Taxes and public spending

🧔 Adult The EU/OECD-INFE framework says that an adult understands why taxes are collected and how they are used (competence 538), knows what can happen if they are not paid (539) and accepts that taxes due are paid (550). In practice this means three habits:

1. You know which taxes you pay: on income, in the price of purchases, on property and your car, on a gift or an inheritance.
2. You include taxes in your budget (competence 547) — you plan the money for them in advance instead of discovering them at the end of the year.
3. You know where to check — at the national tax authority, at your municipality, in the official journal where laws are published.

How many of your taxes do you pay without "seeing" them? Most of them — in the price of purchases (Chapter 3) and in the deductions from your pay (Chapter 2). That is why this knowledge is part of financial literacy: a tax you do not see is a tax you cannot plan.

Myth → truth

• Myth: "Taxes are a punishment."
• Truth: a tax is the way a society pays for its shared costs. The rules on how much are political decisions, which are discussed separately. Here we only explain how taxes work and how to meet your obligations.

Who profits? Everyone who uses shared services. And someone who knows the rules does not pay fines for a missed deadline and uses the reliefs they are entitled to.

→ Continue at the source

• Example of a national tax authority — Bulgaria's National Revenue Agency (NRA, НАП), "Taxes" section: https://nra.bg ✔ (the page was opened: the sections "Taxes", "Social security", "Pay") (in Bulgarian).
• EU/OECD-INFE framework for adults (2022) — topic 4.6 "Tax and public spending", competences 538–550 ✔ (the text was read).

🧔 Adult How the tax is built (in general):

1. You add up your income for the year from different sources.
2. From it, taxable income is worked out by deducting recognised expenses and reliefs, if you are entitled to them (for example, for children, under certain conditions).
3. A rate is applied to the total annual tax base — one rate or several bands, depending on the country.
4. The tax already withheld or paid in advance is deducted from the result. The rest is to be paid or to be refunded.

Example: Bulgaria — A single rate of 10 per cent applies to the total annual tax base ✔. Reliefs are set out in the Personal Income Tax Act (deductions from the total annual tax base) ✔: for example, for children — Article 22c (for one, two, three or more children under 18; in the law the amounts are 200 / 400 / 600 leva), for a child with a disability — Article 22d, for young families with a mortgage — Article 22a. The conditions and amounts change from year to year. For example, according to the guidance on the child relief: if the other parent will use the relief for the tax year, the second person does not use it, and the relief also applies for the year of birth and for the year the child turns 18. Before you count on a relief, read its conditions in the text of the law and on nra.bg for the specific year.

Check in your country — Which reliefs exist (children, a mortgage, donations, education) and for which year? Read the conditions on the tax authority's website before you count on them.

What is income and how does it show in your wallet? Income is not only pay: rent, fees, the sale of property, cash prizes. The EU/OECD-INFE framework adds a competence that an adult declares all sources of income (competence 24 of the general list).

Example (fictional): Maria receives €12,000 of taxable income from employment contracts during the year, and her employer has withheld advance tax at a rate of 10 % — €1,200, with no other reliefs. If she has no other income or reliefs, her total tax base is €12,000, the tax is €1,200 and €0 is left to pay. If she has a relief, the base is smaller and the difference will be refunded. The numbers are made up to show the calculation; this is not tax advice.

Myth → truth

• Myth: "My employer has sorted everything out; I don't need to do anything."
• Truth: if you have other income, reliefs or income from abroad, you may need to file a tax return. Tax authorities compare the data from employers with the income declared — in the Bulgarian example, the NRA says so on its page "Filing after the deadline" ✔.

Who profits? Someone who keeps track of the reliefs they are entitled to. A relief you miss is not refunded automatically.

