Federal budget trends in March 2021

Table: Trends in the federal budget

Expenditure (€bn)³

441.8

547.7

129.6

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

 

 

+40.3

Revenue (€bn)⁴

311.1

307.3

68.1

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

 

 

-20.3

Tax revenue (€bn)

283.3

284.0

63.6

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

 

 

-14.3

Balance of pass-through funds (€bn)

0.0

0.0

0.0

Fiscal balance (€bn)

-130.7

-240.4

-61.5

Financing/use of surplus:

130.7

240.4

61.5

Cash resources (€bn)

-

-

86.0

Seigniorage (€bn)

0.2

0.2

0.0

Movements in reserves(€bn)

0

0.0

0.0

Net borrowing⁶ (€bn)

130.5

240.2

-24.5

Any discrepancies in totals are due to rounding.
¹ Including government draft of a supplementary federal budget for 2021 of 24 March 2021.
² As per accounts.
³ 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.
⁴ 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.
⁵ Negative values denote accumulation of reserves.
⁶ (-) debt repayment; (+) borrowing.
Source: Federal Ministry of Finance

Actual 2020

2021 target¹

Actual²
March 2021

to the top

Government draft of a supplementary federal budget for 2021

The draft supplementary federal budget for 2021 was adopted by the federal government on 24 March 2021. The German Bundestag will conclude its deliberations on it by the end of April. More details can be found in the article “Key figures of the 2022 government draft of the financial plan to 2025 and the government draft of a supplementary budget for 2021” (in German only).

All of the following information about 2021 targets refers to the government draft of the supplementary budget.

to the top

Revenue

Federal revenue in the period from January to March 2021 totalled approximately €68.1bn, down by 20.3% (roughly €17.4bn) compared with the same period last year. This decline is due primarily to tax revenue shortfalls relating 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 14.3% (roughly €10.6bn) compared with the same period in 2020. Receipts from value added taxes have been particularly affected, falling by around €3.1bn. Revenue from the solidarity surcharge also fell, by 35.7% (approximately €1.8bn), largely due to the abolition this year of the requirement to pay solidarity surcharge for approximately 90% of wages tax and income tax payers.

The category of “other revenue” also posted a decline of 60.0% (about €6.7bn) on the year during the January–March period. This was mainly due to the fact that the Federation’s share of the Bundesbank’s net profits was not remitted. In the previous year, the Bundesbank transferred approximately €5.9bn to the Federation, of which €2.5bn remained in the federal budget. The other €3.4bn had to be allocated to the special investment and redemption fund to repay the fund’s debts.

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 the first three months of 2021 totalled around €129.6bn, an increase of 40.3% (roughly €37.2bn) over the same period last year. A breakdown by economic category shows that higher spending in the January–March period was driven mainly by consumption spending, which was up by 32.6% (approximately €28.2bn). Ongoing grants and subsidies to companies and social security funds made up most of this rise. The former were up by 111.5% on the year (roughly €9.3bn), due mainly to the pandemic-related assistance that is being provided to businesses. The government draft of the supplementary budget includes €65.0bn for these ongoing subsidies in 2021; by the end of March, €11.0bn had been disbursed. Grants to social security funds were up by 29.5% (around €11.5bn) on the year. This includes roughly €7.2bn in disbursements to the health fund to cover costs caused by the Covid-19 pandemic. These grants also include €3.0bn in disbursements to the health fund’s liquidity reserves for a programme to future-proof hospitals. The increase in consumption spending was tempered by a decline in interest expenditure, which was down by 32.0% (about €1.4bn) on the year.

Investment spending totalled approximately €14.8bn in March 2021, an increase of 155.7% (roughly €9.0bn) over the same period last year. The main factor driving this increase was liquidity assistance provided to the Federal Employment Agency (roughly €8.9bn so far this year). In contrast, fixed asset investment was down by 51.6% (about €0.9bn) due to a decline in spending on construction projects. About half of the year-on-year decline in construction spending can be attributed to a special factor that will affect spending over the whole year: as of 2021, investments in trunk road construction are being outsourced to Autobahn GmbH des Bundes (Federal Autobahn GmbH). These funds are being provided to Autobahn GmbH des Bundes in the form of investment grants, which were up by approximately €0.4bn on the year in March 2021. Approximately €5.5bn has been earmarked for these investment grants in 2021. As a result, about €4.7bn less has been budgeted for construction investment in 2021 than in 2020 (and about €4.2bn less than the amount that was actually spent on construction investment in 2020).

