Federal budget trends up to and including November 2024

Revenue

Federal revenue (excluding seigniorage, withdrawal from reserves and revenue from loans) totalled approximately €366.3bn for the period from January to November 2024, up by 10.2% (€33.9bn) on the year. Tax revenues were up by 5.0% (€15.2bn) on the year. For further information about tax revenues, please refer to the article “Tax revenues in November 2024” [in German only] in the current issue of the monthly report.

The category of “other revenue” totalled €44.4bn in November 2024, a year-on-year gain of 72.7% (€18.7bn). This included a €5.0bn year-on-year increase in receipts from the distance-based commercial vehicle toll, a gain largely driven by the recent addition of a CO2 component to the toll. In addition, revenue from sales of holdings and from the liquidation of other capital assets belonging to the Federation rose by €3.5bn compared with the same period last year. Revenue generated in connection with the Offshore Wind Act (Windenergie-auf-See-Gesetz) totalled €1.3bn. Furthermore, an amount of €4.1bn was transferred to the core budget as a result of the special fund for digital infrastructure being dissolved. This is because the funding that is being provided to the Länder for the purpose of implementing the Digital Pact for Schools and expanding broadband networks is now being drawn from the core budget.

Expenditure

In the period from January to November 2024, federal expenditure totalled €416.8bn, up slightly by 1.0% (€4.2bn) on the year. Broken down by economic category, investment spending increased on the year by 0.9% (€0.4bn), as did consumption spending, which rose by 1.0% (€3.8bn).

In the area of consumption spending, ongoing grants and subsidies recorded a year-on-year increase of 3.1% (€7.9bn). Human resources expenditure was up by 5.6% (€2.1bn) on the year. In contrast, interest expenditure declined by 12.1% (€4.6bn) on the year, while operating expenditure fell by 4.3% (€1.5bn). The increase in ongoing grants and subsidies was the result of contrasting trends: spending on citizen’s benefit was up by €3.2bn, and the federal subsidy to the general pension insurance system rose by €2.2bn on the year. Spending on efforts to enhance security, defence and stability in partner countries was €1.6bn higher than in the first 11 months of 2024. Federal grants to reimburse the Länder for social spending on basic income support for older people and for people with reduced earning capacity climbed by €1.2bn. In contrast, federal payments to the health fund to cover pandemic-related costs declined by €1.4bn on the year. Furthermore, no money was budgeted in 2024 for a supplementary federal subsidy to the health fund or for federal lump-sum contributions to the long-term care insurance system. This led to year-on-year spending reductions of €1.8bn and €1.0bn, respectively, in the period from January to November 2024.

Investment spending rose slightly on the year. This was despite a special factor in 2023, when 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. No such loan was made in 2024. After adjusting for this effect, investment spending was up by 18.8% (€6.7bn) on the year. This increase was mainly due to an allocation of €5.5bn to increase the equity of Deutsche Bahn AG. Additionally, investment grants to Autobahn GmbH des Bundes were €0.4bn higher than in the first 11 months of 2023.

Fiscal balance

The federal budget recorded a deficit of €50.5bn for the January–November 2024 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.

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Tax revenue in November 2024

Tax revenue trends

Total tax revenue

Overall tax revenue (excluding local authority taxes) was up by 9% on the year in November 2024 (see the table “2024 trends in tax revenue (excluding local authority taxes)”).

This increase was largely due to growth in receipts from joint taxes, which account for the largest share of tax revenue and which were up by over 10% on the year. In addition, a special factor relating to value added taxes, which led to substantial year-on-year revenue growth, also had an impact on overall tax receipts (see further details on specific taxes below). With the exception of corporation tax, receipts from the other joint taxes were also up on the year, with some posting very strong growth. On a cumulative basis, revenue from joint taxes increased by almost 4% on the year in the January to November period. Overall tax revenue (excluding local authority taxes) rose by a similar amount in cumulative terms.

Revenue from taxes accruing to the Federation was up slightly in November, by around 1½% on the year. Tobacco duty, insurance tax, motor vehicle tax and the solidarity surcharge all posted revenue growth, while receipts from energy duty and electricity duty fell. In cumulative terms, the yield from federal taxes grew by around 3½% on the year in the first 11 months of 2024. However, this increase can largely be attributed to revenue from the EU energy crisis contribution, which is being levied for the first time in 2024. If the effects of this additional revenue are factored out, then the increase over the year to date would be similar to the increase in November.

Receipts from taxes accruing to the Länder grew by almost 12% on the year in November. Revenue from real property transfer tax remained close to €1.1bn, representing an increase of around 8% on the year, which reflects the lower baseline figure in 2023. The yield from inheritance tax, which is the other high-revenue Länder tax, rose by 17% compared with the same period last year. From a cumulative perspective, the Länder taxes posted revenue growth of around 5% in the January to November period. This more moderate increase illustrates how volatile revenue levels can be from month to month.

