Off-budget fund (Germany)

In German budget law, an off-budget fund ("off-budget entity", "special fund", German: Sondervermögen, the same word Sondervermögen in other context can be used for "special asset", a state-owned enterprise) is an independent additional budget ("shadow budget") that is intended exclusively to fulfill individual, limited tasks of the federal government in an emergency situation, is not part of the regular budget and thus is not subject to the debt brake and thus can be used for circumvention of budget rules. Management and financial responsibility for the off-budget entities is provided by the federal government, the funds are set up and managed in accordance with the provisions of the Federal Budget Code (BHO) (Section 113 BHO). In the 2020s the use of off-budget funds dramatically expanded, with the total (multi-year) potential deficits by the end of fiscal 2022 coming to 400 billion euro, about 10% of 2023 GDP. For comparison, the debt brake limit would only allow borrowing of 13 billion euro in 2023.

In contrast to the federal budget of Germany, which represents all income and expenditure of the federal government (general budget financing of all departments), the expenditure of the special fund is strictly earmarked. The federal government can be authorized to take out loans to cover the expenses of a special fund. According to the lump sum budgeting, all income in the general budget serves to cover all expenses (Section 8 BHO). Since the introduction of the debt brake, the budgets of the federal and state governments have generally had to be balanced without income from loans (Art. 109 Para. 3 Sentence 1 GG); the income should be generated from general tax revenue.

In the case of off-budget funds, only the ongoing contributions to the fund and withdrawals from it need to be included in the budget (Art. 110 Para. 1 Sentence 1 HS 2 GG). However, like the budget itself, special funds may only be established through legislation and are subject to control by the Bundestag, the German Bundesrat and the Federal Audit Office (Art. 114 GG).