→ Continue at the source

• European Commission, Your Europe — Taxes: https://europa.eu/youreurope/citizens/work/taxes/index_en.htm ✔ (opened 21.10.2026).
• Example: Bulgaria — NRA, personal income tax: https://nra.bg/wps/portal/nra/taxes/godishen-danak-varhu-dohdite ✔ (nra.bg pages, opened 19.10.2026) (in Bulgarian).
• Example: Bulgaria — Personal Income Tax Act, full text of the version in force (last amended State Gazette No. 85/2026): https://www.ciela.net/svobodna-zona-normativi/view/2135538631/zakon-za-danatsite-varhu-dohodite-na-fizicheskite-litsa ✔ (in Bulgarian)

🧔 Adult How to read a price:

• The price on the shelf is usually including VAT (the final price for the consumer). An invoice shows the base and the tax separately.
• Excise duties are a separate indirect tax on certain goods. In the EU, the general arrangements are common: Council Directive (EU) 2020/262 covers energy products and electricity, alcohol and alcoholic beverages, and manufactured tobacco ✔ (Article 1(1); official text, Publications Office of the EU, opened 21.10.2026). Excise duty is included in the price of these goods; the exact amounts are set by each country within EU minimums.
• What does this mean for your budget? Part of every purchase does not stay with the seller. The more you spend, the more you pay in taxes, even if you do not see it.

What you check as a consumer: VAT appears on the receipt and the invoice; if a business that is your customer is registered for VAT, it sees VAT as a separate line. Not every business is registered for VAT — only those that reach a threshold set by law, or that register voluntarily.

Example: Bulgaria ✔ — Under Article 2 of the Excise Duties and Tax Warehouses Act, excise goods are alcohol and alcoholic beverages, tobacco products, energy products (for example, fuels) and electricity (text in force, opened 21.10.2026); the exact amounts are in the same law. The VAT registration threshold from 1 January 2026 is €51,130 of annual turnover in the country (Article 96(1) of the VAT Act); the application is filed within 7 days of exceeding it ✔ (nra.bg, "VAT registration", opened 19.10.2026).

Check in your country — What is the VAT registration threshold, and how are excise duties on fuel, alcohol and tobacco set? The tax or customs authority publishes them.

Myth → truth

• Myth: "I don't pay taxes because I don't work."
• Truth: everyone who shops pays indirect taxes. They are included in the price.

Who profits? The state — predictable revenue; the consumer — when they know what part of the price is tax, so they can compare prices correctly.

→ Continue at the source

• Council Directive 2006/112/EC (VAT Directive), Article 97 (as amended by Directive (EU) 2018/912) and Article 98 (as replaced by Directive (EU) 2022/542): https://eur-lex.europa.eu/eli/dir/2006/112/oj ✔ (amending acts: https://eur-lex.europa.eu/eli/dir/2018/912/oj, https://eur-lex.europa.eu/eli/dir/2022/542/oj)
• European Commission — VAT rates: https://taxation-customs.ec.europa.eu/taxation/vat/vat-directive/vat-rates_en ✔
• Council Directive (EU) 2020/262 (excise duty), Article 1: https://eur-lex.europa.eu/eli/dir/2020/262/oj ✔
• Example: Bulgaria — NRA, VAT information and e-services: https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya ✔ (rates); https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya/registratsiya-po-zdds ✔ (threshold and deadline for registration) (in Bulgarian).

🧔 Adult Local taxes are not harmonised in the EU — each country organises them its own way. What usually matters: who sets the rate (the national law or the local council), the payment deadlines, any discount for paying early, and when you must declare a new property.

Example: Bulgaria — The general principles under the Local Taxes and Fees Act (lex.bg, version in force, opened 21.10.2026): - Deadlines ✔ (Article 28(1) and (2)): property tax is paid in two equal instalments — by 30 June and by 31 October of the year for which it is due; those who pay the whole year in advance by 30 April get a 5 per cent discount. - The household waste fee ✔ (Articles 62–67): it is paid for the municipality's services of collecting, transporting and treating waste and for cleaning public places; the amount is set for the calendar year according to the costs in the cost plan approved by the municipal council. The type of services and the frequency of collection are set by an order of the mayor, announced publicly by 31 October of the previous year (Article 63(2)). - Who sets the rates ✔ (Article 1(2)): the municipal council sets the amount of local taxes by ordinance "under the conditions, according to the procedure and within the limits set by this law". So you check your municipality's ordinance, not one amount for the whole country. - Gifts ✔: property acquired as a gift between relatives in the direct line and between spouses is not taxed (Article 44(6)); for other gifts, the municipal council sets the tax within the limits of Article 47(1) — from 0.4 to 0.8 per cent for gifts between brothers and sisters and their children, and from 3.3 to 6.6 per cent between other persons. - Inheritance ✔: inheritance tax is set out in Articles 29–43; taxation depends on the degree of kinship and the size of the share — the surviving spouse and heirs in the direct line do not pay (Article 31(2)), and for others the amount depends on kinship and is due on the part of the share above 250,000 leva (≈ €127,823 at the fixed rate of 1.95583; the law states the amount in leva) (Article 36).