to the top

Fiscal balance

The federal budget recorded a deficit of €61.5bn for the January–March 2021 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

Tabelle vergrößern

Trends in federal expenditure by economic category

Tabelle vergrößern

Trends in federal revenue

Tabelle vergrößern

to the top

Tax revenue in March 2021

2021 trends in tax revenue (excluding local authority taxes)

Tabelle vergrößern

Total tax revenue (excluding local authority taxes) was up by 0.9% in March 2021 compared with the same month the previous year. This was partly the result of a significant increase in revenue from value added taxes, which was related to the deferred deadline for paying import VAT. The economic effects of the coronavirus pandemic continued to have a negative impact on tax revenue. As in previous months, pandemic-related measures (deferrals, waived enforcement measures, reductions in prepayments) taken on the basis of secondary legislation also affected tax revenue. Receipts from joint taxes rose by 3.4% on the year in March. In addition to the increase in VAT receipts, revenue growth was also recorded for withholding tax on interest and capital gains, non-assessed taxes on earnings and corporation tax. Revenue from taxes accruing solely to the Federation was down by 18.7% on the year in March, while receipts from taxes accruing to the Länder were up by 12.9%.

to the top

EU own resources

Transfers of own resources to the EU, including customs duties, were up by €0.8bn (49.9%) on the year in March 2021. Monthly fluctuations occur over the course of the year based on the EU’s financing needs at any given time. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year.

to the top

Overview of the January–March 2021 period

Total tax receipts fell by 5.2% on the year in the first quarter of 2021. Revenue from joint taxes was down by 4.6%, and receipts from taxes accruing solely to the Federation were down by 11.4%. Revenue from taxes accruing solely to the Länder was up by 4.7%.

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 4.0% on the year in March 2021. The Federation’s take from joint taxes increased by 4.8% on the year, mainly due to a rise in revenue from value added taxes. Revenue from purely federal taxes was down sharply, by 18.7%, and federal transfers of own resources to the EU were significantly higher on the year, both of which reduced the Federation’s tax revenue. In contrast, supplementary grants that the Federation pays to the Länder were slightly down on the year in March.

Länder tax receipts were up sharply, by 4.0% on the year, in March 2021. The revenue from joint taxes that is allocated to the Länder rose by 3.5%; as was the case with the Federation, this rise was driven mainly by a sharp increase in receipts from value added taxes. In addition, the yield from taxes that accrue exclusively to the Länder posted a robust gain of 12.9%. Local authorities’ take from their share of joint taxes was down by 3.3% on the year.

to the top

Joint taxes

to the top

Wages tax

Gross wages tax revenue in March 2021 was down by 2.1% on the year. Cash receipts in March included wages tax that was remitted for February 2021. As a result of the ongoing coronavirus pandemic and the lockdown measures, many companies are continuing to take advantage of the government’s short-time work scheme. This in turn has a negative impact on wages tax revenue. Revenue figures for March were also lower due to (a) the increase in the basic personal allowance, which was enacted as part of the Second Family Tax Burden Reduction Act (Zweites Familienentlastungsgesetz) and (b) the related shift in the other tax thresholds. Child benefit payments – which are financed from wages tax receipts – rose by 6.7% on the year due to the €15 per child increase in child benefit enacted under the Second Family Tax Burden Reduction Act. These factors led to a 4.0% year-on-year decline in cash receipts from wages tax in the month of March. In the first quarter of 2021, cash receipts from wages tax were 4.7% lower than in the previous year.

to the top

Corporation tax

Gross receipts from corporation tax were up by 2.3% in March 2021, the first month in the year when prepayments are due. Prepayments for the current year fell by about 8%. Because the balance between back payments and refunds resulting from assessment activities was significantly better in March 2021 than in March 2020, the overall result was an increase in gross receipts from corporation tax. Investment allowance payments had only a minimal impact on the overall outcome due to their low volume. As a result, there was also a clear rise in cash receipts from corporation tax, which were up by 2.3% on the year. In cumulative terms, cash receipts from corporation tax grew by 20.1% on the year in the first quarter of 2021.

