Puig: Better financing would increase GDP by 3% and create 48,000 jobs

Puig: Better financing would increase GDP by 3% and create 48,000 jobs

The Comunitat would receive 2,500 million euros more from the Central Administration if rational criteria of spending needs were followed, which would translate into a GDP growth of 3% and 47,877 new jobs, according to the conclusions preliminary of a study of the Valencian Institute of Economic Investigations (IVIE) advanced by the president of the Generalitat, Ximo Puig.

Image result for gdpThis new report has been prepared from data from the Ministry of Finance in the period 2011-2014, and presented this Monday by Puig, who has stated that public spending in the Valencian Community is “a big scam” and shows that it exists ” a deep democratic anomaly. “

Puig has detailed that of those 2.500 million, 1.607 have origin in the autonomic financing; another 692 would come from the increase of the Central Administration in the competences that it manages (logistical infrastructures, regional aid, justice and citizen security, aid for dependency and support for job placement of the unemployed); and 202 million would have to come from an improvement in local financing.

With objective criteria, these amounts would result in GDP growth of almost 3,000 million (3%) and employment (2.7%), and the fiscal balance would go from negative to positive, Puig said after ensuring that the years 2011 to 2014 the region “has stopped receiving 10 billion”.

“We Valencians are fulfilling but their loyalty is not reflected in the financing, in the investment of the State”, according to the president, who has asked the Government “reforms and rationality” and that the autonomy financing debate never be repeated .

He assured that Rajoy’s credit “has fallen significantly” because he said in January 2017 before all the autonomous presidents that there would be a new financing model that year, after that it would be done in the first months of this year, and later that this month May, the Fiscal and Financial Policy Council will meet, and recalled that the regional financing system has been delayed for four and a half years.

Puig has urged to move “from marketing to rationality” to ensure equity and that Spanish citizens are “equal in diversity”, and has considered that a rational system can help solve territorial problems.

“Territorial problems are not resolved with flags, no matter how big they are, they are resolved by giving solutions to citizens,” he proclaimed.

According to this report of the IVIE, the Community has a negative balance in the fiscal balance despite having a per capita income level of 88%, and public spending in this region is “the lowest” of all the territories, since of the 256.704 million of expenditure channeled by the Central Administration between 2011 and 2014, only 22.967 have gone to the Comunitat, which represents 8.9% of the total, a percentage lower than the population weight.

Despite being an autonomy with fewer resources than the average, the Comunitat contributes to interterritorial solidarity by financing the higher public spending of richer communities, he adds.

Image result for gdpIn addition, in the current financing system, the greatest “disadvantages” occur in regional aid, support for agriculture, livestock and fisheries, investments in infrastructure and financing of social services, since in none of these items does the expenditure reach 70%. %.

Puig has offered this information after meeting with the Minister of Finance, Vicent Soler, and financing experts José Antonio Pérez and Francisco Pérez, to analyze the situation of the negotiation of the new regional financing system.

Puig: Better financing would increase GDP by 3% and create 48,000 jobs

Puig: Better financing would increase GDP by 3% and create 48,000 jobs

The Comunitat would receive 2,500 million euros more from the Central Administration if rational criteria of spending needs were followed, which would translate into a GDP growth of 3% and 47,877 new jobs, according to the conclusions preliminary of a study of the Valencian Institute of Economic Investigations (IVIE) advanced by the president of the Generalitat, Ximo Puig.

Image result for gdpThis new report has been prepared from data from the Ministry of Finance in the period 2011-2014, and presented this Monday by Puig, who has stated that public spending in the Valencian Community is “a big scam” and shows that it exists ” a deep democratic anomaly. “

Puig has detailed that of those 2.500 million, 1.607 have origin in the autonomic financing; another 692 would come from the increase of the Central Administration in the competences that it manages (logistical infrastructures, regional aid, justice and citizen security, aid for dependency and support for job placement of the unemployed); and 202 million would have to come from an improvement in local financing.

With objective criteria, these amounts would result in GDP growth of almost 3,000 million (3%) and employment (2.7%), and the fiscal balance would go from negative to positive, Puig said after ensuring that the years 2011 to 2014 the region “has stopped receiving 10 billion”.

“We Valencians are fulfilling but their loyalty is not reflected in the financing, in the investment of the State”, according to the president, who has asked the Government “reforms and rationality” and that the autonomy financing debate never be repeated .

