Overview of federal budgetary and financial data up to and including January 2022 - Federal Ministry of Finance - Resources (2024)

Federal budget trends in January 2022

Until the 2022 budget has been adopted by the German Bundestag and promulgated in the Federal Law Gazette, the German government is working on the basis of an interim budget, which is based primarily on Article 111 of the Basic Law (see the article “Vorläufige Haushaltsführung 2022” (“2022 Interim Budget Management”) in the German version of the January 2022 monthly report). Given that the targets for the 2022 federal budget have not been determined, no target values are included in the following tables.

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Revenue

Federal revenue in January 2022 totalled approximately €22.8bn, up by 33.2% (about €5.7bn) on the year. Tax receipts (taking into account transfers of own resources to the EU) increased by 37.9% (roughly €5.8bn) on the year. The yield from value added taxes was up by 58.2% (about €4.2bn) on the year. Revenue from income tax and corporation tax was up by 12.9% (approximately €1.0bn). Receipts from the solidarity surcharge were down by 47.7% (about €0.6bn). Payments to the EU (GNI-based own resources and VAT-based own resources) were down by about €1.1bn on the year, which also contributed to the increase in tax revenue.

Other revenue recorded a year-on-year drop of 6.8% (approximately €0.1bn), which can be attributed primarily to lower revenue from grants from EU funds.

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Expenditure

Federal expenditure in January 2022 totalled €45.4bn, down by 16.3% (approximately €8.8bn) on the year. A breakdown by economic category shows that the lower spending was primarily the result of a drop in consumption spending, which was down by 13.8% (about €6.7bn). Ongoing grants to social security funds declined by 19.9% (approximately €5.3bn). A one-off €3.0bn disbursem*nt to the health fund’s liquidity reserves was made in January 2021 for a programme to future-proof hospitals. In addition, disbursem*nts to the health fund to cover pandemic-related costs were €2.6bn lower in 2022 than in 2021. Subsidies to businesses fell by 37.8% (about €1.8bn) on the year. Assistance to businesses affected by the fallout from the coronavirus pandemic amounted to roughly €0.5bn in January 2022.

Investment spending totalled approximately €3.3bn in January 2022, 38.5% (about €2.1bn) below last year’s level. However, last year’s figure was distorted by the liquidity assistance provided to the Federal Employment Agency, which was converted into a subsidy following closure of the 2021 federal budget. Fixed asset investment was approximately €0.1bn below last year’s level.

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Budget balance

The federal budget recorded a deficit of €22.6bn in January 2022.

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 (the difference between gross borrowing and gross repayments) also tends to fluctuate strongly 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 January 2022

Total tax revenue (excluding local authority taxes) was up by 22.4% on the year in January 2022. This can largely be attributed to the 25.9% year-on-year rise in revenue from joint taxes. Value added taxes recorded an unusually large revenue increase. However, this is primarily attributable to the low 2021 baseline, which was a result of (a) the deferred deadline for paying import VAT and (b) the temporary cut in VAT rates in the second half of 2020. Wages tax, assessed income tax and non-assessed taxes on earnings also posted significant year-on-year revenue growth. Receipts from federal taxes in January 2022 fell by 7.8% on the year, primarily as a result of the sharp decline in revenue from the solidarity surcharge. In contrast, receipts from taxes accruing to the Länder grew by 21.6%, with all taxes in this category posting significant revenue gains.

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EU own resources

Transfers of own resources to the EU, including customs duties, were down by about €1.0bn (23.7%) on the year in January 2022. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year. However, depending on the EU’s financing needs at any given time, such requisitions can be subject to fluctuations, for example when amending budgets take effect.

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Distribution among the Federation, Länder and local authorities

The Federation’s tax receipts (after accounting for supplementary federal grants to the Länder) were up by 36.3% on the year in January 2022. The Federation’s take from joint taxes grew by 30.1%. This was higher than the 25.9% increase in overall revenue from joint taxes. The discrepancy is due to the fact that the Federation’s take from its share of VAT revenue increased by 58.0%, even though overall VAT revenue posted a somewhat smaller increase of 48.0%. Under section 1 (1) of the Fiscal Equalisation Act (Finanzausgleichgesetz), the Federation receives 52.81% of overall VAT revenue. This share is subsequently reduced by annual fixed amounts that the Federation allocates to the Länder and local authorities. Because the amounts of these allocations are fixed for a given year, this means that when VAT revenue goes up, the Federation’s share of VAT revenue goes up as well. Moreover, the amounts of the allocations from the Federation to the Länder and local authorities were lower than they were in January 2021. Other trends in January 2022: revenue from taxes accruing solely to the Federation was down by 7.8% on the year. Supplementary federal grants to the Länder increased, as did federal subsidies to the Länder for public transport. Meanwhile, federal transfers of own resources to the EU were down on the year (see above).

