Federal budget trends in January 2021

Table: Trends in the federal budget

Expenditure (€bn)²

441.8

498.6

54.2

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

 

 

+33.9

Revenue (€bn)³

311.1

318.6

17.1

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

 

 

-16.3

Tax revenue (€bn)

283.3

292.8

15.4

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

 

 

-15.5

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-130.7

-180.1

-37.1

Financing/use of surplus:

130.7

180.1

37.1

Cash resources (€bn)

-

-

88.6

Seigniorage (€bn)

0.2

0.2

0.0

Movements in reserves⁴ (€bn)

0

0.0

0.0

Net borrowing (€bn)

130.5

179.8

-51.6

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 2020

2021 target

Actual¹
January 2021

to the top

Revenue

Federal revenue in January 2021 totalled approximately €17.1bn, down by 16.3% (roughly €3.3bn) compared with January 2020. This decline is due primarily to the effects of the Covid-19 pandemic and the associated tax-related assistance measures that have been adopted to help manage the crisis. Tax receipts (also taking into account transfers of own resources to the EU) declined by 15.5% (roughly €2.8bn) compared with the same period in 2020. Receipts from value added taxes as well as from income tax and corporation tax have been particularly affected, falling by roughly €2.0bn and €1.1bn, respectively.

The category of “other revenue” recorded a drop of 22.8% (about €0.5bn) on the year in January. This was mainly due to a decline in administrative fines paid to the Federal Cartel Office.

to the top

Expenditure

In 2020, extraordinary measures were taken to fight the coronavirus pandemic and to mitigate its economic and social consequences. Budget execution in 2021 will also be heavily influenced by measures to counteract the pandemic and its effects.

Federal expenditure in January 2021 totalled €54.2bn, up by 33.9% (€13.7bn) compared with January 2020. A breakdown by economic category shows that higher spending in January was mainly due to growth in consumption spending, which was up by 28.6% (approximately €10.9bn). Ongoing grants to social security funds, which were up by €9.1bn (51.1%) on the year, accounted for the bulk of this increase. This includes roughly €5.5bn in disbursements to the health fund to cover costs caused by the SARS-CoV-2 pandemic. This means that about ¾ of the budgeted funds (about €7.7bn) have been disbursed. These grants also include €3.0bn in disbursements to the health fund’s liquidity reserves for a programme to future-proof hospitals; this is the full amount that was budgeted for this purpose. The increase in consumption spending was tempered by a decline in interest expenditure, which was down by 21.1% (about €1.0bn) on the year.

Investment spending totalled approximately €5.4bn in January, an increase of 115.5% (roughly €2.9bn) over the same period last year. The main factor driving this increase was liquidity assistance provided to the Federal Employment Agency (roughly €2.9bn so far this year). In contrast, fixed asset investment was down by 55.2% (about €0.4bn) due to a decline in spending on construction projects.

to the top

Fiscal balance

The federal budget recorded a deficit of €37.1bn in January 2021.

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. This is especially the case at the beginning of the year and under the prevailing circumstances.

Trends in federal expenditure by function

Tabelle vergrößern

Trends in federal expenditure by economic category

Tabelle vergrößern

Trends in federal revenue

Tabelle vergrößern

to the top

Tax revenue in January 2021

2021 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

Total tax revenue (excluding local authority taxes) in January 2021 was down by 11.1% compared with the same month last year. The economic effects of the coronavirus pandemic continued to have a negative impact on tax revenue. As in previous months, virus-related measures (deferrals, waived enforcement measures, reductions in prepayments) taken on the basis of secondary legislation also affected tax revenue. Receipts from joint taxes were down by 11.7% on the year. The temporary cuts in VAT rates in the second half of 2020 continue to reduce VAT receipts. In addition, the deferral of deadlines for paying import VAT, which were pushed back by more than a month, led to a significant drop in revenue. There was also a major decline in receipts from non-assessed taxes on earnings. Revenue from taxes accruing solely to the Federation was down by 7.7% in January, while receipts from taxes accruing only to the Länder were down by 4.2%.

to the top

EU own resources

Transfers of own resources to the EU, including customs duties, were down by 14.0% on the year in January 2021. Monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time. In general, they are based on the annual EU budget that is in force for the respective year.

to the top

Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) were down by 12.8% on the year in January 2021. The Federation’s take from joint taxes fell by 12.6% on the year due to a sharp decline in overall revenue from these taxes. In addition, revenue from taxes that accrue exclusively to the Federation were down by 7.7% on the year. In contrast, a considerable decline in payments of own resources to the EU (down by 14.0% on the year) had a positive impact on the Federation’s overall revenue figures. Supplementary grants that the Federation pays to the Länder were down on the year as well.

Länder tax receipts were down sharply by 10.0% on the year in January 2021. The revenue from joint taxes that flows to the Länder fell by 11.8% overall, due – as was the case with the Federation – to steep declines in revenue from certain joint taxes. The discontinuation of the increased trade tax apportionment also had a negative impact on Länder tax revenue totals. Furthermore, the yield from taxes that accrue exclusively to the Länder posted a substantial decline of 4.2%. Local authorities’ take from their share of joint taxes was down by 6.7% on the year.

to the top

Joint taxes

to the top

Wages tax

Gross wages tax revenue in January 2021 was down by 4.0% on the year. Cash receipts in January included wages tax that was deducted for December 2020. The current lockdown measures, which took effect in November 2020 and were intensified on 16 December 2020, led to an increase in company notifications regarding short-time work. This in turn had a negative impact on wages tax revenue. Child benefit payments – which are financed from wages tax receipts – rose by 9.7% on the year due to the €15 per child increase in child benefit enacted under the Second Family Tax Burden Reduction Act (Zweites Familienentlastungsgesetz). These factors led to a sharp 6.4% year-on-year decline in cash receipts from wages tax in the month of January.

