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Federal budget trends up to and including May 2020
Table: Trends in the federal budget
Actual 2019
2020 target1
Actual2 January-May 2020
Expenditure (€bn)3
343.2
484.5
163.3
Year-on-year change in % (year to date)
+16.0
Revenue (€bn)4
356.5
317.5
119.0
Year-on-year change in % (year to date)
-9.8
Tax revenue (€bn)
329.0
291.5
106.6
Year-on-year change in % (year to date)
-10.8
Balance of pass-through funds (€bn)
0.0
0.0
0.0
Fiscal balance (€bn)
13.3
-167.0
-44.3
Financing/use of surplus:
-13.3
167.0
44.3
Cash resources (€bn)
-
-
41.8
Seigniorage (€bn)
0.2
0.3
0.1
Movements in reserves5 (€bn)
-13.5
10.6
0.0
Net borrowing6 (€bn)
0.0
156.0
2.4
Any discrepancies in totals are due to rounding.
1Including first supplementary budget in accordance with Bundestag decision of 27 March 2020. 2As per accounts. 3With 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. 4With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting. 5Negative values denote accumulation of reserves. 6(-) debt repayment; (+) borrowing
Federal revenue for the first five months of the year totalled roughly €119.0bn, down by 9.8% (approximately €13.0bn) on the year. Tax revenue (including transfers of EU own resources to the EU) declined by 10.8% (about €12.9bn). The consequences of the Covid-19 pandemic led to a sharp decrease in tax revenue compared with the same period of 2019. Receipts from value added taxes have been particularly affected.
Other revenue was down by approximately €0.1bn (-1.0%) on the year; this was in contrast to the April 2020 results, when other revenue increased by around €3.0bn in year-on-year terms. This slight decline was due to the fact that around €3.4bn from the Federation’s share of the Bundesbank’s net profit was transferred to the special investment and redemption fund in May 2020. Resources must be transferred to the special fund if the Federation’s share of the Bundesbank’s net profit exceeds the estimate of €2.5bn contained in the federal budget. Receipts from the profits of government undertakings and holdings, and from allocations from the Institute for Federal Real Estate, were around €0.6bn lower than in the same period last year.
Federal expenditure in the first five months of 2020 totalled €163.3bn, up by 16.0% (around €22.6bn) on the year. The marked rise in total expenditure is attributable to a sharp year-on-year increase in consumption spending in the form of ongoing subsidies to companies. Most of this spending consisted of immediate assistance for small companies and self-employed individuals affected by the fallout from the Covid-19 pandemic. A total of €15.3bn has been disbursed, out of the €50bn earmarked for this purpose. Payments to social security funds exceeded last year’s figure by 3.2% (approximately €1.9bn). The fall in interest expenditure, which was down by 54.2% (around €2.9bn) on the year, slowed the increase in consumption spending.
Investment spending in May totalled €10.0bn, down by 6.1% in year-on-year terms. This was mainly driven by lower spending resulting from the discontinuation of compensation payments from the Federation to the Länder (the Federation and Länder agreed to end these payments as part of the reorganisation of financial relations between government levels that took effect at the start of 2020). Instead of receiving compensation payments, the Länder now receive a higher share of VAT revenue. Investment spending in the area of construction saw a year-on-year rise of 17.3% (approximately €0.4bn).
The federal budget recorded a deficit of €44.3bn for the five-month period from January to May 2020.
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.