He assured that Rajoy’s credit “has fallen significantly” because he said in January 2017 before all the autonomous presidents that there would be a new financing model that year, after that it would be done in the first months of this year, and later that this month May, the Fiscal and Financial Policy Council will meet, and recalled that the regional financing system has been delayed for four and a half years.

Puig has urged to move “from marketing to rationality” to ensure equity and that Spanish citizens are “equal in diversity”, and has considered that a rational system can help solve territorial problems.

“Territorial problems are not resolved with flags, no matter how big they are, they are resolved by giving solutions to citizens,” he proclaimed.

According to this report of the IVIE, the Community has a negative balance in the fiscal balance despite having a per capita income level of 88%, and public spending in this region is “the lowest” of all the territories, since of the 256.704 million of expenditure channeled by the Central Administration between 2011 and 2014, only 22.967 have gone to the Comunitat, which represents 8.9% of the total, a percentage lower than the population weight.

Despite being an autonomy with fewer resources than the average, the Comunitat contributes to interterritorial solidarity by financing the higher public spending of richer communities, he adds.

Image result for gdpIn addition, in the current financing system, the greatest “disadvantages” occur in regional aid, support for agriculture, livestock and fisheries, investments in infrastructure and financing of social services, since in none of these items does the expenditure reach 70%. %.

Puig has offered this information after meeting with the Minister of Finance, Vicent Soler, and financing experts José Antonio Pérez and Francisco Pérez, to analyze the situation of the negotiation of the new regional financing system.

Low-income earners will in future receive a pension of 844 euros

Low-income earners will in future receive a pension of 844 euros

Image result for pensionThe Union and the SPD have agreed on the solidarity-based pension for life benefits over the weekend. Every month around 850 Euro pension should get low earners, provided that they fulfill certain conditions. For other pension plans, such as the pension with 63 and the mother’s pension, the two sides are still in disagreement.

Representatives of the CDU / CSU and SPD have agreed on a comprehensive pension package. This includes, among other things, the minimum pension described below, the maternity pension and the non-deductible pension at the age of 63.

There has been little improvement in pensions over the past four years. It is all the more important now that the Union and the SPD agree on a comprehensive pension reform in the coalition negotiations, which benefits all Germans. At least over the weekend, the work and social work group has come closer to low-income pension increases . The solidarity-based life benefit pension currently being discussed by the Union and the SPD envisages an increase in the pensions of low earners to around € 850 a month – if those affected provide certain proof. Both sides had previously planned similar measures with the Lebenschafts- and the Solidarrente to combat poverty in old age.

Increase of pensions: Union and SPD achieve compromise

Image result for pensionUrsula von der Leyen (CDU) has pushed for the Union with the requirement that people must have provided for the minimum pension privately or operationally . Only those who can prove that they have completed a company or private pension plan are entitled to the pension. In addition, recipients must prove 40 years of contributions to the statutory pension insurance. When calculating the low-income pension, income from other sources should also be taken into account. After the introduction of the solidary Lebensleistungsrente the access hurdles are initially set slightly lower, reports Spiegel Online. In the first ten years, 35 contribution years are sufficient. Moreover, the obligation to take precautionary measures is only to come into force five years after the new regulation has been introduced. The introduction is expected to take place by 2017.

Service: Be prepared and take care of your private pension now. So you not only uphold your claim to the new pension benefits . They are also building up a financial cushion for the retirement age. Request a non-binding pension offer now.

Guaranteed pension of around 850 euros per month for low-income earners

Many low-income earners depend on social assistance at retirement age, even though they have spent a lifetime in the state pension scheme. The Union and the SPD want to change this and increase the pension in the future to at least 30 salary points. Currently this corresponds to a monthly pension of 844 euros. The estimated cost of the improved old-age allowance initially amounts to 100 million euros per year. By 2030, however, they could grow to up to three billion euros annually. The pension increase is to be financed by means of taxation.

Solidary Lebensleistungsrente still on the edge

Even though the Union and the SPD are in agreement in the working group, the planned solidarity-based life benefits pension can still fail because of the cost issue. The agreement between the Union and the SPD is subject to the availability of the corresponding financial resources. With the pension at 63 and the mother’s pension, black and red on the small level has not been able to compromise. Financing is still under discussion for both measures. Now the demands are to be discussed on Tuesday by the 75 representatives from the parties in the so-called big round. The coalition agreement is due by the end of November at the latest. Only then will the Germans learn what the new government plans for the pension.