to the top

Corporation tax

Gross receipts from corporation tax totalled roughly €1.5bn in January 2021, a year-on-year gain of 42.3%. The increase resulted mainly from routine tax assessments for 2019 and 2020. Investment allowance payments had only a minimal impact on the overall outcome due to their low volume. As a result, cash receipts from corporation tax likewise rose sharply by 41.8% on the year.

to the top

Assessed income tax

Gross revenue from assessed income tax was down by 7.7% on the year in January 2021. Employee refunds declined by 20.7% on the year in January; 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 showed a slight drop of 1.4% on the year in January 2021.

to the top

Non-assessed taxes on earnings

The gross yield from non-assessed taxes on earnings was down by 33.8% on the year in January 2021. Refunds by the Federal Central Tax Office, which are financed from this revenue, totalled about €133m (up by 78.3% on the year). Overall, cash receipts from non-assessed taxes on earnings fell by 37.1% in January 2021.

to the top

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains remained basically unchanged on the year in January 2021, recording a slight gain of 1.3%.

to the top

Value added taxes

Receipts from value added taxes were down by 18.0% on the year in January. Long-term extensions for declaring and remitting VAT have been granted to most businesses. As a result, cash receipts from domestic VAT in January 2021 included most of the VAT collected by businesses in November 2020. Despite the temporary reduction of VAT rates in the second half of 2020, cash receipts from domestic VAT were up slightly by 1.7% on the year in January. Revenue from import VAT was down by 88.0% on the year in January. This steep decline was due mainly to the deferred deadline for paying import VAT on goods imported in December 2020. Under the Second Coronavirus Tax Assistance Act (Zweites Corona-Steuerhilfegesetz), the deadline was pushed back from 16 January 2021 to 26 February 2021.

to the top

Taxes accruing to the Federation

In January 2021, revenue from taxes accruing solely to the Federation was down by 7.7% compared with the same month last year. For some taxes, the tax measures that were introduced to improve the liquidity of companies resulted in a decline in revenue. In the case of alcohol duty, sparkling wine duty and intermediate products duty, amounts due in January 2021 were paid already in December 2020. This led to significant year-on-year declines in revenue from these duties in January: 77.6% for alcohol duty, 95.9% for sparkling wine duty, and 82.0% for intermediate products duty. Other taxes posting lower revenue on the year in January included energy duty (down by 9.8%), motor vehicle tax (down by 12.2%) and aviation tax (down by 72.6%). Revenue from the solidarity surcharge also fell, by 10.3%. This was due only in small part to the abolition of the solidarity surcharge for approximately 90% of wages tax and income tax payers. Rather, the main reason for the drop in solidarity surcharge revenue was the decline in receipts from the taxes that make up its base (in particular, lower revenue from wages tax and non-assessed taxes on earnings). In January, revenue gains were recorded for tobacco duty (up by 30.1%) and coffee duty (up by 10.0%). Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes.

to the top

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were down by 4.2% on the year in January 2021. This outcome was driven mainly by lower revenue from real property transfer tax (down by 6.2%) and beer duty (down by 17.5%). Betting and lottery tax revenue also fell slightly by 1.1%. In contrast, fire protection tax and inheritance tax posted year-on-year gains of 8.8% and 0.2% respectively in January. 

to the top

Borrowing and guarantees

Borrowing trends for the Federation in January 2021

Tabelle vergrößern

Borrowing trends for the Federation (budget and special funds, excluding loan financing) in January 2021

Tabelle vergrößern

Borrowing trends for the Federation (loan financing) in January 2021

Tabelle vergrößern

Guarantees

 

Authorised amount

Amount allocated as of 31 December 2020

Amount allocated as of 31 December 2019

in €bn

Export credit guarantees

160.0

125.3

125.2

Loans to foreign debtors, foreign direct investment, EIB loans

80.0

37.0

42.8

Financial cooperation projects

35.0

30.0

25.6

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

430.0

274.3

115.8

International financial institutions

100.0

68.6

60.1

Treuhandanstalt successor organisations

1.0

1.0

1.0

Interest compensation guarantees

15.0

15.0

15.0

to the top

Calendar

Publication schedule¹ of the monthly reports

March 2021 issue

February 2021

19 March 2021

April 2021 issue

March 2021

22 April 2021

May 2021 issue

April 2021

20 May 2021

June 2021 issue

May 2021

22 June 2021

July 2021 issue

June 2021

22 July 2021

August 2021 issue

July 2021

20 August 2021

September 2021 issue

August 2021

21 September 2021

October 2021 issue

September 2021

21 October 2021

November 2021 issue

October 2021

19 November 2021

December 2021 issue

November 2021

21 December 2021

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

26–27 February 2021

Meeting of G20 finance ministers and central bank governors in Italy

15–16 March 2021

Eurogroup and ECOFIN Council meetings

7–8 April 2021

Meeting of G20 finance ministers and central bank governors in Washington, D.C.

8–11 April 2021

Spring meeting of the IMF and World Bank in Washington, D.C.

16–17 April 2021

Eurogroup and informal ECOFIN meetings in Portugal

17–18 May 2021

Eurogroup and ECOFIN Council meetings in Brussels

17–18 June 2021

Eurogroup and ECOFIN Council meetings in Brussels

Due to the coronavirus pandemic, dates and the format of meetings will be specified at short notice prior to the respective meetings.