Both governments announced consolidation in spring 2026, and both mean something other than spending less. In Germany, three new consumption levies sit alongside the line about a leaner state; in Austria, half the savings package consists of expansionary measures, and the Fiscal Council has put a number on the gap between target and measure. This article sets the adopted figures side by side and separates what is settled from what is announced.
What has been adopted in Germany
The federal cabinet adopted the benchmark figures for the 2027 federal budget on 29 April 2026. The numbers are public and unambiguous:
| Item | Amount 2027 |
|---|---|
| Federal spending | EUR 543.3bn |
| Net new borrowing (core budget) | EUR 110.8bn |
| Investment funds | EUR 118.5bn |
| Defence budget | around EUR 106bn |
The investment funds do not come from the core budget alone but from the core budget, the Climate and Transformation Fund and the special fund for infrastructure and climate neutrality combined. That matters when comparing with earlier years.
The decision is accompanied by the formula that the state must become leaner and more efficient. In the same context the Federal Ministry of Finance names three revenue measures verbatim: a plastic levy, a sugar levy and an increase in tobacco duty.
That is the notable part — not the size of these levies but their nature. They are consumption levies. They attach to consumption rather than income, they appear in no top-rate debate and in no statistic on the income burden. Anyone measuring the tax burden through the income tax schedule does not measure these at all. What is running in parallel on the income side — a new 47 percent bracket, a lowered top-rate threshold, a health insurance surcharge from 2028 — is in German Tax Reform 2026.
What has been adopted in Austria
The 2027/28 double budget was presented on 28 April 2026 with a stated volume of EUR 5.1 billion and the goal of leaving the EU deficit procedure in 2028. The procedure against Austria has been running since July 2025.
The composition of that volume is the decisive point. On the Chancellery’s account, EUR 2.55 billion goes to consolidation and EUR 2.55 billion to expansionary measures — that is, to additional spending. Of a EUR 5.1 billion savings package, half is therefore not saving.
For context from the same source: the 2027 pension increases are budgeted at EUR 2.4 billion. A single spending item thus almost matches the entire consolidation share of the package. Why the Austrian pension system is under structural pressure is set out in Austrian Pensions: 86.8% Replacement Rate.
What the Fiscal Council says about it
The Fiscal Council is the independent watchdog of Austrian budget policy, and its analysis is the reason this article exists.
The government plans to cut the Maastricht deficit from 4.2 percent of GDP (2025 and 2026) to 3.5 percent in 2027 and below 3.0 percent in 2028. The Fiscal Council’s office expects 4.1 percent for 2027 — a difference of 0.6 percentage points against the government target.
More central is the term the Council uses for it: the implementation gap. It denotes the difference between the adopted consolidation targets and the measures concretely backing them. It stands at:
| Year | Implementation gap |
|---|---|
| 2027 | EUR 1.2bn |
| 2028 | EUR 2.0bn |
| 2029 | EUR 2.8bn |
The gap therefore does not narrow but widens. On the basis of the Council’s autumn forecast, additional consolidation measures of EUR 8.9 billion would be required to comply with the deficit procedure.
| Germany | Austria | |
|---|---|---|
| Decision both governments decided within two days of each other | benchmark figures, 29 Apr 2026 | double budget, 28 Apr 2026 |
| Stated goal Austria has been under the EU procedure since July 2025 | a leaner, more efficient state | exit the deficit procedure in 2028 |
| New borrowing 2027 the Fiscal Council expects 4.1% for Austria | EUR 110.8bn net new borrowing | Maastricht deficit of 3.5% planned |
| Revenue side in both cases levies rather than spending cuts | plastic, sugar, tobacco levies | bank levy extended |
| Independent assessment Fiscal Council, analysis of public finances | — | implementation gap of EUR 1.2–2.8bn |
What sits on the other side
One caveat first, because it matters more here than usual: consumption levies and social contributions cannot be avoided through a foreign company. They attach to domestic consumption and employment. Anyone remaining resident in Germany or Austria pays them regardless of where a company is registered. Anyone promising otherwise is selling a risk — Georgian Company, German Authorities describes where such constructions fail.