What happens to my income tax return if I have two payers?

What happens to my income tax return if I have two payers?

Image result for income tax returnTell the urban legend that if in the same year you have two payers, that is, two different sources of income, Mr. Montoro appears in your dreams and forces you to pay a lot of taxes . But no, this is not the case and we will explain why.

Two payers is not always synonymous to pay more to the Treasury

The first thing you must understand is what it means to have two payers. If we work for someone else, that is, for a company that is not our property, this company would be our payer. But it may happen that either on a regular basis or on a regular basis we carry out work for a second company, which would become our second payer. We would then have two payers.

A lot of people are terrified of this situation and end up giving up that second source of income for fear of being penalized fiscally in the income statement. However, the reality is that when paying IRPF it does not matter how many payers you have, but how much your income goes up .

In other words, the income statement is made based on what the total income you have generated from January 1 to December 31, regardless of whether they come from a single payer, two payers or ten.

That is, if in one year you have won 12,000 euros, it does not matter if this money comes from a single payer that paid you 1,000 euros per month or from two payers who paid you each 500 euros per month. What matters to the Treasury is the final amount, that is, 12,000 euros, and it is on this figure that the percentage of IRPF that you must pay is calculated.

The important thing is not the number of payers, but the amount you have earned

It is important to bear in mind that the limit set for being obliged to make the declaration of income is 22,000 euros gross per year . If you do not exceed this amount, you do not have to make the statement. This is an advantage, because if the statement goes out to pay, you do not have to present it. However, when you have more than one payer, the limit is reduced to 12,000 gross euros per year.

Perhaps the most controversial aspect of having more than one payer is that it is more complicated for them to get the retention they should apply . For example, if in our regular work we earn 25,000 euros per year, our company calculates the retention corresponding to this figure. If we also earn another 20,000 euros working for a second company, this will retain the percentage corresponding to that amount.

Image result for income tax returnThe problem is that none of the companies is taking into account the income we receive from the other. The reality is that the annual income is 45,000 euros, and it is on that figure and not on the previous ones on which the withholding would have to be calculated.

As a consequence of this, when making the income statement, it is most likely that it will be “paid”. And this is because the monthly retention has been lower than the one that really corresponded. The solution is to communicate to both companies the income that you receive from the other so that they can calculate the correct retention. Another possibility is that you yourself use an income tax simulator to calculate the tax rate that corresponds to you and then ask your payers to apply it to you.

Whatever your case may be, what you have to be clear about is that you do not have to pay tax penalties, but that increasing your gross income also increases the amount of taxes you have to pay. Therefore, if you have the possibility of obtaining extra income, do not be afraid. The greater your income, the better for you (and for the Treasury).

Corporate Fixed Income

Corporate Fixed Income

Everything you need to know about the emissions made by companies

Find the funds of the best International Managers More information

Image result for corporate fixed incomeThe fixed income market, in all its typologies and as we pointed out in all our publications referring to this asset, is the largest financial market in the world, where governments, companies and local administrations go in search of financing.

If we focus on the emissions made by companies, these are usually differentiated into two groups according to the company’s payment capacity: investment grade (issuers with a high payment capacity) and high yield (or high yield) (issuers with lower payment capacity):

  • Degree of investment or Credit : the subset formed by fixed income issues made by companies with a high capacity to pay.
  • High Yield : the subset formed by the emissions made by companies with lower payment capacity. In this case, since they are companies with reduced payment capacity and, therefore, a greater risk of default, they offer higher coupons than the investment grade emissions, to compensate for the increase in risk.

These markets are usually classified geographically, so the investor will find funds from Crédito Europa, Crédito USA and Crédito Global , on the one hand, and High Yield Europe, High Yield USA and High Yield Global , on the other. In addition, in each geography, we can find funds focused on the short term or the entire maturity spectrum.

The evolution of these funds will be influenced by movements in interest rates and changes in the financial health of the companies in which they are invested. In the case of high yield, the evolution of the financial health of the companies in which it is invested acquires special importance, and in this sense, correctly selecting the companies that fall within the portfolio, as well as the companies that must be discarded. all costs, is key to the profitability of the fund.