Income tax and corporation tax
(incl. final withholding tax on interest and capital gains)
150,384
42.2
119,239
37.6
52,214
49,940
-4.4
of which:
Wages tax
93,311
26.2
63,251
19.9
34,639
34,590
-0.1
Assessed income tax
27,078
7.6
26,557
8.4
8,184
7,222
-11.8
Non-assessed tax on earnings
11,724
3.3
10,925
3.4
3,777
3,748
-0.8
Final withholding tax on interest and capital gains
2,264
0.6
2,156
0.7
1,058
1,485
+40.4
Corporation tax
16,007
4.5
16,350
5.1
4,557
2,894
-36.5
Value added taxes (VAT)
118,944
33.4
121,288
38.2
48,851
41,129
-15.8
Trade tax apportionment
1,947
0.5
1,981
0.6
542
546
+0.7
Energy duty
40,683
11.4
40,400
12.7
11,196
10,420
-6.9
Tobacco duty
14,257
4.0
14,370
4.5
5,178
5,080
-1.9
Solidarity surcharge
19,646
5.5
19,900
6.3
7,213
6,963
-3.5
Insurance tax
14,136
4.0
14,470
4.6
8,372
8,658
+3.4
Electricity duty
6,689
1.9
6,650
2.1
2,717
2,683
-1.3
Motor vehicle tax
9,372
2.6
9,490
3.0
4,320
4,277
-1.0
Alcohol duty including alcopops duty
2,119
0.6
2,132
0.7
887
871
-1.8
Coffee duty
1,060
0.3
1,065
0.3
444
418
-5.9
Aviation tax
1,182
0.3
1,725
0.5
405
161
-60.2
Sparkling wine duty and intermediate products duty
403
0.1
397
0.1
183
178
-2.7
Other taxes accruing to the Federation
2
0.0
2
0.0
1
1
+0.0
Deductions
Consolidation assistance for the Länder
800
X
1,067
X
0
0
-
Supplementary grants to Länder
7,555
X
10,025
X
1,860
2,405
+29.3
EU own resources (GNI-based)
23,317
X
30,060
X
11,838
12,692
+7.2
EU own resources (VAT-based)
2,520
X
2,700
X
1,251
1,389
+11.0
Grants to Länder for public transport
8,651
X
8,807
X
3,605
3,732
+3.5
Grants to Länder for motor vehicle tax and HGV toll
8,992
X
8,992
X
4,496
4,496
+0.0
Other revenue
27,502
7.7
26,076
8.2
12,488
12,367
-1.0
Revenue from economic activity
6,376
1.8
6,699
2.1
5,034
3,978
-21.0
Interest revenue
309
0.1
276
0.1
93
74
-20.4
Loan repayments, holdings, privatisation proceeds
2,026
0.6
1,444
0.5
393
374
-4.8
Total revenue2
356,492
100.0
317,534
100.0
131,963
118,978
-9.8
1Including first supplementary budget in accordance with Bundestag decision of 27 March 2020. 2With the exception of revenue from loans on the credit market, withdrawals from reserves, revenue from cash surpluses and seigniorage. Excluding revenue from internal offsetting.
2020 trends in tax revenue (excluding local authority taxes)
2020 trends in tax revenue (excluding local authority taxes)1
2019
May
Year-on-year
change
January to May
Year-on-year
change
2020 estimates4
Year-on-year
change
in €m
in %
in €m
in %
in €m
in %
Joint taxes
Wages tax2
15,135
-10.3
86,067
+0.2
212,250
-3.4
Assessed income tax
-999
X
16,999
-11.8
47,600
-25.3
Non-assessed taxes on earnings
1,247
-36.5
7,540
-2.7
21,000
-10.6
Final withholding tax on interest and capital gains
(including the former withholding tax on interest income)
349
-27.1
3,374
+40.4
6,300
+22.4
Corporation tax
-225
X
5,789
-36.5
18,800
-41.3
Value added taxes (VAT)
16,505
-21.0
87,988
-11.7
221,000
-9.1
Trade tax apportionment
197
-22.0
1,317
+0.6
3,649
-22.4
Increased trade tax apportionment
0
-100.0
99
-89.3
0
X
Total joint taxes
32,210
-21.1
209,172
-7.5
530,599
-10.9
Taxes accruing to the Federation
Energy duty
2,644
-19.4
10,420
-6.9
37,100
-8.8
Tobacco duty
1,028
-38.9
5,080
-1.9
14,350
+0.7
Alcohol duty
167
+4.1
861
-2.9
2,100
-0.8
Insurance tax
1,032
+1.7
8,658
+3.4
14,580
+3.1
Electricity duty
490
-9.9
2,683
-1.2
5,990
-10.4
Motor vehicle tax
686
-21.3
4,277
-1.0
9,500
+1.4
Aviation tax
4
-96.6
161
-60.3
300
-74.6
Solidarity surcharge
1,089
-17.1
6,963
-3.5
17,700
-9.9
Other taxes accruing to the Federation
100
-22.4
607
-3.5
1,441
-1.7
Total taxes accruing to the Federation
