The euro has enjoyed an optimistic week. In particular, reports that the coalition in Greece has agreed a debt reduction plan with its creditors following eight long months of negotiations have boosted sentiment. From here on, Greece’s creditors will accept a 70.0% loss in the value of their existing government bonds, while receiving just 4.0% interest on the new ones. (This is a little like going into a negotiating room and not only coming out with no gains, but losing your trousers and shirt in addition. It is astonishing bondholders accepted these terms, and must reflect incredible pressure from the EU.) Of course, this is but one side of the coin. In return, Greece must implement … [Read more...] about How much more can Greece take?
Expats
Wave of complimentary tax hits home buyers
What is complimentary tax? During the property boom in Spain purchasers and sellers sometimes came to an agreement to pay some of the purchase price ‘unofficially.’ This meant that the amount declared was below what had actually been paid. The idea was that by doing this purchaser and seller could avoid higher capital gains tax and Spanish transfer tax payments. The Tax Authority wised up to this and as a result began to check the amount the property had been sold at against their own valuation. Complimentary tax represents the difference between what tax they considered should have been paid and what actually was. Unfortunately the drop in the market value of most property sold today … [Read more...] about Wave of complimentary tax hits home buyers
UK to dodge the recession bullet?
(In case you don't know, the UK services PMI is a monthly measure of productivity in the UK services industry. It accounts for two thirds of economic output in Britain, and so is crucial in determining UK growth.) This month UK services took market forecasts, chopped them into small chunks with onions and carrots, fried them, and ate them for dinner. The PMI hit 56.0 (releases above 50.0 mean growth and the higher the better.) This compares to 54.0 the month before, and expectations of a slowdown to 53.5. It’s a 10 month high for UK services, and the biggest single jump on record. Great! Of course, before this, economists thought Britain would soon be re-entering recession. The economy … [Read more...] about UK to dodge the recession bullet?
Electricity bills back to normal
Many people rely on electric heating. This has caused some concern over the past couple of years as costs have escalated and there have been some confusing changes to charging policy. However, there has recently been some good news as far as your bills are concerned. Instead of every month, there will be a welcome return to two-monthly billing and only after a metre reading has taken place. The alternating meter/estimate bills have been something of a nightmare for people trying to budget. One month you can be charged a nominal figure of 7€ to receive a bill the month after of 100€! Hardly helpful when you’re trying to keep your bank account in the black. However, if you actually … [Read more...] about Electricity bills back to normal
Schools protest as Valencia fails to pay up
The absence of funding from Valencia has led to some schools being left without electricity and others having no money for basic resources or unable to replace teachers who are absent. Las Culturas is struggling on a week-by-week basis. So how have they been managing? A representative from the school explained: "The only way we are able to keep the school running is through using the money that people contribute towards lunch. Without this we would have nothing. We would not be able to buy paper for the photocopier or even toilet paper.” The cut in resources has had immediate effects, while other cut backs will have longer-term implications. Teacher pay and conditions are being … [Read more...] about Schools protest as Valencia fails to pay up
Is Greece poised to give the euro a boost?
For almost eight months, bureaucrats in Athens have been negotiating to convince investors to take a voluntary loss on their bonds, arguing this is the only way Greece can get its debt onto a sustainable footing. Until just the last day or so bondholders have refused, for the good reason that volunteering to take a loss is like opening your wallet to strangers in the street! Somehow or other though EU officials have managed the impossible, and investors stand poised to accept a 50.0% loss on their existing Greek bonds, while accepting an interest rate of just 3.75% on replacements. How then might this help the euro? Because if Greek officials and bondholders had not reached agreement, … [Read more...] about Is Greece poised to give the euro a boost?
Tax hikes to hit residents
From the most recent Agencia Tributaria bulletins we have been told that 85% of that €6.2 billion tax bill is to come from resident income tax. This affects the employed, self-employed, people with savings and retired people receiving income from outside of Spain such as pensions. It will be administered as a complimentary income tax in addition to the current 24% + income tax that residents already pay. As you might have guessed this tax is on a sliding scale according to how much your income is: Tax range Complimentary income tax €0 – €17.707 0.75% €17.707 – €33.007 2% €33.007 – €53.407 3% €53.407 – €120,000 4% The increases … [Read more...] about Tax hikes to hit residents
A letter from the Tax Authority
The imputed income tax is a tax on property payable by non-residents on the basis that if they wished they could receive rental income from their property. Spanish residents have to pay it too on any second property they own in Spain. For years Spanish property owners were largely unaware of the need to pay this tax. They were often not told about it at the time of purchase and without a similar tax in the UK they remained in luxurious ignorance. Until now. The Spanish Tax system tends to work according to the assumption that everyone knows what they should pay. Whereas in the UK you would expect to get a reminder of some kind for an unpaid bill, here it can go undetected for years until … [Read more...] about A letter from the Tax Authority
Political incorrectness at the school play
It was when a dozen or so small children charged into the room with their faces blacked up, Afro wigs on their heads and wielding spears, that I started to feel a little uncomfortable. It was the Christmas theatre performance at my son’s school in Madrid, not usually an occasion that leaves me pondering issues of race, politics and political correctness. My four-year-old and his class had already performed a carefully choreographed dance to some Andean music, dressed in traditional Peruvian clothing and the theme of the evening was “cultures of the world”. “How open-minded,” I mused as the troop of mini-Andeans left the stage and I anticipated an hour of multiculturalism. But when … [Read more...] about Political incorrectness at the school play
Where to learn Portuguese
If you are thinking of moving to Portugal, keep in mind that you will have trouble integrating entirely unless you have a good grasp of the local language. You can start your relationship with the Portuguese language via an online course. Not only are online courses very convenient -- you choose how to organize your time, and review challenging grammar exercises as many times as you like -- but you can continue your study, no matter where you are and how often you have to travel. Another advantage is that these courses are often free. www.learningportuguese.co.uk is a user-friendly website where you can find tons of exercises for both beginners and advanced users. What is particularly … [Read more...] about Where to learn Portuguese