Understanding Social Insurance and General Healthcare System in Cyprus

Every person working in Cyprus is required to pay contributions towards Social Insurance and the General Healthcare System (GHS or ΓεΣΥ). Social Insurance is where you get benefits from when you can't work in case of illness, disability, old age, etc. GHS gives you access to medical services, and every permanent resident of Cyprus can use it.

Employer Contributions: What You Need to Know

As an employer in Cyprus, you have several obligations regarding social insurance, GHS contributions, and other mandatory contributions for your employees which are calculated based on their salary. As of the 1st January 2024, the minimum monthly wage is €1,000 gross for full-time employees.

Registration Process for Employers

First, you need to register with the Employers' Register of the Social Insurance Services:

When Should the Payments Be Made?

These payments must be made by the end of the following month for which they are due.

ERGANI Platform Registration

Remember that as an employer, you are also required to create an account in the ERGANI platform, using your Employer Registration Number. Through the platform, you must inform the Social Insurance Services of any new hires, employee termination, and other relevant information.

Record-Keeping Obligation

Particularly, as an employer you should maintain a recruitment register, which includes personal information for each employee (serial number, name, ID card number, social insurance number, date of recruitment and date of commencement of employment).

Employee Social Insurance and Healthcare Obligations

As an employee in Cyprus, where the majority of the workforce is employed by others, it's important to understand how social insurance and GHS contributions work.

Social Insurance Calculation

The overall contribution to social insurance is 22.8% of your earnings. However, you don't cover the entire amount yourself. Contributions are divided as follows:

Healthcare System Contributions

Similarly, GHS contributions are divided between yourself, your employer and the state.

Gross vs. Net Salary Breakdown

Remember, employee contributions are deducted from your gross salary, not paid out of pocket. This means that, for example, when someone says they will pay you a gross salary of €1500 per month, 8.8% of that amount will be deducted for social insurance and 2.65% for GHS.

If you have two jobs, you will be paying these contributions for both. You don't need to worry about making these payments yourself since your employer will take care of them for you.

You can calculate your Social Insurance and Healthcare contributions to check your net salary as an Employee using our tax calculator.

Social Insurance and Healthcare for Self-Employed Professionals

If you're self-employed in Cyprus, you are responsible for registering and paying your Social Insurance and GHS contributions yourself.

Social Insurance

The overall contribution to social insurance is 21.8% of your earnings, and it is divided between yourself and the state as follows:

General Healthcare System

Similarly, GHS contributions are divided between yourself and the state.

Registration Steps

First, you need to register as self-employed with the Social Insurance Services:

Earnings Calculation

For purposes of calculating the amount of your contributions, the state bases the calculation on your occupation.

You can find a list of self-employment categories and their minimum weekly earnings below.

If you earn less than the minimum amount set by the state, you can apply to have your contributions be based on your actual earnings instead. To do that, fill out and submit form YKA 1-017

to your local Social Insurance District Office.

Payment

Remember that you'll have to make these payments yourself every three months.

You can find out the exact amount of Social Insurance and Healthcare contributions you'd have to pay to as a self-employeed by using our tax calculator.

Dual Employment Considerations

If you are both an employee and self-employed at the same time, such as having a 9-5 job and a side hustle, you need to pay social insurance for both. Many people mistakenly think they don't have to pay for their side hustle if they already pay social insurance through their main employment, but this is incorrect.

Confirming Your Obligations with the Social Insurance Services

Before starting a side hustle or any new venture, it's best to check with Social Insurance Services about your specific circumstances. Asking ahead of time can help you avoid legal issues in the future. While you can call them or even go there in person, it's better to send your questions via email. Having their written response can be helpful if any misunderstandings arise later on.