7,240
-20.4
39,710
-2.9
103,061
-5.9
Taxes accruing to the Länder
Inheritance tax
762
+39.9
3,392
+18.9
7,500
+7.3
Real property transfer tax
1,174
-7.2
6,892
+5.3
15,000
-5.0
Betting and lottery tax
138
-22.4
819
-5.2
1,865
-5.6
Beer duty
21
-60.6
184
-23.6
520
-15.8
Other taxes accruing to the Länder
33
+8.1
291
+7.3
505
+4.8
Total taxes accruing to the Länder
2,127
+2.8
11,578
+7.5
25,390
-1.8
EU own resources
Customs duties
409
-1.2
1,907
-3.2
4,500
-11.5
EU own resources (VAT-based)
325
+159.8
1,365
+9.1
2,700
+7.2
EU own resources (GNI-based)
3,022
+155.3
12,692
+7.2
26,720
+14.6
Total EU own resources
3,756
+118.0
15,964
+6.0
33,920
+9.7
Federation3
16,018
-34.8
107,836
-10.9
284,536
-13.5
Länder3
19,407
-14.7
119,378
-4.0
297,186
-8.4
EU
3,756
+118.0
15,964
+6.0
33,920
+9.7
Local authorities’ share of income tax and value added tax
2,805
-16.4
19,189
-1.6
47,908
-6.8
Total tax revenue (excluding local authority taxes)
41,987
-19.9
262,367
-6.3
663,550
-9.8
1Methodology: Total cash income from the various taxes is recorded and allocated to the various government levels as stipulated by law. Tax amounts actually received in the current month by individual government levels may differ from the target amounts for technical reasons. 2After deduction of child benefit refunds by the Federal Central Tax Office 3After supplementary grants; any discrepancies with the table on trends in federal revenue are due to the methodology used (see footnote 1). 4Results of the Working Party on Tax Revenue Estimates of May 2020.
Total tax revenue (excluding local authority taxes) in May 2020 fell by 19.9% on the year. The economic effects of the coronavirus pandemic, and the tax measures adopted to combat the crisis, had a significant negative impact on tax revenue in May 2020. Of particular note is the decline in revenue from joint taxes, which fell by around one fifth, mainly as a result of lower revenue from value added taxes. However, revenue from wages tax, assessed income tax, non-assessed taxes on earnings and corporation tax also recorded large decreases. Similarly, receipts from taxes accruing solely to the Federation fell sharply due to tax relief and lower consumption caused by the economic downturn. In percentage terms, aviation tax revenue posted a particularly significant decline, while receipts from energy duty and electricity duty saw large drops in absolute terms. Tobacco duty revenue also fell; however, this was due to revenue being shifted from May to June. Receipts from taxes accruing solely to the Länder rose by 2.8%.
Transfers of own resources to the EU, including customs duties, totalled approximately €3.8bn in May 2020, a year-on-year rise of around €2.0bn. In January, the European Commission had already drawn down an additional twelfth of the amount earmarked for the entire year, for the purpose of financing its functions. This led to lower drawdowns of own resources in recent months. In May, the Commission drew down a significantly higher amount of VAT-based and GNI-based own resources compared with May 2019. Monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time. However, monthly requisitions are generally in line with the financial framework for the current year.
Cumulative overview of the January–May 2020 period
Total tax receipts fell by 6.3% on the year in the first five months of 2020. Revenue from joint taxes decreased by 7.5%, while receipts from taxes accruing solely to the Federation dropped by 2.9%. Revenue from taxes accruing solely to the Länder posted an increase of 7.5% in the January-May 2020 period.