Vocabulary to keep in mind

In addition to the definitions already mentioned for any investment in fixed income, within the funds that invest in the credit market we would highlight the following definitions:

  • Type curve : also known as the temporary structure of interest rates, it is the graphic representation that relates the interest rate to the different terms to which the debt has been issued. In a normal situation, it is growing, that is, the longer the term, the higher the interest rate.
  • Rating : credit quality granted by the rating agencies, which reflects the solvency of the issuer analyzed. The best ratings are called investment grade, while the worst are known as high yield.

Learn about the international investment funds highlighted by Quality Funds and choose your best option: more information

Why is it interesting to invest in corporate bonds?

  • Collection of periodic interests .
  • Protection of capital , by recovering the initial amount of the investment at the end of the life of the bond.
  • Diversification , since it allows to reduce the risk of portfolios when combined with other assets such as Variable Income.

To take into account when investing in corporate bonds

Image result for corporate fixed income

  • The payment capacity of the company to which we lend is key.
  • If he is not able to pay the interest and return the amount within the established period, the investor could lose part or all of his money .
  • The term of the loan is also important. It is easier to know if the entity will be able to return the money within 5 years than within 30, since in such long periods many things can happen.
  • There are several private agencies in charge of analyzing the different issuers, and establishing a rating or rating based on their credit quality. The best known are Standard & Poor’s, Moody’s and Fitch. This allows you to compare different issuers with the same criteria.

The fund managers , in the cards that they usually make from the funds periodically, publish the average rating of the group of bonds in which the fund invests, together with other data of interest.

Annual Earnings Limit

With the annual earnings limit (JAEG) there is a value in Germany, which determines whether you are compulsorily insured in the statutory health insurance or not. It is also called the mandatory insurance limit. It is of relatively high importance because this value determines whether you have freedom of choice in health insurance.

So high is the annual wage limit of 2018

  • General JAEG : Monthly: 4.950,00 Euro – Annual: 59.400 Euro
  • Special JAEG : Monthly: 4.425,00 Euro – Annually: 53.100 Euro

Entry requirement for private health insurance

Image result for insuranceSo you have to reach the JAEG to even complete private health insurance. This makes it possible, for example, to choose part of the benefit components and the amount of reimbursements in health insurance itself. Private health insurance companies also offer tariffs that promise higher-quality medical care and include services such as chief physician treatment.

However, you must not equate the annual earnings limit with the income threshold. This is relevant when it comes to calculating the contribution to social security. In the area of ​​health insurance, for example, since 2003 it has been well above the annual income threshold.

PKV or GKV: Compulsory insurance limit crucial

When it comes to deciding on a private or statutory health insurance, you will have to go beyond this insurance limit in the current and the following calendar year.

But even here there is a peculiarity, and indeed for all those who were not insured as of December 31, 2002 and were therefore privately insured. This limit – also called the special annual income limit – is about ten percent below the general compulsory insurance limit and applies without any time limit. It corresponds exactly to the income threshold in the statutory health insurance. And even in cases where you have already changed your employer or, for example, become insured again in health insurance in the meantime.

Exempted from this rule are, for example, students who were privately insured at the same time, but did not exceed the annual earnings limit.

Amount of the annual wage limit

The annual earnings limit is adjusted annually and has thus undergone a changeable development in recent years. The general annual salary limit for 2017 is 4,800.00 euros per month or 57,600 euros per year.

The special annual wage limit is € 4,350.00 per month or € 52,200.00 per year in parallel. It applies, as already explained, to all those employees who were not compulsorily insured as of December 31, 2002 and whose income accordingly exceeded the then JAEG.

In recent years, this mandatory insurance limit has increased consistently, but not from year to year. Even in 2006, the general JAEG was 3,937.50 euros per month. It has increased by almost 19 percent within ten years.

Below you can see the respective values ​​for the general and special annual earnings limit since 2006.

  Annual income limit Special annual wage limit
Monthly Yearly Monthly Yearly
2017 4,800.00 euros 57,600 euros 4,350.00 euros 52,200 euros
2016 4,687.50 euros 56,250 euros 4,237.50 euros 50,850 euros
2015 4.575,00 Euro 54,900 euros 4,125.00 euros 49,500 euros
2014 4,462.50 euros 53,550 euros 4,050.00 euros 48,600 euros
2013 4,350.00 euros 52,200 euros 3,937.50 euros 47,250 euros
2012 4,237.50 euros 50,850 euros 3.825,00 Euro 45,900 euros
2011 4,125.00 euros 49,500 euros 3,712.50 euros 44,550 euros
2010 4,162.50 euros 49,950 euros 3,750.00 euros 45,000 euros
2009 4,050.00 euros 48,600 euros 3.675,00 Euro 44,100 euros
2008 4.012,50 Euro 48,150 euros 3,600.00 euros 43,200 euros
2007 3,975.00 euros 47,700 euros 3,562.50 euros 42,750 euros
2006 3,937.50 euros 47,250 euros 3,562.50 euros 42,750 euros

As the table shows, year to year changes are neither uniform nor always in the same direction. For example, from 2010 to 2011, there was a slight downward adjustment.

