Debt clocks of the EU Member States – comparison

Are you curious to find out what is the different debt percentage arround the different EU member states? Now you have access to real time clocks of the national debt and the budget surplus/deficit of the member countries of the European Union (EU) under the Maastricht Treaty in percent of GDP (debt to GDP ratio, surplus/deficit to GDP ratio). According to the Maastricht Treaty, the national debt should not exceed 60.0 percent of GDP and the deficit should not exceed 3.0 percent of GDP.

You can find the information you need here: debtclocks.eu/comparison.

 

The Cost of Christmas

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There has been a lot of discussion in the UK  about the cost of Christmas and whether we are spending more than ever over the Christmas period. The answer seems to be in most cases – LESS.

A survey by YouGov at the end of 2015 has shown that UK households spent less in 2015 than in 2014 – £796 on average. (Approx €1000 euros) It is the lowest level since 2012 and a drop of £24 on 2014. People cut back on food, drink and gifts, as well as cards and decorations.

The reason is thought to be fierce competition between retailers and the thought in people’s mind that they really shouldn’t get (further) into debt.

Marc Gander of the Consumer Action Group said: “I’m sure that parents are in a huge dilemma. It breaks their hearts when they get themselves into debt simply to bring their children a little magic and to make sure that their kids feel that they’re not left out or inferior to their friends. I have always thought that this time of the year is really Christmas for payday loan companies. It’s happy Christmas for the parents and the children – and a prosperous New Year for the payday loan industry.

Hopefully the FLY project will add to peoples’ knowledge and understanding of the dangers of payday loans …

Tax reliefs in Bulgaria

The tax system of each state is oriented by the needs of the state and its main activities and policies. The tax levy covers almost all of the incomes of both individuals and legal entities, as well as certain types of financial transactions. The deadline for sending your personal tax report for 2014 had just passed in Bulgaria.  Hire are some of the possibilities for tax reliefs in the state, according to both social and policy goals of the state.

 

People with reduced performance

The target group for this relief are people, which reduced work performance has been reduced with or above 50%. They can reduced their tax base with 7920 leva (around 4000 eu). To prove their condition, they must show the legal documents, approving their physical condition.

 

Tax relief on personal contributions for voluntary insurance and insurance.

 

The logic of this relief is based on the problems with the health and pension system. As Bulgaria is in the middle of major insurance reform. It should motivate the citizens to invest more into their personal voluntary insurance accounts as well as in the state insurance policy. It reduced 10% of the annual tax base, which are settled as voluntary additional insurance and up to 10% of the amount of annual taxable year for imported personal contributions for health insurance and premiums / contributions “Life.”

 

Tax relief for private contributions to retirement pension

The other branch of this policy and its reflection to the tax policy is the private pension account. In this case the amount of the annual tax bases is increasing  proportionally to sum, which the person played for his remaining years until retirement.

 

Tax relief for charity

The amount of the relief is based on the recipient of the charity.

 

– 5% relief for individuals, who gave money for charity to hospitals, to specific institutions, which provide social services, including child care;

– 15% for charity in the field of culture

– 50% for charity made in favor of Center “Fund for Treatment of Children” and / or the Centre “Fund for Assisted Reproduction”;

 

Tax relief for young families

 

The amount of the annual tax base is decreasing according to the mortgage payments through the year. The person, who has made the deal should be:

– married

– his husband/wife should be under 35 by the time of the mortgage has been signed

– the household, for which the mortgage is being paid is the only one for this family for the year;

– documents signed by the husband/wife that he/she hasn’t applied for the same relief

 

Relief can be used by local individuals as well as foreign individuals, resident for tax purposes in a Member – State of the European Union or in another country – party to the Agreement on the European Economic Area during the year for interest payments on first 100 000 lev principal of a mortgage loan.

 

Tax relief is available only to file an annual tax return, which applies to a document issued by the bank customer certifying the amount of the year made interest payments on the first 100,000 lev principal of the mortgage to buy a home.

And what are the reliefs which the tax payer can receive by your country?

 

 

The information has been provided by Bulgarian National Revenue Agency.

Does it matters how often your interest rate is calculated or not?

Very often interest rate is declared as percentage on a yearly basis. So does it really matter how often it is calculated during the year or not?

1st case – once per year

While it might seem very complicated stuff it is really simple. Let us do the math in the case when interest rate is calculated once per year. Let’s say we have 1000 euro in a saving account which has an interest rate of 2% yearly. After one year the interest our account would have accumulated will be 1000+(1000×2%) equals 1000+1000×0.02 = 1000 + 20 = 1020 euro. In other words, after one year and interest rate calculated at the end of the year our account has earned 20 euro and the money available in the account will be 1020 euro.

2nd case – once per month
We take the same initial conditions – 1000 euro in the saving account with a yearly interest rate of 2%. Interest rate is calculated on a monthly base. In one year we have 12 months so the MONTHLY interest rate will be 2% divided by 12 or in mathematical representation 0.02/12 = 0.00166666 which we could simplify at 0.002. That is 0.2% monthly. So the interest rate is calculated monthly and the calculations are:
1st month: 1000+1000×0.002 = 1000+2=1002
2nd month: 1002+1002×0.002=1002+2.004=1004
3rd month: 1004+1004×0.002=1004+2.008=1006.01
4th month: 1006.01+1006.01×0.002 = 1006.01+2.012 = 1008.02
…..
11th month: 1020.18+1020.18×0.002 = 1020.18+2.0404 = 1022.22
12th month: 1022.22+1022.22×0.002 = 1022.22+2.0444=1024.27

In this case if we compute the interest rate on a monthly basis the same saving account would have generated 24.27 euro for one year compared with the 20 euro in the 1st case or 4.27 euro more on a yearly basis. That is roughly 20 percent more earnings.

As a conclusion: The more often the interest rate is calculated the higher the earnings at the end of the year will be. That is due to the compound effect accumulating over each calculation, as the interest rate is calculated over a higher amount that includes the interest earned the previous sub-period (in the second case it is a month). You can easily make the calculation if the interest rate is calculated on a weekly basis using the same initial conditions.