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30 January 2024

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

Translated extracts from the Federal Ministry of Finance’s January 2024 monthly report

Federal budget trends up to and including December 2023

Table: Trends in the federal budget

Expenditure (€bn)²

480.7

461.2

457.1

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

 

 

-4.9

Revenue (€bn

364.7

389.7

392.2

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

 

 

+7.6

Tax revenue (€bn)

337.2

356.3

356.1

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

 

 

+5.6

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-116.0

-71.5

-64.9

Financing/use of surplus:

116.0

71.5

64.9

Cash resources (€bn)

-

-

0.0

Seigniorage (€bn)

0.1

0.2

0.2

Movements in reserves⁴ (€bn)

0.5

43.8

37.5

Net borrowing⁵ (€bn)

115.4

27.4

27.2

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 2022

2023 target

Actual
January–December 2023¹

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Tax revenue in December 2023

2023 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

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Tax revenue trends

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Total tax revenue

As was the case in November 2023, overall tax revenue (excluding local authority taxes) in December 2023 remained basically steady in year-on-year terms (see the table “2023 trends in tax revenue (excluding local authority taxes)”). Joint taxes, which account for the largest share of tax revenue, posted a slight year-on-year gain of just under 1%, with a sharp increase in the yield from withholding tax on interest and capital gains. Receipts from value added taxes and non-assessed taxes on earnings also grew, albeit at a moderate pace. In contrast, revenue from wages tax and corporation tax declined on the year, while receipts from assessed income tax remained flat (see further details on specific taxes below).

Revenue from taxes accruing to the Federation was down by just under 2% on the year in December. This result was driven largely by a sharp decline in tobacco duty receipts. The yields from electricity duty, motor vehicle tax and alcohol duty were also down on the year, while energy duty, insurance tax and aviation tax each recorded gains.

Receipts from taxes accruing to the Länder fell by about 5% on the year in December. This decline continued to be driven mainly by revenue from real property transfer tax, which was down by about 24% on the year. Receipts from this tax may be stabilising, however, since the result for December was barely lower than totals from recent months. The decline in revenue from real property transfer tax was offset to a large extent by receipts from inheritance tax, which climbed by about 25% on the year. Inheritance tax receipts can fluctuate significantly from month to month.

Now that the December figures are available, it is possible to calculate cumulative totals for fiscal year 2023. These show that the tax revenue received by the Federation, Länder and local authorities (excluding taxes accruing solely to local authorities) totalled €829.8bn in 2023, an increase of just under 2% compared with 2022. The rate of tax revenue growth was well below the rate of inflation in 2023. This is due to both (a) the sluggish performance of the economy and (b) the revenue-reducing effects of tax relief measures adopted by the federal government (such as the Inflation Compensation Act [Inflationsausgleichsgesetz] and the temporary reduction in VAT rates on gas and district heating).

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Apportionment of tax revenue among the different levels of government

The Federation’s take from joint taxes remained basically unchanged on the year in December 2023. In general, revenue trends for the Federation in December reflected the December outcomes for individual joint taxes, as outlined above. The only exception here occurred in the case of value added taxes, where the Federation’s take remained flat despite the growth in VAT revenue overall. This was due to the fixed payments that are transferred from the Federation’s share of VAT revenue to the Länder in accordance with the Fiscal Equalisation Act (Finanzausgleichsgesetz) (for details, see the table “Apportionment of VAT revenue in December 2023” below). These fixed payments were increased significantly to the benefit of the Länder in both December 2023 (on the basis of the Block Grants Act [Pauschalentlastungsgesetz]) and December 2022 (on the basis 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]). The increase enacted under the Block Grants Act was somewhat larger, which means that the Federation’s VAT receipts declined in year-on-year terms in December 2023. Conversely, this led to a year-on-year increase in the revenue from joint taxes that was allocated to the Länder in December 2023.

The public transport subsidies that the Federation pays to the Länder were down sharply on the year in December, mainly due to the extra €1bn in public transport subsidies that the Federation made available to the Länder in December 2022. Supplementary federal grants to the Länder were up by about 11% on the year in December 2023. In contrast, transfers of own resources to the EU (which are financed from the Federation’s tax revenues) were down on the year. After accounting for (a) the apportionment of VAT revenue and (b) supplementary federal grants to the Länder, the Federation’s overall tax revenue in December 2023 (including receipts from purely federal taxes) recorded a small gain of just under 2% on the year. Länder tax revenue was down very slightly on the year in December due to (a) the base effect in connection with public transport subsidies (see above) and (b) a decline in receipts from taxes accruing solely to the Länder. Local authorities’ take from joint taxes was also down slightly on the year.

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Apportionment of VAT revenue in December 2023

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

Share of total VAT revenue (€24,941m)

52.81398351%

45.19007254%

1.99594395%

€13,172m

€11,271m

€498m

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

-€805m

+€605m

+€200m

1/5 of the fixed payment as per section 1 (5) of the Fiscal Equalisation Act (€1,884m)

-€377m

+€377m

Block Grants Act

-€3,900m

+€3,900m

Share after accounting for the fixed payments


 

32.4%

64.8%

2.8%

€8,091m

€16,153m

€698m

Any discrepancies in totals are due to rounding.