Länder tax receipts also posted a strong year-on-year gain of 23.1% in January 2022. Due to the mechanism for distributing VAT revenue described above, the Länder posted lower rates of growth for VAT revenue (up by 42.2%) and revenue from joint taxes (up by 25.0%) than the Federation. Moreover, the yield from taxes that accrue exclusively to the Länder rose significantly, by 21.6%, while supplementary federal grants to the Länder increased by 4.0% and federal subsidies to the Länder for public transport rose by 22.3%.

Local authorities’ take from their share of joint taxes was 10.5% higher than in the same period last year. Local authorities’ revenue from value added taxes rose by only 7.4%, due to the significantly lower fixed amount of allocations from the Federation.

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 9.0% in year-on-year terms in January 2022. This upward trend primarily reflects the marked improvement in labour market conditions compared with January 2021. Child benefit payments – which are financed from wages tax receipts – rose by 1.2% on the year. Overall, cash receipts from wages tax posted a year-on-year gain of 10.6% in January 2022.

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Corporation tax

Gross receipts from corporation tax recorded a slight year-on-year fall of 1.0% in January 2022. Research and investment allowances were financed from this amount. On balance, these payments totalled approximately €1.8m and thus had only a minimal impact on cash receipts from corporation tax. Cash receipts from corporation tax were down by 1.1% on the year in January 2022.

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Assessed income tax

Gross revenue from assessed income tax was up by 11.5% on the year in January 2022. Employee refunds (which are subtracted from the gross figure) were down by 22.6% on the year. Investment allowance payments, research allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, are also subtracted from the gross figure. On balance, cash receipts from assessed income tax were up by 25.0% on the year in January 2022.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings recorded a 5.1% year-on-year rise in January 2022. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €13m (down by 90.5% on the year). Overall, cash receipts from non-assessed taxes on earnings were up by 13.0% in January 2022 compared with the same month last year.

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Final withholding tax on interest and capital gains

In January 2022, revenue from final withholding tax on interest and capital gains was 6.3% lower than in the same month last year.

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Value added taxes

Revenue from value added taxes was up by 48.0% on the year in January 2022. Receipts from domestic VAT grew by 11.7% on the year. As a result of the long-term extensions for filing VAT returns and paying VAT, January’s cash receipts from domestic VAT are impacted by revenue from the previous November. It is therefore worth noting that cash receipts from value added taxes were low in January 2021 due to the temporary cut in VAT rates in the second half of 2020. Receipts from import VAT were up by 1,140.0%. This surge 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. This had the effect of lowering last year’s baseline figure considerably, resulting in the high increase recorded for January 2022.

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Taxes accruing to the Federation

In January 2022, revenue from taxes accruing solely to the Federation was down by 7.8% compared with the same month last year. Revenue from the solidarity surcharge was down by 47.7% on the year. Because wages tax is not due until the month after the wages are earned, the abolition of the solidarity surcharge for a large majority of wages tax and income tax payers from 1 January 2021 onwards did not reduce cash receipts from the solidarity surcharge until February 2021. In other words, the January 2021 baseline figure for solidarity surcharge revenue still reflects the legal situation prior to the change.

Revenue losses were also recorded for tobacco duty (down by 9.9%) and insurance tax (down by 3.0%). Other taxes posted year-on-year revenue gains, some of them significant: energy duty revenue was up by 17.8%, electricity duty revenue was up by 7.4% and aviation tax revenue surged by 513.2%, although the latter remains significantly below pre-crisis levels. The rates of change for alcohol duty, sparkling wine duty, alcopops duty and intermediate products duty, some of which were very high, can be attributed to shifts in payment structures in 2021. Trends in revenue from other taxes had only a minor impact on overall receipts from federal taxes.

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Taxes accruing to the Länder

Receipts from taxes accruing solely to the Länder were up by 21.6% on the year in January 2022. Taxes recording revenue gains included real property transfer tax (up by 10.9%), inheritance tax (up by 44.4%), fire protection tax (up by 10.4%) and betting and lottery tax (up by 28.8%). The increase in receipts from betting and lottery tax was mainly due to substantial proceeds from the new online poker tax and virtual slots tax, which have been levied since 1 July 2021. Receipts from beer duty rose by 20.8%.

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Borrowing and guarantees

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