Apportionment of tax revenue among the different levels of government

The Federation’s tax receipts (after accounting for supplementary federal grants) were up by around 11% on the year in November 2024. This increase was largely a result of the fact that federal transfers of own resources to the EU, which are financed from the Federation’s tax revenue, were down by around 16% on the year in November. Supplementary federal grants to the Länder also fell significantly in November, by 28% in year-on-year terms. In contrast, federal subsidies to the Länder for public transport rose sharply, by 17% on the year. The Federation’s take from joint taxes increased at a slightly lower rate than overall revenue from joint taxes. This is due to the fact that the Federation’s share of VAT revenue in November 2024 was slightly lower than in November 2023, after taking into account the fixed payments that are transferred from the Federation’s share of VAT revenue to the Länder and local authorities in accordance with the Fiscal Equalisation Act (see the table “Apportionment of VAT revenue in November 2024” below).

The tax receipts of the Länder were up by around 9% on the year in November 2024, after accounting for supplementary federal grants. In this respect, the above-mentioned factors (supplementary federal grants, federal subsidies for public transport and vertical distribution of VAT revenue) have the inverse impact on Länder receipts than they do on the Federation’s revenue. Local authorities’ take from their share of joint taxes was up by 11% on the year in November 2024.

Apportionment of VAT revenue in November 2024

IIn November 2024, revenue from value added taxes was distributed as follows among the Federation, Länder and local authorities:

Further details on specific taxes

Wages tax

Revenue from wages tax posted relatively high year-on-year growth of around 7½% in November 2024. In cumulative terms, receipts increased by roughly 5% on the year in the January to November period. Child benefit payments (which are financed from wages tax receipts) remained basically unchanged on the year. The high growth in November 2024 was partly driven by rising nominal wages, which were up by almost 5% on the year in the third quarter of 2024, according to the latest figures from the Federal Statistical Office. Another factor was probably the trend in tax-exempt inflation compensation bonuses, which now comprise a significantly smaller part of wage payments compared with the same period of 2023. Looking ahead, the fact that the weak performance of the German economy is now having a noticeable impact on the labour market will likely have an increasing influence on the future trend in wages tax revenue. Total employment is only slightly higher than in the same period of 2023. In contrast, the number of people in short-time work has risen markedly on the year.

Assessed income tax and corporation tax

Receipts from assessed income tax were up by around €120m on the year in November 2024. The revenue trend was driven largely by the revenue administration’s assessments for previous periods, which can result in significant year-on-year fluctuations in receipts from this tax. Research allowance payments rose sharply on the year, but continue to have only a negligible impact on results due to their small volume. In cumulative terms, revenue from assessed income tax increased by slightly more than 2% on the year in the January to November period.

In contrast, the yield from corporation tax fell noticeably in year-on-year terms, dropping by around €800m. Here, too, assessment activities by the revenue administration can result in significant volatility in terms of revenue. On a cumulative basis, revenue from corporation tax fell by approximately 12% on the year in the January to November period. Here, the impact of the ongoing economic slowdown on the revenue trend can be observed. The retroactive adjustments of prepayments for the previous and current year show a downward tendency compared with the same period last year. The level of refunds is already €2bn higher than for the whole of 2023, while back-payments are showing considerably lower growth. Research allowance payments, which are financed from corporation tax revenue, rose by over 60% on the year in the January to November period. However, this had only a relatively small negative impact on total revenue.

Capital income taxes

Receipts from final withholding tax on interest and capital gains posted another huge year-on-year gain in November, surging by about 122%. On a cumulative basis, year-on-year growth for the January–November period totalled 136%. Significantly lower revenue growth can be expected in 2025, because the sharp increase in interest rates on (short-term) deposits will already be reflected in the 2024 baseline figures then. Revenue from non-assessed taxes on earnings, which is largely derived from the taxation of dividend income, also increased in November, by around 20½% on the year. This high increase falls within the typical range of growth-rate variation that this tax type experiences from month to month. On a cumulative basis, receipts from non-assessed taxes on earnings fell by almost 9% in the January to November period in comparison with the same period last year.

Value added taxes

Receipts from value added taxes recorded a substantial year-on-year rise of 11% in November 2024. This increase was significantly greater than the cumulative growth of 3% on the year in the January to November period. The sharp rise in November is largely due to the particularly high tax revenues from the “One Stop Shop” (OSS) scheme. Without these receipts, the rise in revenue would have been much more moderate. Current economic indicators such as retail sales do not indicate that a new trend is starting or that similarly sharp revenue gains can be expected in the coming months. According to current data, price-adjusted retail sales fell in October compared with the previous month. In nominal terms, which is the figure that is relevant for tax revenue, sales increased by just under 2% on the year.

The revenue from the OSS scheme is recorded as revenue from domestic VAT, which – analogous to receipts from value added taxes overall – rose by almost 15% on the year in November. In contrast, the yield from import VAT grew only slightly, by around ½%. This small increase was basically in line with the trend in nominal imports, which, according to the latest data, increased by around 1½% on the year in October 2024.

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Borrowing and guarantees

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