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

Federal budget trends up to and including May 2022

Until the 2022 budget has been 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 the period from January to May 2022 totalled approximately €138.8bn, up by 22.5% (about €25.5bn) on the year. Tax receipts (including EU own resources that are subtracted from the total) were up by 23.7% (about €24.8bn) on the year. Revenue from value added taxes rose by 25.1% (about €11.2bn), while receipts from income tax and corporation tax grew by 18.6% (about €9.4bn). Payments to the EU (GNI-based own resources and VAT-based own resources) were down by about €3.4bn on the year, which also contributed to the increase in tax revenue.

The category of “other revenue” recorded a gain of 7.9% (about €0.7bn) on the year in the January–May period.

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Expenditure

Federal expenditure in the first five months of 2022 totalled approximately €191.2bn, down by 5.0% (about €10.1bn) compared with the same period last year. A breakdown by economic category shows that consumption spending remained basically constant on the year, down by just 0.5% (about €0.8bn). There were several contrasting trends overall. For example, ongoing subsidies to social security funds were up by €8.4bn on the year, which increased spending levels. This includes higher federal payments (totalling roughly €9.6bn) to the health fund and the long-term care insurance compensation fund to cover pandemic-related costs, and the elimination of €3.0bn in grants for a programme to future-proof hospitals. In addition, spending on subsidies for the procurement of Covid-19 vaccines rose by around €1.9bn on the year in the January–May 2022 period. Furthermore, interest expenditure was up by 80.1% (around €2.6bn) on the year; this was largely the result of higher grants to the special fund for final payments on inflation-indexed federal securities. Operating expenditure was also up on the year by 14.8% (roughly €1.8bn), due mainly to costs incurred in connection with the build-up and release of gas reserves. Approximately €1.2bn was spent for this purpose in the first five months of 2022. Conversely, the year-on-year decline in spending was mainly due to lower subsidies to companies, which fell by 40.4% (about €12.3bn). Assistance to businesses affected by the fallout from the coronavirus pandemic amounted to roughly €6.5bn in the first five months of 2022, compared with approximately €18.8bn in the same period last year. Moreover, grants to public administrations were down by 13.6% (about €2.9bn) on the year, due mainly to the fact that in 2021 a €2.5bn grant to the Energy and Climate Fund was allocated in March, which increased the baseline figure.

Investment spending totalled about €13.2bn in the first five months of 2022, down by 41.3% (roughly €9.3bn) on the year. This was mainly because the liquidity assistance provided to the Federal Employment Agency in the January–May period was around €9.1bn lower than in the same period last year. At the end of the 2021 budget year, the assistance granted over the course of the year that was not repaid by the end of the budget year was converted into a subsidy for the Federal Employment Agency. Fixed asset investment remained roughly at the same level as last year.

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Budget balance

The federal budget recorded a deficit of approximately €52.4bn for the January–May 2022 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. This is especially true towards the start of the year. It should also be borne in mind that an interim budget is currently in place.

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Tax revenue in May 2022

Total tax revenue (excluding local authority taxes) was up by 10.0% on the year in May 2022. This outcome was driven mainly by an 11.4% year-on-year rise in revenue from joint taxes. Two contrasting special factors led to significant year-on-year rates of change in the revenue from certain key taxes. The surge in wages tax revenue was due in large part to the low baseline figure from 2021, which was affected by payments of the child bonus. Conversely, the decline in receipts from value added taxes was attributable to the sharp drop in import VAT, which was largely due to technical reasons (explained in greater detail below). Receipts from federal taxes in May 2022 were up by 2.4% on the year, while receipts from taxes accruing to the Länder climbed by 8.5%. The ongoing strong upward trend in tax revenue, which is also apparent in trends in tax bases, is reflected in the most recent tax revenue forecast of 10–12 May 2022 made by the Working Party on Tax Revenue Estimates. Nevertheless, the outlook for tax revenue trends going forward is very unclear due to the high level of uncertainty that currently surrounds economic forecasts. The current edition of the monthly report includes a detailed report on the findings of the latest tax revenue estimate.

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EU own resources

Transfers of own resources to the EU, excluding customs duties, were up by 3.5% on the year in May 2022. In general, monthly requisitions are based on the annual EU budget that is in force for the respective year and are distributed relatively evenly across individual months. The 2022 annual budget is similar to last year’s in terms of volume. However, so far this year the drawdown of EU own resources has been 19.7% lower in cumulative terms than in the same period last year. As a result, requisitions in the rest of the year can also be expected to be somewhat higher than in the equivalent period of 2021.

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Overview of the January–May 2022 period

Overall, the first five months of 2022 were marked by a relatively strong increase in tax revenues, which were up by 15.1% on the year. This was partly due to the fact that the 2021 baseline was impacted by the economic effects of the Covid-19 pandemic and by the statutory and administrative tax measures that were taken in response. In January–May 2022, receipts from joint taxes were up by 17.2% on the year, revenue from federal taxes was up by 2.6% and the yield from taxes accruing to the Länder was up by 11.2%.

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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 9.1% on the year in May 2022. This increase was mainly due to growth in revenue from joint taxes. The Federation’s take from joint taxes grew by 10.6%, which was slightly less than the 11.4% increase in overall revenue from joint taxes; this discrepancy is related to the above-described special factors affecting revenue figures for wages tax and value added taxes. In addition, revenue from taxes accruing solely to the Federation was up by 2.4% on the year. These gains were mitigated to some extent by year-on-year increases in supplementary federal grants to the Länder, federal subsidies to the Länder for public transport, and transfers of own resources to the EU (excluding customs duties).