Check in your country — Who sets local taxes where you live, and where is the decision published (the local council's website, the municipal tax office)? What are the deadlines, and is there a discount for paying early?

What matters: if you acquire a property (purchase, gift, inheritance), the municipality — or the authority that collects property tax in your country — has its own procedure for declaring and paying. Ask where the property is located (the local tax office).

Myth → truth

• Myth: "Property tax is the same across the whole country."
• Truth: in many countries the local council sets the amount within the limits of the law. Read your municipality's rules.

Who profits? The municipality — revenue for local services. You — if you know the deadline and use any discount for paying early.

→ Continue at the source

• Example: Bulgaria — Local Taxes and Fees Act, text in force on lex.bg: https://lex.bg/laws/ldoc/2134174720 ✔ (opened 21.10.2026; Articles 1, 28, 29–43, 44, 47, 62–67) (in Bulgarian).
• Example: Bulgaria — NRA, local taxes and fees: https://nra.bg ✔ (home page) (in Bulgarian).

🧔 Adult Every country sets its own deadline, how to file and pay, the penalties for being late and the way to correct a mistake. The general picture: a deadline for the annual return, payment of any tax still due by the same or a nearby date, interest and fines for being late, and a right to correct a return.

Example: Bulgaria - Deadline ✔: the NRA writes on nra.bg that the annual income tax return is filed "by 30 April of the following year", and the tax is paid by the same deadline (the return — under Article 50; the period from 10 January to 30 April, and for sole traders and farmers from 1 March to 30 June — under Article 53(1) of the Personal Income Tax Act ✔). In the 2025 campaign the NRA writes that returns are filed from 10 January to 30 April; for sole traders and farmers — from 1 March to 30 June ✔. If the last day is a non-working day (a holiday), the deadline ends on the next working day ✔ (Tax and Social Security Procedure Code, Article 22(7), lex.bg, opened 21.10.2026). - How to file ✔ (2025 campaign): online through the NRA's e-services portal, with a personal identification code (PIC) or a qualified electronic signature (QES); a pre-filled return — from the beginning of March for people with a PIC or QES, with information already submitted to the NRA (employment and civil contracts, rent); on paper — at an NRA office, by registered post with acknowledgement of receipt, or at post offices. - 5 per cent discount ✔: the NRA writes (2025 campaign) that whoever files the return online and pays by 31 March gets a 5 per cent discount on the tax still due, provided they have no public liabilities subject to enforcement. ✔ The condition and the cap are in the Personal Income Tax Act, Article 53(6): the total discount may not exceed 500 leva (≈ €255.65 at the fixed rate). The amount in euro for returns in 2027 — according to the NRA's announcement for the campaign. When 31 March is a non-working day, the deadline moves — in 2024 the NRA moved it to 1 April ✔. - If you miss it ✔ (nra.bg, "Filing after the deadline"): the NRA advises you to file the return even if it is late. Under Article 80(1) and (3) of the Personal Income Tax Act, a first offence carries "a fine or a pecuniary sanction of up to 255.65 euro/500 leva", and a repeated one "up to 511.29 euro/1000 leva" ✔. Interest is also due on tax not paid on time, "in the amount set in the relevant law" ✔ (Tax and Social Security Procedure Code, Article 175(1), lex.bg, opened 21.10.2026). - How you pay ✔: through the NRA portal (with a PIC or QES) and by bank transfer to the accounts published on nra.bg. - Corrective return ✔: while the filing deadline has not passed, you can change a return you have filed with a new return (Tax and Social Security Procedure Code, Article 104(1) and (2)). If you find a mistake after the deadline, you have the right once, until 30 September of the same year, to correct it with a new return ✔ (Personal Income Tax Act, Article 53(2), text in force, opened 21.10.2026). How a correction affects a 5 % discount you have already used — ask the NRA (0700 18 700).