Distribution among the Federation, Länder and local authorities
The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) posted a substantial drop of 34.8% on the year in May 2020. Not only was there a decline in receipts from joint taxes and federal taxes, but significantly larger supplementary federal grants also had to be paid. In addition, more EU own resources had to be transferred in May 2020 than in May 2019.
Länder tax receipts were down by 14.7% on the year in May. This was due to a 19.5% year-on-year decline in the yield from the share of joint taxes allocated to the Länder. This drop was partially compensated for by higher receipts from taxes accruing solely to the Länder, which were up by 2.8% in year-on-year terms. The local authorities’ take from joint taxes fell by 16.4% on the year.
Wages tax receipts declined in May 2020, with gross revenue decreasing by 7.7% on the year. This was a result of the massive take-up of the German government’s short-time work scheme (Kurzarbeit), which led to lower wages tax payments. Child benefit payments, which are financed from wages tax receipts, rose by 4.5% on the year due to a €10 per child increase in monthly child benefit that came into effect in July 2019. On balance, cash receipts from wages tax declined by 10.3% on the year in May 2020. On a cumulative basis, cash receipts from wages tax in the January-May period were at almost the same level as last year (+0.2%).
Gross revenue from corporation tax totalled approximately ‑€225m in May, which tends to be a low-revenue month for this tax, compared with ‑€38m in May 2019. Taxpayer paybacks of investment allowance only very slightly exceeded payouts in May, meaning that net cash receipts from corporation tax also totalled around ‑€225m. On a cumulative basis, cash receipts from corporation tax fell by 36.5% on the year in January–May 2020.
Gross receipts from assessed income tax posted a year-on-year decline of 49.4% in May, generally a low-revenue month for this tax type. Employee refunds were up by 12.7% on the year in May; after these are subtracted from the gross figure (along with investment allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount), net cash receipts from assessed income tax stood at approximately -€1.0bn. In cumulative terms, cash receipts from assessed income tax were down by 11.8% on the year in the January–May period.
May 2020 saw a 35.6% year-on-year drop in gross receipts from non-assessed taxes on earnings. In the case of this tax, however, the decline is largely unrelated to the pandemic. Rather, it can be attributed to a shift in the timing of cash receipts as a result of differences in dividend payment dates compared with 2019. Refunds by the Federal Central Tax Office, which are financed from this revenue, totalled about €72m. As a result, cash receipts from non-assessed taxes on earnings were down by 36.5% on the year. Cumulative cash receipts from non-assessed taxes on earnings in the first five months of the year were down by 2.7% on the year.
Final withholding tax on interest and capital gains
Revenue from final withholding tax on interest and capital gains fell by 27.1% on the year in May 2020. However, high levels of monthly revenue from this tax were recorded in the course of the year to date. There are no statistics breaking down revenue from this tax into its two components, but it can be assumed that the decline is attributable to the contribution made by capital gains. In cumulative terms, cash receipts from withholding tax on interest and capital gains were up by 40.4% on the year in the January–May 2020 period.
Receipts from value added taxes declined by 21.0% on the year in May 2020. Receipts from domestic VAT recorded a substantial year-on-year drop of 21.6%, while import VAT revenue fell by 19.4% on the year. Due to the time lag with which sales show up in the cash statistics, the decline in sales experienced in March did not start to show up in cash receipts until May. In cumulative terms, cash receipts from value added taxes were down by 11.7% on the year in the January–May 2020 period.
In May 2020, revenue from taxes accruing solely to the Federation was 20.4% lower than in the same month last year. This was due to the far-reaching tax relief introduced in response to the coronavirus crisis, including refunds of tax that had already been paid (retroactive tax deferrals) and deferrals without collateral. Receipts from energy duty and electricity duty declined by 19.4% and 9.9% respectively; this was partly due to tax relief but also to reduced consumption of fuel and electricity as a result of the crisis. Revenue also dropped for coffee duty (-31.9%) and motor vehicle tax (-21.3%). Global air traffic has ground to an almost complete halt as a result of the shutdown. This, in combination with the tax deferrals granted, led to a 96.6% collapse in aviation tax revenue. Receipts from the solidarity surcharge declined by 17.1% as a result of drops in revenues from income and corporation tax (which constitute its tax base). Tobacco duty also posted a large revenue decline of 38.9% on the year. In this case, part of the revenue was shifted to June 2020. Revenue increases were recorded for insurance tax (up by 1.7%) and alcohol duty (up by 4.1%). Trends in revenue from other taxes had only a minor impact on the overall results for federal taxes.