Länder tax receipts (after accounting for supplementary federal grants) were also up markedly on the year in May 2022, by 9.3%. Länder revenue from joint taxes was up sharply on the year (+9.9%), but – as was the case with the Federation – this figure was slightly lower than the increase in overall revenue from joint taxes. Mirroring the higher payments made by the Federation, the Länder saw a year-on-year increase in receipts from supplementary federal grants (12.6%) and from federal subsidies for public transport (1.8%). In addition, the yield from taxes that accrue exclusively to the Länder posted a robust gain of 8.5%. Local authorities’ take from their share of joint taxes was 25.5% higher than in the same period last year

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Joint taxes

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Wages tax

Gross revenue from wages tax was up by 10.4% on the year in May 2022. This result reflects, in particular, the ongoing positive trends on the labour market (for more information, see the article “Konjunkturentwicklung aus finanzpolitischer Sicht” [“Domestic economic trends from a fiscal policy perspective”] in the current German edition of the monthly report). Child benefit payments – which are financed from wages tax receipts – were down sharply by 39.9% on the year, an outcome that reflects last year’s payments of a €150 child bonus that were financed from May 2021 wages tax revenue. Overall, cash receipts from wages tax posted a year-on-year gain of 37.9% in May 2022. In cumulative terms, cash receipts from wages tax were up by 14.9% on the year in the first five months of 2022.

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Corporation tax

Gross revenue from corporation tax amounted to approximately €159m in May 2022. This compares with receipts of −€22m in May 2021. In months such as May, when corporation tax receipts are strongly affected by the revenue administration’s assessment activities, sharp fluctuations in year-on-year revenue figures are common and should not be interpreted as indications of future trends. Payments of research and investment allowances, which are financed from gross receipts, totalled just €6.2m and thus had only a marginal impact on cash receipts from corporation tax. On balance, cash receipts from corporation tax totalled roughly €152m in May 2022. In cumulative terms, cash receipts from corporation tax were up by 9.8% on the year in the first five months of 2022.

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Assessed income tax

Like corporation tax receipts, revenue from assessed income tax in May 2022 was influenced by assessment activities. Here too, significant year-on-year fluctuations can occur. Gross receipts from assessed income tax were up by 51.4% on the year in May. Employee refunds rose by 0.9% on the year. Investment allowance payments, research allowance payments and owner-occupied homes premiums, which are insignificant in terms of amount, were also deducted from the gross figure. On balance, cash receipts from assessed income tax amounted to €487m in May 2022, in contrast to the rough total of –€218m recorded in May 2021. In cumulative terms, cash receipts from assessed income tax were up by 22.5% on the year in the first five months of 2022.

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Non-assessed taxes on earnings

Gross receipts from non-assessed taxes on earnings were down by 0.9% on the year in May 2022. Refunds by the Federal Central Tax Office, which are financed from gross revenue, totalled about €60m (up by 23.0% on the year). Overall, cash receipts from non-assessed taxes on earnings fell by 1.4% on the year in May. Cumulatively, cash receipts from non-assessed taxes on earnings rose by 14.3% on the year in the first five months of 2022.

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Final withholding tax on interest and capital gains

In May 2022, revenue from final withholding tax on interest and capital gains was 27.0% lower than in the same month last year. Taken cumulatively, cash receipts from final withholding tax on interest and capital gains were down by 16.5% on the year in the first five months of 2022.

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Value added taxes

Revenue from value added taxes fell by 6.6% on the year in May 2022. This outcome was driven mainly by a sharp decline in receipts from import VAT, which were down by 39.7%. In contrast, the yield from domestic VAT was up by 5.6% on the year. The significant drop in import VAT revenue was caused primarily by the fact that, since 2021, the deadline for remitting the tax to the authorities is now the 26th of each month; this means that, in some months, part of the revenue is not recorded until the following month due to the time needed for processing. After adjusting for this effect, import VAT revenue was actually higher on the year, due in part to the marked year-on-year increase in the value of goods imports, and especially due to the sharp rise in import prices.

Cumulatively, cash receipts from value added taxes were up by 20.6% on the year in the first five months of 2022. These cash receipts originated largely from transactions that took place from November 2021 through March 2022. Economic activity during this period was higher then during the same period in 2020/2021, which was strongly affected by the pandemic and the measures taken at that time to mitigate its effects; this explains part of the revenue growth recorded in 2022. Furthermore, the tax measures taken in connection with the Covid-19 pandemic significantly lowered the baseline figures for 2021.

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Taxes accruing to the Federation

In May 2022, revenue from taxes accruing solely to the Federation was up by 2.4% compared with the same month last year. Receipts from the solidarity surcharge climbed by 31.9% on the year, thanks to growth in revenue from the taxes that make up its tax base. Revenue gains continued to be posted by insurance tax (+4.4%), motor vehicle tax (+3.5%) and aviation tax (+648.0%). The sharp increase in aviation tax revenue was due to the very low baseline figure from 2021. The strong growth in aviation tax revenue in recent months means that the revenue gap in comparison with the months prior to the pandemic’s outbreak has now nearly been closed. In contrast, yields from energy duty, electricity duty and alcohol duty fell on the year by 2.5%, 0.3% and 25.3%, respectively. 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 8.5% on the year in May 2022. Taxes posting revenue gains included real property transfer tax (+9.9%), inheritance tax (+0.4%) and beer duty (+6.7%). The increase in receipts from betting and lottery tax, which were up by 38.2%, was mainly due to proceeds from the new online poker tax and virtual slots tax, which have been levied since 1 July 2021. Revenue from fire protection tax was down by 6.4% on the year.

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Borrowing and guarantees

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