Social Insurance contributions for 2020 will remain the same as in 2019 whereas contributions to the General Healthcare System (GHS) will be increased as from 1 March 2020. The contributions applicable for 2020 are analysed below.
Social Insurance Contributions
As it is known, there is a mandatory earnings-related social security scheme in Cyprus which applies to both employed and self-employed individuals, whether resident or not, and whether Cypriot or not. Self-employed persons are assessed on notional income levels depending on their occupation.
Contributions to the various funds are tax-deductible, and the employer’s contribution is not taxable for the employee. The following are the contributions an employer is required to make on the gross emoluments of his employees for 2020:
· Social Insurance Fund 8.3%
· Redundancy Fund 1.2%
· Industrial Training Fund 0.5%
· Social Cohesion Fund 2%
· Holiday Fund (if not exempt *) 8%
* An employer can be granted an exemption when paid annual holidays are offered and upon certain conditions being met.
Besides the Social Cohesion Fund for which contributions are uncapped, for the rest of the funds the contributions are capped at a certain amount of gross emoluments, which for 2020 is € 54,864 per annum.
The employee only contributes to the Social Insurance Fund at the same rate as the employer and subject to the same gross emoluments cap.
Self-employed persons contribute to the Social Insurance Fund at the rate of 15.6%.
General Health System Contributions
As from 1 March 2019 when the GHS Law came in to effect, employers are required to contribute 1.85% on the gross emoluments of employees, who are also required to contribute 1.70% on their emoluments and other income (e.g. rent, dividends, interest, etc.). The contribution rate for self-employed persons is 2.55%. The state is also required to contribute at 1.65% on the gross emoluments. As from 1 March 2020, the respective contributions will increase to 2.90% for employers, 2.65% for employees, 4% for self-employed persons and 4.70% for the state.
Pensioners, people with other income (as explained above), people with income from office or position or persons responsible for the remuneration of such people are also required to contribute to the GHS.
Contributions should be made as long as they relate to persons, who are resident of Cyprus irrespective of whether they are domiciled or not.
For the purposes of calculating the contributions, gross emoluments and other income are limited to €180,000 per annum.