Revenue from taxes accruing solely to the Länder increased by 2.8% on the year in May 2020. This was driven by a surge in revenue from inheritance tax, which was up by 39.9%. Receipts from real property transfer tax fell by 7.2%, while revenue from beer duty declined by 60.6% as a result of tax deferrals. The yield from betting and lottery tax dropped by 22.4% on the year. Revenue from fire protection tax increased by 8.1% compared with May 2019.
Debt trends for the Federation and its special funds
Debt trends for the Federation and its special funds
(in €m)
Debt level
Borrowing
(increase)
Debt repayment
(decrease)
Debt level
Change in debt level
(balance)
30 April 2020
May 2020
May 2020
31 May 2020
May 2020
Budget borrowing
1,068,595
58,529
-
1,127,124
58,529
broken down by purpose
Federal budget
1,026,679
61,880
-
1,088,559
61,880
Financial Market Stabilisation Fund
(loans for expenses pursuant to section 9 (1) of the Financial Market Stabilisation Fund Act (Finanzmarktstabilisierungsfondsgesetz))
22,700
-
-
22,700
0
Investment and Redemption Fund
19,217
-3,351
-
15,866
-3,351
Financial Market Stabilisation Fund
(loans for resolution authorities pursuant to section 9 (5) of the Financial Market Stabilisation Fund Act)1
29,500
500
-
30,000
500
Total including loans for resolution authorities1
1,098,095
59,029
-
1,157,124
59,029
broken down by debt type
Federal securities
1,086,897
59,029
-
1,145,926
59,029
Conventional federal securities
1,030,557
58,948
-
1,089,506
58,948
30-year federal bonds
236,588
1,651
-
238,239
1,651
10-year federal bonds
492,045
21,451
-
513,495
21,451
Federal notes
167,297
5,263
-
172,561
5,263
Federal Treasury notes
97,580
5,273
-
102,853
5,273
Treasury discount papers issued by the Federation
37,048
25,309
-
62,357
25,309
Inflation-linked federal securities
55,935
80
-
56,015
80
30-year inflation-linked federal bonds
8,788
82
-
8,870
82
10-year inflation-linked federal bonds
47,147
-2
-
47,145
-2
Other federal securities
405
-
-
405
0
Securitised loans
6,725
-
-
6,725
0
Other loans and ordinary debts
4,474
-
-
4,474
0
broken down by maturity
up to one year
178,938
204,138
25,200
one to four years
340,677
364,785
24,108
more than four years
578,480
588,201
9,721
Additional information1:
Liabilities from the indexing of inflation-linked federal securities2
3,276
3,582
306
Reserves in accordance with the Final Payment Financing Act (Schlusszahlungsfinanzierungsgesetz)3
3,376
3,402
26
1 Under section 9 (5) of the Financial Market Stabilisation Fund Act, the Federal Ministry of Finance is empowered to borrow up to €30bn for the Financial Market Stabilisation Fund so that the Fund can grant loans to resolution authorities for the purpose of refinancing (as per section 8 (10) of the Financial Market Stabilisation Fund Act) assets that they have taken over. Such borrowing is neutral overall in terms of debt, because it replaces the funds that resolution authorities would otherwise have to borrow on the market. However, it does increase the debt level in federal securities. 2 Liabilities resulting from indexing include the amount by which the original issuance price has increased due to inflation between the start date and the specified reference date. 3 In contrast, reserves include only the increases that are noted on coupon payment dates (15 April of every year) (section 4(1) of the Final Payment Financing Act) and on reopening dates for inflation-linked securities (section 4(2) of the Final Payment Financing Act).