Additional Income Streams: Rental and Dividend Contributions

Rental Income GHS Contributions

Rental income is not subject to Social Insurance contributions. It is however subject to GHS contributions. Regardless of the amount, rental income is subject to GHS at the rate of 2.65% of the gross rental income, and the payment method depends on whether the tenant is an individual or a company. GHS contribution on rental income only applies when the landlord is an individual, if the landlord is a company, they are exempt from paying GHS on rental income.

For Individual Tenants

Where the tenant of a property is an individual, the landlord must file a self-assessment and pay the GHS on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Payments are made through the Tax Portal.

For Company Tenants

Where the tenant is a company or a partnership, GHS on rental income is withheld at the source at a rate of 2.65% of the gross rental amount. This means that the tenant is responsible for deducting this amount from the gross amount of rent and pay the GHS contribution to the Tax Authorities with Form IR614A on the 30th of June for the first half of the year, and 31st of December for the second half of the year. Once again, payments are made through the Tax Portal.

Dividend Income Reporting

Dividend income is also subject to GHS at the rate of 2.65%. Companies that pay dividends to their individual shareholders are required to withhold the GHS contribution from the dividends of their shareholders and pay it to the Tax Authorities. Companies must declare these using form TD603 and pay the GHS through the Tax Portal by the end of the month following the month in which the dividends were paid.

Caps on Contribution Amounts

Social Insurance contributions are only calculated on an annual income up to €62,868. Any amount you earn over €62,868 will not be considered in these calculations.

Similarly, GHS contributions are capped at an annual income of €180,000 meaning that any amount you earn over €180,000 will not be considered in these calculations. Officers and Pensioners are also subject to a 2.65% contribution rate for the GHS. You can find more information on the GHS here.

Wrapping It Up: Staying Compliant

If you're an employee, you don't need to worry about the administrative side of social insurance and healthcare payments, since your employer is required to handle it for you. That said, it's smart to keep an eye on things to ensure your employer is making the correct payments, as these contributions are really important for your future benefits.

Self-Employed or an Employer? We've Got Your Back

If you're self-employed or an employer, you'll need to manage social insurance and healthcare contributions for yourself and your employees. The good news is, you don't have to do it all yourself. Just get in touch with us, and we'll take care of everything, from registrations to monthly payments and everything else in between.

FAQ: Common Questions About This Topic

Is social insurance mandatory in Cyprus?

Yes, social insurance is mandatory for everyone working in Cyprus, whether employed or self-employed, until the age of 65. This includes part-time workers, foreign nationals, and remote workers based in Cyprus. The only exceptions are certain categories of very short-term workers and specific diplomatic personnel.

How many years do you have to work in Cyprus to get a pension?

You need a minimum of 15 years of contributions to qualify for a pension in Cyprus. The retirement age is 65, though early retirement is possible at 63 if you meet specific contribution requirements.

What is the penalty for not paying social insurance in Cyprus?

Non-payment of social insurance can result in: Monthly penalties of up to 3% on outstanding amounts, Legal proceedings and enforcement measures, Loss of access to benefits and healthcare, Potential criminal charges for employers who fail to pay employee contributions, The Social Insurance Services can also charge retroactive payments with interest.

Can you opt out of GESY payments?

No, GESY (GHS) payments are mandatory for all Cyprus residents. You cannot opt out, even if you have private health insurance. The only exception is for individuals who are insured by another EU country and have an S1 form.

Can I pay lower social insurance if I work part-time?

Yes. Part-time workers' contributions are calculated based on actual earnings. However, if you work multiple part-time jobs, you must pay contributions for each job. The total contributions from all jobs are considered when calculating your benefits.

Can I voluntarily increase my social insurance contributions?

Yes. You can make voluntary contributions to improve your future benefits, particularly useful for periods when you might have reduced income. However, these must be approved by the Social Insurance Services and have specific conditions attached.

What if my actual self-employed income is significantly different from the minimum set by the state?

If your actual income is lower than the minimum set for your profession, you can apply for an income assessment using form YKA 1-017. If approved, your contributions will be based on your actual earnings rather than the minimum threshold.