This is due to the fact that the amount of JAEG is determined by an ordinance. The Federal Ministry of Labor and Social Affairs takes the salaries of employees as a gross value and measures how these values ​​have developed from the previous calendar year to the previous calendar year.

The change between 2010 and 2011 is therefore directly related to the consequences of the global economic crisis and led to a slight reduction in the overall trend.

That means the insurance limit for you

Social insurance has a long tradition in Germany. Otto von Bismarck introduced it, thus establishing a far-reaching social system with an impact on our lives today. With the emergence of private health insurance, the statutory health insurance companies got a competition. The state has repeatedly intervened and, for example, laid down who may ever private health insurance. In order to regulate this uniformly, the annual earnings limit was introduced as the relevant mandatory insurance limit.

Boundary should not be a sole change argument

You can not accept the mandatory insurance limit and see as an argument that a change to private health insurance is inevitably worthwhile. For that the tariffs and above all the contribution risks are too big, than that here finally a recommendation can be made. The decisive factor is which services are important to you and which system has the best cost-benefit ratio.

How to obtain insurance freedom

Basically, you do not have to change employer to obtain insurance freedom. Of course, this is simply possible by getting a salary increase. Now it is important to extrapolate your salary from the time of the increase: Multiply your new salary by twelve and look in the table above to see if you can get over the JAEG.

If yes, you will be insured at the end of the current calendar year. So now you have freedom of choice. This also applies if the mandatory insurance limit is not exceeded in spite of the salary increase during the current calendar year.

When you will be insured again

Conversely, there are already immediate consequences that you must consider by falling below the JAEG.

If you are still employed and your income falls below the JAEG, for example due to a shorter working time, you will be required to take out insurance again. However, this does not apply to temporary transgressions.

Insofar as the annual earnings limit for the new year is higher and you then current income does not exceed this limit, you are also insured again.

There are exceptions, in particular, if you receive maternity, sick, injured or transitional allowances. Even in cases where you start reintegration after incapacity for work, there are exceptions. The same is true according to case law, even if you were on strike or were affected by a strike, so you have lost income.

Exceeding / falling below the JAEG: That changes

As already explained, there are many more exemptions for falling below the compulsory insurance limit than the other way round for exceeding this value. An advantage here is that you can be insured privately.

However, you must follow certain rules if you come across the JAEG, but this is not the only result of your regular monthly salary. For example, if you receive sickness benefits or take unpaid leave, it has no effect. Here it is fictitiously assumed that you receive your salary as usual. If you change employer and become unemployed for a short time, you may not count the unemployment benefit I on the JAEG. The decisive factor here is always the number of months in which you can prove that you are gainfully employed.

Not all earnings count

Please note that not every income is included in the annual earnings limit at the same time. You may start to work as a sideline, but minijobs are explicitly excluded.

Even with overtime, the principle applies that only those overtime hours are added, which you receive as fixed lump sums and which are regularly added to the salary. Child supplements, supplements for night, Sunday or public holidays as well as a cost replacement for travel expenses are excluded.

If you fall below the JAEG, then this has above all a meaning for the re-entry into the legal health insurance. In that case, you must cancel your private health insurance, retroactively and no later than three months after becoming compulsory. Otherwise, you may cancel with a one-month notice period at the end of the current month. Here it can happen that contributions are paid twice. So once for the private policy and once for the statutory health insurance.

What counts for calculating the compulsory insurance limit

You will then be compulsorily insured in the statutory health insurance if your regular annual salary does not exceed the respective mandatory insurance limits.

These include, on the one hand, the pay regularly paid and, on the other, one-off payments received. Here, there are no restrictions if, for example, you receive remuneration from several occupations.

If you are self-employed and self-employment is not the main occupation, it will have no effect on your JAEG. It looks different with several mini jobs. In this case, the first 450 EUR job is left out, but all others are added to the mandatory insurance limit.

