Social Insurance Contribution Changes
As from the 1st of January 2019 both employer and employee Social Insurance Contributions in Cyprus will increase by 0,5%, from 7,8% to 8,3%. The increase will be applicable for the next five years.
In addition, the contributions to the Social Insurances by self-employed individuals will also increase by 1%, meaning that from 14,6% will jump to 15,6%.
The applicable rates for the year can be seen here.
Introduction of the National Health Insurance System
As from 1 March 2019 the General Healthcare System Law of 2001 (GHS), as amended, will come into effect.
Individuals, employers and the government will have obligation contribute to the GHS.
Initially, the contributions are set at 1,70% for employees and pensioners, 1,85% for employers, 1,65% for the government, and 2,55% for self-employed individuals.
For example, an employee has a gross salary of 1000€, with the new contributions/deductions scheme from the employee’s salary will be deducted the amount of 83€ for the social insurance’s contribution and the amount of 17€ for the GHS contribution, therefore the employee will receive net salary of 900€.
Regarding self-employed individuals if their quarterly declared income to the social insurances is 5000€, the individual will pay 780€ social insurances contribution and in addition 127.50€ contribution to the GHS.
As from 1 March 2020, the contributions will increase to 2,65% for employees and pensioners, 2,90% for employers, 4,70% for the government and 4% for self-employed. The contributions will be deducted from the entire earnings of the individuals (including dividends, interest and rental income). The maximum limit for contributing income €180.000.
A summary of the relevant contributions can be seen here.
The team of tax experts at PHS & Partners LTD is here to assist you with any queries that you may have.
By Andreas Germanos
Head of Accounting & VAT, PHS & Partners
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