among other things due to planned dividend distributions announced by major corporations. At its most recent meeting in May 2023, the Working Party on Tax Revenue Estimates stated that revenue from non-assessed taxes on earnings is projected to increase by 12.9% in 2023.

Value added taxes

Revenue from value added taxes declined sharply by nearly 16% on the year in June 2023. This is due primarily to a special effect relating to import VAT that significantly increased the 2022 baseline (see the article “Tax revenues and economic environment in May 2023” [in German only] in the previous edition of the monthly report). As a result, import VAT posted a decline of roughly 42% on the year in June 2023. Adjusting for the estimated impact of this special effect would lead to a much lower decline of about 12%. This is in line with the general downward trend in nominal imports of goods since mid-2022, which is partly due to price-related factors. Imports of goods in the first half of 2023 were down markedly by nearly 11% on the year, despite a nearly 2% year-on-year gain in May (adjusted for working days and seasonal factors).

Without the special effect mentioned above, revenue from value added taxes would have been down by about 2% on the year in June 2023. Revenue from (domestic) VAT rose by nearly 3%, despite the temporary reduction in VAT rates on gas and district heating. This figure was likely boosted by the decline in import VAT and the associated decline in deductions of input VAT.

In cumulative terms, revenue from value added taxes was down by just under ½% on the year in the first half of 2023. Factors contributing to this decline included (a) a reduced yield from VAT on gas and district heating and (b) the weak trend in real consumption so far this year. For example, nominal retail sales (the relevant figure in determining VAT revenue) were up by just under 3% on the year in June, a growth rate well below the rate of inflation.

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Borrowing and guarantees

Borrowing trends for the Federation in June 2023

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

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Amount allocated as of
30 June 2023
Amount allocated as of
30 June 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
Monthly reportReporting periodPublication date
August 2023 issueJuly 202324 August 2023
September 2023 issueAugust 202321 September 2023
October 2023 issueSeptember 202320 October 2023
November 2023 issueOctober 202321 November 2023
December 2023 issueNovember 202321 December 2023
Key dates on the fiscal and economic policy agenda

21–22 August 2023

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

15–16 September 2023

Eurogroup and informal ECOFIN meetings in Santiago de Compostela, Spain

11–14 October 2023

Annual meetings of the World Bank Group and the International Monetary Fund, including a meeting of G20 finance ministers and central bank governors, in Marrakech, Morocco

16–17 October 2023

Eurogroup and ECOFIN Council meetings in Brussels, Belgium