However, you are not allowed to include bonus payments that your employer makes, for example, for tax or non-contributory purposes. There are also bonuses that you receive from your marital status, such as child allowances.

Are you a career starter or will you be changing your employer soon? Since a change in the law in 2011, it is no longer necessary to consider your income in previous years. The so-called 3-year rule is no longer valid. If your salary is above the respective JAEG, you are then no longer insured directly from the beginning. It also benefits career starters who immediately exceed the compulsory insurance limit. Here, you can also include capital-efficient benefits (VwL): These are state-subsidized savings allowances, which the employer grants to you in addition or as part of the salary. The funds are paid directly by the employer to the savings account, in many cases you can pay up to certain maximum limits also an additional own contribution.

Explicitly not part of the calculation are compensations that you have received because you have not used your holiday entitlement in whole or in part. The Federal Social Court has already judged here over 20 years ago (see Az 12 RK 26/90). If your contract of employment provides for certain benefits in kind, such as a company flat or a service vehicle, then it depends on the individual case again. If you can expect these services “regularly”, you will be credited to JAEG.

Where exactly does the contribution assessment threshold apply?

Image result for assessmentYou must clearly separate the contribution assessment limit from the annual earnings limit (JAEG) or the mandatory insurance limit. It serves as a measure when it comes to calculating the contributions to the pension insurance, the health and long-term care insurance as well as the unemployment insurance. Anything beyond that will no longer affect the post. Thus, the income threshold is used by social security for calculation, while the annual income limit determines whether or not you are insurable. And always in the field of health insurance.

What happens if part of my earnings are used for company pension plans?

If part of your regular earnings is lost, for example, when it is converted into a company pension scheme, this has a direct impact on the annual earnings ceiling. Up to four percent of the income threshold, which applies to the statutory pension insurance, are then social insurance. This applies to the old federal states. It is therefore possible that you are thus again below the JAEG and therefore again be insured in the statutory health insurance.

My pay was increased retroactively. What do I have to consider?

When calculating the regular annual earnings, there is a crucial point to note. If this is to be calculated for the current year or the coming calendar year, all components that are expected to be paid must be included.

My salary is reduced by short-time work. What are the effects?

You are a member of the statutory health insurance as long as you also receive short-time allowance. In this case, it is assumed that you will continue to receive regular pay. The short-time work is thus not considered in the form. It therefore has no influence if you have private health insurance and are below the JAEG due to short-time work. This will not automatically reinsure you in the statutory health insurance.

6 things you should check before submitting your Income Tax return

6 things you should check before submitting your Income Tax return

Image result for income taxThe campaign for the Declaration of Income is already underway and, as every year, taxpayers are eager to validate our drafts and check if we are in debt to the Treasury or if instead it is the Tax Agency which has to return money .

The problem arises when that impatience leads us to accept incorrect drafts without realizing it. The rush is very treacherous, so before giving it to accept our draft income should make a vital checks with which to avoid losing some tax benefit or, even worse, receive a sanction from the Treasury.

What you have to check yes or yes of your income statement

  1. Personal and family information It may seem obvious, but sometimes the taxpayer changes house for a move, the family grows or changes the civil status and the Treasury does not know unless we communicate it. It is especially important to consider births , as they are accompanied by important deductions.
  2. The autonomous deductions . Most of the errors in the drafts come here: autonomous deductions that do not appear directly in our draft because the Tax Agency leaves this task to the taxpayer. These deductions vary from one community to another and in many cases are large, so be better attentive.
  3. Housing property or rent . In the case of home ownership, the state deduction per purchase is only valid for acquisitions made before January 1, 2013. Meanwhile, if we live in a rented home, the deduction is only for contracts signed before January 1. of 2015. If we fulfill the requirements, let’s not pass these deductions because they are also very large .
  4. Pension plans . As we know, they are deductible and can allow us significant savings , so it is important that we make sure that they are incorporated in the draft Income statement. We must pay special care if we have totally or partially rescued the plan.
  5. Donations and affiliations . Affiliation to a union or donation to a political party, for example, are also expenses that they deduct. In principle, they should be included from the first moment in our declaration, since it is up to the entity that has received the donation or affiliation to do so, but it is better to be vigilant to avoid losing this tax benefit.
  6. Capital gains . By default, they tend to be left out of the Income Tax return and, when the Tax Agency realizes this, it sanctions us. To avoid this, it is better to review cases such as the sale of a property, shares or official assistance that we have been able to receive, such as Plan Pive.