Check in your country — What is the deadline for the annual return, is there a pre-filled return, how do you sign in to the tax authority's portal, and how can you correct a mistake? Note the deadline in your calendar.

Wherever you live: pay taxes only to the accounts published on the official website of the tax authority. Do not pay to personal accounts in response to messages that arrive by email or on social media — check only on the official website.

Myth → truth

• Myth: "If I don't file, nobody will find out."
• Truth: tax authorities compare the data on amounts paid by employers with the income declared — in the Bulgarian example, the NRA ✔.

Who profits? Someone who files on time and online: less stress and, in some countries, a discount.

→ Continue at the source

• Example: Bulgaria — NRA, "Filing taxes", "Filing after the deadline", "Corrective return", 2025 campaign: https://nra.bg ✔ (nra.bg pages, opened 19.10.2026) (in Bulgarian).
• Example: Bulgaria — helplines: NRA Information Centre — 0700 18 700; infocenter@nra.bg ✔ (home page).

🧔 Adult Taxpayers' rights and appeal procedures are national. The common principle in the EU: you have the right to information, to be heard, to a written decision with reasons, and to appeal — first to a higher administrative body, then to a court — within deadlines set by law. In 2016 the European Commission published Guidelines for a Model for a European Taxpayers' Code — a non-binding model of these rights and obligations that countries can adapt ✔ (PDF opened 21.10.2026 — "a non-binding document", "a model to follow, to which Member States could add or adapt elements"): https://ec.europa.eu/taxation_customs/system/files/2016-11/guidelines_for_a_model_for_a_european_taxpayers_code_en.pdf

General steps when something is unclear or wrong:

1. Ask — the tax authority's information centre; for local taxes — the municipal tax office.
2. Ask for a document in writing if you receive a decision, a notice or an instruction — and keep it.
3. Appeal — read the decision itself: it states how and to whom you can appeal and by when; a missed deadline may not be restored.
4. During a tax audit, you usually have the right to object in writing and present evidence within a deadline.
5. Reports and questions about the service — use the written enquiry channels on the tax authority's website; if the authority delays, ask what your country allows (a complaint to the higher body, an ombudsman).

Example: Bulgaria - Ask — NRA Information Centre (0700 18 700, infocenter@nra.bg) ✔. - Appeal ✔: the procedure and deadlines are set out in the Tax and Social Security Procedure Code — Chapter Eighteen "Administrative appeal against an audit assessment" (Articles 152–155) and the next chapter on court appeals (Articles 156–160). An audit assessment is appealed within 14 days of service to the director of the "Appeals and Tax and Social Security Practice" directorate at the NRA's head office, and the appeal is filed through the territorial directorate (Article 152). If the decision does not satisfy you, you appeal to the administrative court within 14 days of receiving the decision (Article 156(1)); the part that was not appealed administratively cannot be appealed in court (Article 156(2)). (Tax and Social Security Procedure Code, lex.bg, opened 21.10.2026.) - During an audit ✔ you can file a written objection and present evidence within 14 days of service of the audit report; if needed, the deadline is extended at your request by no more than one month (Article 117(5)). - Reports and service ✔: the NRA website has sections for written enquiries. If the revenue authority delays its actions, you have the right to complain about the delay to the higher authority ✔ (Article 144(3)).

Check in your country — Which body hears tax appeals, what is the deadline, and is there a tax ombudsman or a taxpayers' charter? The tax authority's website and the decision you received are the first places to look.

Three practical habits:

• keep your documents (pay, bank statements, contracts) — for years back;
• do not miss appeal deadlines — they are short;
• if it is complicated, look for a tax adviser or accountant (a professional opinion; this is not a recommendation of a specific person).

Myth → truth

• Myth: "There's no point complaining about the tax authority."
• Truth: the law provides for appeals and deadlines. The first step is to read in the decision how and to whom you appeal.

Who profits? Someone who knows the deadlines and keeps their documents.