What can be changed is residence itself. Georgia taxes sole traders under the Small Business Status at 1 percent of turnover up to GEL 500,000, and companies under the Estonian model only on distribution. The basics are in Georgia 1% Tax 2026 and Georgia Tax Residency.
And for completeness: the change is not free. Exit taxation under section 6 AStG arises in the country of origin, and in Austria it falls due immediately for third countries — see Staying Does Not Get Cheaper. Anyone over 55 should also know about the health insurance re-entry bar: Leaving the Scheme Is Easy.
What follows from this
Two distinctions matter for your own planning, and both are rarely drawn cleanly in public debate.
Adopted is not the same as announced. The 2027 benchmark figures are a cabinet decision; the budget itself is passed in parliament and can change. The three consumption levies are announced, not in force. The Austrian consolidation targets are fixed; the measures backing them, worth EUR 1.2 to 2.8 billion a year, are not yet.
A target is not the same as a measure. That is precisely what the implementation gap measures. A gap widening from EUR 1.2 billion to EUR 2.8 billion will ultimately be closed one of two ways: through spending cuts nobody has yet named, or through further revenue. For planning your own location, the second is the more realistic assumption.
How costs and services relate overall is in Government Ratio 50.3%; the Austrian overall balance in Leaving Austria.
Frequently asked questions
How much new borrowing is in the German federal budget for 2027?
The benchmark figures adopted by the federal cabinet on 29 April 2026 provide for spending of EUR 543.3 billion and net new borrowing of EUR 110.8 billion in the core budget. For investment, EUR 118.5 billion is available in 2027 across the core budget, the Climate and Transformation Fund and the special fund for infrastructure and climate neutrality. The defence budget rises to around EUR 106 billion.
Which new levies have been announced?
In its statement of 29 April 2026 the Federal Ministry of Finance names three measures verbatim: a plastic levy, a sugar levy and an increase in tobacco duty. These are consumption levies, incurred regardless of income and invisible in income tax statistics.
What is the implementation gap in Austria?
It is the Fiscal Council’s term for the difference between the adopted consolidation targets and the measures actually backing them. On its analysis the gap is EUR 1.2 billion in 2027, EUR 2.0 billion in 2028 and EUR 2.8 billion in 2029. The target is fixed; the route to it is not yet backed by measures to that extent.
Will Austria exit the deficit procedure in 2028?
The government has set that as its goal and intends to cut the Maastricht deficit from 4.2 percent of GDP in 2026 to 3.5 percent in 2027 and below 3.0 percent in 2028. The Fiscal Council’s office, by contrast, expects 4.1 percent for 2027. On the basis of its autumn forecast, additional consolidation measures of EUR 8.9 billion would be required to comply with the procedure.
Is the Austrian package really a savings package?
Only half of it. On the Chancellery’s own account the 2027/28 double budget has a volume of EUR 5.1 billion, of which EUR 2.55 billion goes to consolidation and EUR 2.55 billion to expansionary measures. For comparison: the 2027 pension increases alone are budgeted at EUR 2.4 billion.
What does this mean for location-independent entrepreneurs?
Consumption levies and social contributions attach to domestic consumption and employment, not to the legal form of a foreign structure. Anyone still resident in Germany or Austria is caught by them regardless of where a company is registered. Only a complete relocation of residence changes the starting position — and that carries its own costs, exit taxation in particular.
This article is general information and does not constitute legal or tax advice. The German budget figures come from the benchmark decision of the federal cabinet of 29 April 2026 and the accompanying statement by the Federal Ministry of Finance; the three levies named there are announced and not in force at the time of writing. The Austrian figures follow the Chancellery’s account of the 2027/28 double budget of 28 April 2026 and the Fiscal Council’s analyses of public finances. Benchmark budget figures are planning values and are altered in the parliamentary process. As of August 2026, subject to change.