To finish, do not forget the key dates: on April 5, the deadline for the presentation exclusively online and on May 11 to do it in person began. In either case, the submission period ends on June 30 . Good luck with your Income Tax return!

Personal finances Difference between income, wealth and money

Personal finances Difference between income, wealth and money

Image result for incomeBeing a very rich topic, I would like to direct the topic specifically towards the improvement of personal finances, I would like to extend the explanation a little more to the everyday reality of ordinary citizens.

Wealth

Everything, absolutely everything you have is known as assets . A part of what you have is yours and you are the owner of it (equity) and the rest you have but is subject to a debt (liabilities). In this way comes the formula used in accounting.

Active = Liability + Equity

…Or what is the same…

Everything you have = What is yours + What you should

It is very easy to pretend to be rich by borrowing money and spending as if there were no tomorrow. But in the end you would have the problem of having to pay debts and that will tighten your finances so much that the life you would have at the end of debt would be a life of poverty, not wealth. Then we understand well that wealth is NOT debt.

For many, wealth is a golden chest (which was money in antiquity), but if that were the case, countries would be rich if they keep a large reserve of gold (money) in central banks, instead of being rich countries because They produce and sell a lot. Then we see that wealth is NOT money.

What is wealth then? Wealth is what is yours.

Everything you have = What is yours (wealth) + What you should

This way, if you get rid of debts, you have more chances of being rich than having many debts. For the only thing that would serve a debt would be if you are going to use the money in a business that yields a return higher than the interest rate of the loan.

Rent

When we talk about equity, what is yours, we see that it is affected by the income (income) and expenses of the period. In a period they have income, you receive money, usually for salary, although there may be other sources of money. If the income exceeds the expenses, you had profits, otherwise you had losses. The utilities pay taxes, so you’ll have to see how much profit you have after taxes.

Profits after taxes = Income (income) – Expenses – Taxes

When you have debts, the interest you pay for debts becomes expenses, which reduces your profits. Those profits at the end of the year become part of your assets, that is, your wealth. And since interests reduce those profits, they also reduce your wealth. If your intention is to reduce your wealth instead of increasing it, immerse yourself in debt. Otherwise, order and get out of debt.

Current assets = Previous equity + Income after taxes

Current assets = What was already yours (wealth) + Income (rent) – Expenses – Taxes

…so…

Everything you have = What was already yours (wealth) + Income (rent) – Expenses – Taxes + What you should

In this way, it is clear that to be rich, you increase your income, reduce your expenses, not get into debt.

Money

Everything you have is divided into 3 types of things. There are those that change hands in less than a year such as cash, bank accounts and merchandise to sell (current assets), those that do not, such as real estate (fixed assets), and some intangible possessions (such as patents or key rights, for example).

Circulating + Fixed + Intangible = What was already yours (wealth) + Income (rent) – Expenses – Taxes + What you should

Money usually changes hands, it comes and goes, and it is one of the forms of current assets.

Money + other things you have = What was already yours (wealth) + Income (rent) – Expenses – Taxes + What you should

As you can see, the fact that you have money in your pocket does not mean you’re rich. To be rich, you have to have your own things and you occupy a level of income. That applies to countries as well as to people. That’s why having gold (money) in the vault of a central bank does not make a country rich, nor does it make someone rich if you carry a lot of money in your pocket.

Banks make money available on credit cards, but it is borrowed money, so having a lot of money ends up being confused with being rich, because wealth and debt are confused. But as we saw, the general debts interest expenses that reduce wealth and compromise your income.

Loans for freelancers are included in the income deductions

Loans for freelancers are included in the income deductions

 

Image result for incomeSpring is the time that the Tax Agency has chosen to regularize our fiscal situation. Specifically, we have from April 4 to July 2 as the deadline to confirm the draft. As a novelty, this year the “Father” Program disappears and gives way to the “Renta Web” program to be able to make the declaration via online. One way to take advantage of this process is to declare the loans for freelancers that we have requested this year, because their interests are deductible . In this case, if we have requested a loan, a loan or a grant and we have the supporting documents, we can present them in our income statement and we will save.

