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Interest on Bulgarian Bank Savings

Next year could see people who have savings in Bulgarian bank accounts being taxed at a rate of 10% on their capital according to Bulgaria's Minister of Finance, Simeon Djankov.

The proposed plan comes as the country is attempting to keep its fiscal deficit rate as low as possible. Bulgarian business analysts have openly expressed their opposition to the budget recommendation stating that the effect this will have on those with Bulgarian bank savings could prove to be catastrophic.

The Bulgarian economy could benefit by an increased income of 120,000,000 per year if the proposal is passed, and this will come into force in January 2013.

Bulgaria will be the last country within the E.U to charge bankers interest on savings. Whilst the U.K has a basic tax rate on savings at 20% the new proposal in Bulgaria will make their savings tax amongst the E.Us lowest. The flat rate of 10% is for all savers and this has been the topic of much disagreement amongst the Bulgarian community as many stress that Bulgaria's wealthiest sector should pay a higher tax rate than the less fortunate poorer population who have just a little money from savings or inheritance.

Many expats residing in Bulgaria rely on the interest which they receive monthly or quarterly from the deposit/savings account which they have in their chosen Bulgarian Bank, and this could have a further effect on the expat communities financial stability at a time when an alarming rate of British expats are finding it very difficult if not impossible indeed to fund themselves in Bulgaria.

The income tax rate is to stay at 10% keeping it at the lowest in the European Union.

In addition to this new proposal it remains a fact that if you have spare money to invest then putting your money into a Bulgarian bank can prove to be financially rewarding with the current interest rates available for savers at as much as 7.5%.

Bulgaria has banks owned by Greece, Germany, Austria the U.S.A among others, and if the new tax law is approved then it applies to the savings earned on all accounts of all banks regardless of their origin and for the sake of simplicity we refer to these as a Bulgarian bank.