→ Continue at the source

• European Commission — Guidelines for a Model for a European Taxpayers' Code (2016): https://ec.europa.eu/taxation_customs/system/files/2016-11/guidelines_for_a_model_for_a_european_taxpayers_code_en.pdf ✔ (opened 21.10.2026).
• Example: Bulgaria — Tax and Social Security Procedure Code, text in force on lex.bg: https://lex.bg/laws/ldoc/2135514513 ✔ (opened 21.10.2026; Articles 22, 104, 117, 144, 152–160, 175) (in Bulgarian).
• Example: Bulgaria — NRA, contacts and enquiries: https://nra.bg ✔ (in Bulgarian).

🧔 Adult The figures for 2024 — from the Eurostat database, table gov_10a_exp ("General government expenditure by function (COFOG)"), updated on 16.09.2026, share of total general government expenditure in per cent ✔. The share of total spending is not a judgement of "a lot" or "a little" — it shows how the budget is divided:

The sums in the columns are rounded (for Bulgaria they add up to about 100.2 % because of rounding).

The total size ✔ (Eurostat, gov_10a_exp, 2024, share of GDP): total general government expenditure is 48.9 % of GDP in the EU-27; in Bulgaria — 39.2 % of GDP.

Example: Bulgaria — According to the National Statistical Institute (NSI), total expenditure of the "General government" sector in Bulgaria in 2024 was €41,059.59 million (80,305.58 million leva) ✔ ("General government expenditure by function (COFOG) – 2024", nsi.bg).

Check in your country — Choose your country in the same Eurostat table (gov_10a_exp) and compare it with the EU-27; the national statistical institute publishes the amounts in euro or in the national currency.

How to read the figures:

• They show how the budget is divided, not whether it is "good" or "bad". Different countries have a different age of the population and different organisation of pensions and health care, so the shares differ.
• The data are consolidated — they include the central government, municipalities and social security funds (the "General government" sector), not only the "state budget" adopted by the annual budget law.
• Pensions fall under "social protection" (Module 25 "Pensions").

Example (fictional): If in a country 36.80 € out of every €100 of public spending go to social protection (as in Bulgaria in 2024), this means €36.80 out of every hundred, not €36.80 per person. For the amount per person, the total has to be divided by the population.

Myth → truth

• Myth: "Taxes get lost and nobody knows where they go."
• Truth: spending is published by function and by year — by Eurostat and by national statistical institutes. You can look at it and compare.

Who profits? Someone who reads the data, not the rumours: they can ask precise questions and compare.

→ Continue at the source

• Eurostat — database "General government expenditure by function (COFOG)", code gov_10a_exp: https://ec.europa.eu/eurostat/databrowser/view/gov_10a_exp ✔ (data downloaded through the Eurostat API on 19.10.2026).
• Example: Bulgaria — NSI, "General government expenditure by function (COFOG) – 2024": https://www.nsi.bg/en/file/37645/general_government_expenditure_by_function_cofog.pdf ✔ (the first page with the total was opened; the table by function was not read).
• Example: Bulgaria — the Public Finance Act (budget framework, structure and reporting of public finances) — lex.bg: https://lex.bg/laws/ldoc/2135837967. Article 1(1) reads: "This law regulates the budget framework, the general organisation and the structure of public finances and includes: …" ✔ (opened 21.10.2026) (in Bulgarian).

🧔 Adult What the Open Budget Survey (OBS) is ✔: according to IBP, it is "the world's only independent, comparative, and fact-based" assessment of budget transparency; it assesses (1) public access to information on the central government's budget, (2) formal opportunities for the public to take part in the budget process and (3) the role of oversight institutions — parliament and the national audit office. It was first launched in 2006 ✔ (internationalbudget.org, opened 21.10.2026). The 2023 edition was the 9th and covered 125 countries ✔ (IBP, "Open Budget Survey 2023 — Bulgaria", country profile, PDF of 20.05.2024); IBP has since published an Open Budget Survey 2025 (*).

The eight key documents ✔ that the OBS checks: Pre-Budget Statement · Executive's Budget Proposal · Enacted Budget · Citizens Budget (a simplified version for the public) · In-Year Reports · Mid-Year Review · Year-End Report · Audit Report. A score of 61 or more means a country probably publishes enough material for an informed public debate on the budget ✔.

