Introduction
The Cyprus General Healthcare System (GeSY) is funded through mandatory contributions made by employers, employees, self-employed individuals, pensioners and certain recipients of investment and passive income.
Understanding how GeSY applies is important for Cyprus companies in order to ensure that the correct contributions are withheld, reported and paid to the relevant authorities.
General Principles
In broad terms, GeSY contributions apply as follows:
In respect of companies
- Cyprus companies contribute to GeSY as employers in respect of remuneration paid to their employees.
In respect of individuals
- Cyprus tax resident individuals (whether domiciled or non-domiciled) are generally subject to GeSY contributions on the categories of income prescribed by the legislation.
- Non-Cyprus tax resident individuals are generally subject to GeSY contributions only on qualifying Cyprus-source income.
Annual contribution cap
GeSY contributions are subject to the applicable annual maximum insurable income prescribed under the legislation.
Effect of GeSY on a Cyprus Company
A Cyprus company should consider the following obligations:
a. Employer contributions
A Cyprus company is required to pay employer GeSY contributions on the remuneration paid to its employees.
b. Company income
The profits and income of a Cyprus company are not themselves subject to GeSY contributions.
c. Withholding obligations
A Cyprus company may also be required to withhold and remit GeSY contributions on certain payments made to Cyprus tax resident individuals, including, where applicable:
- Dividends (including deemed dividend distributions).
- Interest payments.
- Rental income from immovable property situated in Cyprus.
- Certain pension payments.
Current Contribution Rates
Employer and Employee Contributions
| Contributor | Current Rate |
|---|---|
| Employees | 2.65% |
| Employers | 2.90% |
Contributions on Certain Payments
| Type of Payment | Current Rate |
|---|---|
| Dividends (including deemed dividends) | 2.65% |
| Interest | 2.65% |
| Rental income | 2.65% |
| Certain pension payments | 2.65% |
The above contributions are subject to the applicable annual maximum contribution cap under the GeSY legislation.
How UHY Can Help
Our experienced team can advise on all aspects of GeSY compliance, including:
- Employer registration and compliance.
- Payroll administration.
- GeSY contribution calculations.
- Withholding obligations on dividends, interest and rental income.
- Tax and payroll planning for Cyprus companies and individuals.
For more information on how we may assist you, please contact us at uhy@uhy.com.cy or call +357 22379210.
The contents of this publication are provided for general information purposes only and should not be regarded as legal, tax or professional advice. Specific advice should always be obtained based on your particular circumstances before taking any action.