to the top

Assessed income tax

Gross revenue from assessed income tax was down by 6.9% on the year in March 2021. For this tax, too, March is when the first instalment of prepayments fall due. In March 2021, prepayments for the current year remained at the same level as in March 2020. However, retroactive prepayments for previous years posted a significant decline. Given that the balance between back payments and refunds remained largely unchanged, gross revenue from assessed income tax dropped accordingly. Employee refunds declined by 18.5% on the year; 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 posted a clear year-on-year drop of 6.0% in March. In cumulative terms, cash receipts from assessed income tax fell by 4.7% on the year in the first quarter of 2021.

to the top

Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were up by 16.1% on the year in March 2021. Refunds by the Federal Central Tax Office, which are financed from this revenue, totalled about €132m (up by 54.4% on the year). Overall, cash receipts from non-assessed taxes on earnings grew by 14.1% in March 2021 compared with the same period last year. Cumulatively, cash receipts from non-assessed taxes on earnings were down by 13.8% on the year in the first quarter of 2021.

to the top

Final withholding tax on interest and capital gains

Revenue from final withholding tax on interest and capital gains grew by 3.5% on the year in March 2021. Taken cumulatively, cash receipts from final withholding tax on interest and capital gains were up by 31.0% in the first quarter of 2021 compared with the same period last year.

to the top

Value added taxes

Receipts from value added taxes rose sharply in March 2021, by 21.8% on the year. This sharp rise in revenue is related 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. Because the payment date was close to the end of the month, a significant proportion of the payments that were due on 26 February was not reflected in the February cash figures, thereby increasing receipts in March 2021. The shift in the payment date led to a corresponding revenue shortfall for import VAT in January. As a result, cumulative revenue in the first quarter of 2021 posted a sharp drop, falling by 33.0% in year-on-year terms. This also impacted on cumulative cash receipts from value added taxes, which slid by 8.8% in the first quarter of 2021 compared with the first quarter of 2020.

to the top

Taxes accruing to the Federation

In March 2021, revenue from taxes accruing solely to the Federation was down by 18.7% compared with the same month last year. Energy duty, alcohol duty, tobacco duty and aviation tax all posted declines in revenue, falling by 27.3%, 14.9%, 2.7% and 18.3%, respectively. Revenue from the solidarity surcharge also fell, by 41.6%, mainly due to the abolition of the requirement to pay solidarity surcharge for approximately 90% of wages tax and income tax payers. Receipts from electricity duty showed steep growth of 30.6%. Revenue growth was also recorded for insurance tax and coffee duty, whose yields increased by 3.9% and 12.9%, respectively. Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes. In cumulative terms, cash receipts from taxes accruing solely to the Federation fell by 11.4% on the year in the first quarter of 2021.

to the top

Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up sharply in March 2021, by 12.9% on the year. Almost all of these taxes posted revenue gains, with significant increases in some cases. Clear revenue growth was seen with real property transfer tax (+16.1%), inheritance tax (+9.9%), fire protection tax (+2.7%) and betting and lottery tax (+13.8%). Receipts from beer duty declined by 15.3%. In cumulative terms, revenue from taxes accruing solely to the Länder was up by 4.7% on the year in the first quarter of 2021.

to the top

Borrowing and guarantees

Borrowing trends for the Federation in March 2021

Tabelle vergrößern

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

Tabelle vergrößern

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

Tabelle vergrößern

Guarantees

 

Authorised amount

Amount allocated as of 31 March 2021

Amount allocated as of 31 March 2020

in €bn

Export credit guarantees

155.0

121.9

126.1

Loans to foreign debtors, foreign direct investment, EIB loans

75.0

36.0

41.9

Financial cooperation projects

35.0

32.2

26.8

Food stockpiling

0.7

0.0

0.0

Domestic guarantees

430.0

302.9

197.8

International financial institutions

110.0

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

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

21–22 May 2021

Eurogroup and informal ECOFIN meetings in Lisbon, Portugal

17–18 June 2021

Eurogroup and ECOFIN Council meetings in Luxembourg

9–10 July 2021

Meeting of G20 finance ministers and central bank governors in Venice, Italy

12–13 July 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.