What it means for you: the Citizens Budget is a simpler document than the draft budget law. Look for it on the website of your country's ministry of finance.

Example: Bulgaria in OBS 2023 ✔ (the same document): - Transparency: 79 out of 100 (Open Budget Index). Ranking: 10th out of 125 countries. Previous values: 71 (2019 and 2021), 65 (2012 and 2015), 66 (2017). - Public participation: 26 out of 100. - Budget oversight: 54 out of 100. - For the Citizens Budget, IBP gives Bulgaria a content score of 67 out of 100 (for fiscal year 2022), and 59 for the Mid-Year Review ✔. Look for it on the website of the Ministry of Finance (minfin.bg) ⚠ (the exact page is not confirmed — minfin.bg refuses automated access). - Municipal budget: the municipality has a budget and a report on its implementation, and both are public: the budget is published on the municipality's website within 10 working days of its adoption (Article 97 of the Public Finance Act), and the adopted annual report is published there too, after a public discussion (Article 140(4)–(6) of the Public Finance Act) ✔ (lex.bg, opened 21.10.2026). - Note for 2026: the State Budget Act for 2026 was promulgated in State Gazette No. 69/2026, and the State Social Security Budget Act in State Gazette No. 68/2026 ✔ (the budget has been challenged before the Constitutional Court — case No. 15/2026 on the deficit; for the current status, follow the Ministry of Finance).

Check in your country — Find your country's profile in the Open Budget Survey (internationalbudget.org) and the Citizens Budget on the ministry of finance's website. For your town: where are the municipal budget and the annual report published, and is there a public discussion?

How to read a budget (steps):

1. Revenue or spending? First work out which side you are reading.
2. By function or by ministry? The functional breakdown (Chapter 7) shows "what for", the ministries show "who".
3. Planned or spent? The enacted budget is a plan; the in-year reports and the year-end report show what was actually spent.
4. How much of GDP and how much per person? An absolute amount on its own means nothing without a comparison.
5. Municipal budget: your municipality also has a budget and a report on how it was carried out; in many countries both are public.
6. Compare with itself: which years? A budget for this year and a report for the previous one.

Myth → truth

• Myth: "The budget is only for specialists."
• Truth: there are documents for citizens. In the OBS, 61 points out of 100 is the threshold for sufficient transparency — and you can see your country's score. Transparency alone is not enough: public participation also counts (in the Bulgarian example — 79 for transparency but 26 for participation ✔). There is room to improve, and you are part of it.

Who profits? A citizen who asks the local council questions, reads the report and compares it with the plan.

→ Continue at the source

• IBP — Open Budget Survey: https://internationalbudget.org/open-budget-survey ✔ (opened 21.10.2026).
• Example: Bulgaria — IBP, Open Budget Survey 2023, Bulgaria profile: https://internationalbudget.org/sites/default/files/country-surveys-pdfs/2023/open-budget-survey-bulgaria-2023-en.pdf ✔ (opened, 19.10.2026).
• Example: Bulgaria — Ministry of Finance, state budget: https://www.minfin.bg ⚠ (the ministry's official website; not opened — it refuses automated access).

🧔 Adult

• Module 11 "Public money": taxes are the revenue side of public funds, and budget spending by function is the spending side. Transparency (Chapter 8) is the shared "key".
• Module 25 "Pensions": pension contributions are not the same as income tax (Chapter 1). Pensions are the largest part of "social protection" (Chapter 7).
• Taxes and products (competences 543 and 548): different financial products (a mortgage, a pension or savings solution) are taxed differently. Ask about the specific product and read the text of the law, not the advertising. This module does not recommend any product.
• Taxes and the household budget (547): include in your annual plan an amount for tax (if you will have to pay extra), for local taxes and for your other fees. Treat them as a note in the calendar, not as a surprise.

Example: Bulgaria — Local taxes are due by 30 June and 31 October ✔ (Article 28 of the Local Taxes and Fees Act).

Myth → truth

• Myth: "Taxes, contributions and fees are all the same."
• Truth: a tax goes into a general budget, a fee is for a specific service, a contribution gives you rights. Knowing the difference helps you read your payslip.

Who profits? Someone who sees the whole picture — income, taxes, contributions, fees.