Main deductible expenses of a self-employed person

Sometimes we can have difficulties to know what expenses we can include in the declaration of the self-employed, because not all are considered as deductible. Broadly speaking, what we can include must be expenses linked to the economic activity carried out, be conveniently justified and, in addition, recorded in the accounting books . The most common expenses that we can include in our declaration of self-employed income are:

  • The salaries and expenses of the staff . As well as extra pay, diets and travel expenses. Also enter the costs in training, personnel accident insurance or compensation for termination of contract. In addition, we deduct Social Security expenses borne by the company and contributions for common contingencies.
  • The purchases of raw materials, merchandise, fuel, packaging and office supplies are what are known as operating consumptions . We can also include rents, fees, leasing fees or technical assistance expenses in the declaration.
  • Some taxes such as real estate (IBI), the IAE and other taxes and non-state surcharges. Within the financial expenses, we can incorporate in the declaration the interests of the loans and credits for the self-employed . As well as the surcharges for postponing payments and interest for late payments to the Treasury.

These are just some of these deductible expenses, since there are many others such as the services of independent professionals (lawyers, notaries, economists …), for example.

The income statement is a basic document when requesting financing

Image result for incomeThe income statement of the self-employed includes loans and loans for freelancers include the income statement. That is to say, at the time of requesting financing for companies and freelancers, the declaration of the rent is one of the documents that we must present. Although it depends on the amount we request and the entity we go to, the documents necessary to access financing for companies and freelancers include, in addition to income, the declaration of assets, the registration document as self-employed and a proof of income stable. In addition, you can request the last three Social Security payments, the receipts of debts with other banks or lenders and a document certifying the age of our business.

You can also ask us for the annual summary of VAT, the VAT returns for the current year, the annual IRPF summary and the payment of the self-employed person’s receipt. As we see, just as the income statement of the self-employed includes more data than that of the salaried workers, the information that we must provide to access loans for the self-employed is greater than that which the individuals must contribute.

Invest in fixed income: can we lose money?

Invest in fixed income: can we lose money?

One of the classic myths surrounding fixed income investment products is that their profitability will always be positive and that, therefore, money can not be lost. Dear saver, nothing is further from reality. Investing in bonds, bonds and bills may end up reporting a negative return. Something that many Spaniards do not know, concretely almost 40%. A recent study conducted by the comparator HelpMyCash.com reveals that 39.4% of respondents believe that fixed income products can not give a negative return. But the truth is that yes. Let’s see why.

Image result for investmentThe myth of fixed income products

Before continuing, we must clarify that if a fixed income product is hired, for example a bonus, and it is maintained until the expiration date, at the end the amount determined at the time of signing will be received and it is understood that this will be positive, since that logic invites us to think that if we hire an investment product it is to earn money. The only obstacle that we could have in this sense is that the issuer of the debt incurs a default.

However, during recent years we have seen government debt issues at negative rates , which means that those who have gone to the placements and keep the bonds, bills or obligations to maturity, will end up having less money than they had when they subscribed .

So, lesson number one: even keeping a fixed-income product until maturity, profitability can be negative.

The tyranny of the market

Image result for investment

In addition, if the investment instrument is sold before the expiration date, it can also end up recovering less money from the investment. The reason? We will be at the mercy of the market. At this point it is necessary to clarify that the opposite could also happen, and that the profits increase.

If you want to liquidate fixed income products before maturity, the value of the debt will be that dictated by the market and could be lower or higher than the purchase price, depending on the demand and other variables. For example, if you subscribe a bond with a return of 5% and after a couple of months there is a new bond issue, but with a return of 10%, our bond will lose value, as investors will prefer to buy the bond to 10%. On the contrary, if the new bond issue is launched with a lower return than our title, the bond that we have purchased will be more profitable for new investors.

Interest rates can also impact fixed income. In general, it is assumed that when rates rise, the impact on fixed income is negative, while if they fall, the consequences are positive. It will also affect the ratings rating agencies have made the issuers. The worse it is, the greater the risk of default and vice versa.

Lesson number two: if you sell a fixed income security, you will have to assume the market price you have at that time.

What about the funds?

Finally, we must not forget the investment funds that invest in fixed income. They are not foreign to the market and, therefore, could also suffer negative returns. It is important to highlight this point because, sometimes, they are a refuge for the most conservative and they do not always know that they may end up losing money.

It is worth remembering that deposits and sight accounts are the only products that guarantee a 100% recovery of the money invested, since, beyond the reimbursement agreement that has been reached with the entity, they are covered by the Deposit guarantee fund, which would respond to clients if the entity went bankrupt.

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