 

Federation

Länder

Local authorities

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Further details on specific taxes

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Wages tax

Gross wages tax revenue was down slightly on the year in December 2023. This was not due to employment trends, because year-on-year employment levels remained slightly higher on the year. One factor that may have contributed to the decline is short-time work, which increased slightly on the year due to the weak performance of the economy. In addition, recent significant increases in wages and salaries (the Federal Statistical Office’s nominal wages index showed year-on-year growth of over 6% in the third quarter, for example) are not fully manifested in wages tax figures, because some of this higher pay has come in the form of tax-exempt inflation compensation bonuses. The Inflation Compensation Act (which adjusted 2023 income tax brackets to offset bracket creep and raised both the basic personal allowance and the tax allowance for children) is also likely to have had a considerable dampening effect on year-on-year wages tax revenue outcomes for December 2023. Furthermore, the Inflation Compensation Act increased child benefit rates as of 1 January 2023; this led to a sharp year-on-year increase (about 14%) in child benefit payments – which are financed from wages tax revenue – in December 2023. As a result, cash receipts from wages tax posted a larger year-on-year decline (just over 2%) than gross wages tax receipts.

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Taxes on earnings

Receipts from assessed income tax and corporation tax in December were driven largely by the fourth instalment of prepayments for 2023. Corporation tax prepayments in December 2023 were down slightly on the year after posting growth – albeit at steadily declining rates – in the other three months in 2023 when prepayments were due. Thus it appears likely that the economic slowdown is having an increasing impact on corporate profits and has led to a corresponding adjustment in prepayment levels. In addition, back-payments resulting from the revenue administration’s assessment activities for the years up to and including 2022 were down on the year in December 2023, while refunds were up. On balance, gross corporation tax revenue (including retroactive adjustments of prepayments for previous periods) declined by just under 1% on the year in December 2023. After accounting for research allowance payments and minor corrections resulting from repayments of investment allowance, cash receipts from corporation tax were down by just under 1% on the year as well.

Prepayments of assessed income tax in December 2023 declined at a slightly faster pace than prepayments of corporation tax. Trends had already been weaker in the other three months in 2023 when prepayments were due, although this was likely attributable in large part to tax rate changes enacted under the Inflation Compensation Act. In contrast, refunds and back-payments were both up markedly on the year in December. After accounting for relatively small payments of research allowance, investment allowance and owner-occupied homes premiums, cash receipts from assessed income tax were down slightly on the year in December 2023.

As in the previous six months, revenue from final withholding tax on interest and capital gains surged in December, posting a gain of about 130% on the year. This result was most likely driven by significantly higher interest rates and the effect of these rate rises on investment decisions. The yield from non-assessed taxes on earnings was up slightly on the year in December by about 1%.

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Value added taxes

Revenue from value added taxes was up year-on-year by about 3½% in December 2023. This is roughly in line with recent rates of consumer price inflation and is likely a sign that real consumption trends stabilised in the second half of 2023, although a strong recovery has yet to kick in. Retail trends in particular remained feeble in December. The relative distribution of VAT receipts between domestic VAT and import VAT continues to be affected by import trends. Nominal imports were down recently by about 12% on the year (partly due to price-related factors), which explains a large part of the 21% year-on-year drop in import VAT revenue that was recorded in December. Conversely, the decline in import VAT receipts and the associated decline in input VAT deductions served to boost domestic VAT receipts, which posted a year-on-year gain of just under 17% in December.

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Borrowing and guarantees

Borrowing trends for the Federation in December 2023

Tabelle vergrößern

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

Tabelle vergrößern

Guarantees

  

Authorised amount

Amount allocated as of
31 December 2023

Amount allocated as of
31 December 2022

in €bn

Export credit guarantees

150.0

113.1

119.1

Loans to foreign debtors, foreign direct investment, EIB loans

60.0

39.8

39.7

Financial cooperation projects

38.8

31.6

31.5

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

650.0

360.7

346.6

International financial institutions

85.0

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 2024 issue

January 2024

22 February 2024

March 2024 issue

February 2024

21 March 2024

April 2024 issue

March 2024

23 April 2024

May 2024 issue

April 2024

24 May 2024

June 2024 issue

May 2024

20 June 2023

July 2024 issue

June 2024

23 July 2024

August 2024 issue

July 2024

22 August 2024

September 2024 issue

August 2024

20 September 2024

October 2024 issue

September 2024

22 October 2024

November 2024 issue

October 2024

21 November 2024

December 2024 issue

November 2024

20 December 2024

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

22–24 February 2024 

Eurogroup and ECOFIN Council meetings in Ghent, Belgium

28–29 February 2024 

Meeting of G20 finance ministers and central bank governors in Rio de Janeiro, Brazil

11–12 March 2024 

Eurogroup and ECOFIN Council meetings in Brussels, Belgium

11–12 April 2024

Eurogroup and ECOFIN Council meetings in Luxembourg

18–21 April 2024

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.

13–14 May 2024

Eurogroup and ECOFIN Council meetings in Brussels, Belgium