The General Healthcare System (“GHS”) is introduced in Cyprus during 2019 with the objective to transform the existing public healthcare system. The Healthcare Insurance Organization’s vision is, through the implementation of the GHS, for every Cypriot citizen to enjoy lifelong, equal and unhindered access to high quality healthcare services.
The GHS Fund revenues will come from contributions, co-payments, personal contributions, donations and legacies, income from assets of the HIO and any other income accrued from the activities of the HIO. The main finance will come through compulsory contributions of employees, employers, self-employed persons, pensioners, persons earning other types of income and the government.
The payment of the contributions for the first phase will start on 1 March 2019 (which will only cover outpatients) and for the full implementation on 1 March 2020 (which will cover both outpatients and inpatients).
- Employees - has the meaning given to the term Social Insurance Law
- Employers - includes the Government of the Republic
- Self-employed - has the meaning given to the term Social Insurance Law
- Pensioners - shall be interpreted according to the term "pension" which means the retirement of any natural person coming from the sources specified in Article 5 of the Income Tax Law
- Income-earners *
- Government Officials - means a person who holds or exercises a state or municipal or other office and any commissioner or regulator appointed on the basis of a provision of law
- Persons responsible for the payment of remuneration to Government Officials
(*) Income-earners means the income of any natural person coming from the sources defined in Article 5 of the Income Tax Law (ITL), other than remuneration or pension, and includes dividends as defined in the Special Contribution for the Defense of the Republic (SDC).
The referral of the Law to Article 5 of the ICL means that the exemptions and exemptions of income granted for income tax purposes based on the other articles of the ITL do not apply for GHS contribution purposes.
In the case of income, for example, dividends are excluded from other legislation then they are not considered to fall under Article 5 of the Income Tax Law and therefore there is no obligation to pay a contribution to the GHS.
Dividends are determined in accordance with the SDC law, and therefore a contribution is paid to the GHS on the deemed dividends corresponding to the shareholders who are natural persons resident in the Republic. The company should deduct the contribution to these amounts. Shareholders are required to pay such dividends on the due date.
The GHS contribution on the one-off / gratuities paid to public and private employees and the benefits paid by Provident Funds, which fall under Article 5 of the ITL, is calculated on the amount earned for service after 1st March 2019.
The contribution rates for each category of contributors as they have been set by the General Healthcare System (Amending) Law of 2017 are the following:
Table: Contribution rates
|Contributors Categories||First Phase
(As of 1/3/2019-28/2/2019)
(As of 1/3/2020)
|Employees (Public and
|1,70%||2,65%||On their salaries|
|Employers (Including the State as an Employer)||1,85%||2,90%||On the salaries of every person employed by them|
|State||1,65%||4,70%||On the salaries of the employees, the remuneration of the self-employed and officials and on pensions|
|Self-employed||2,55%||4,00%||On their remuneration|
|Pensioners||1,70%||2,65%||On their pension|
|Income earners (e.g. rent, interest, dividends)||1,70%||2,65%||On their income|
|Government Officials||1,70%||2,65%||On their remuneration|
|Persons responsible for the payment of remuneration to Government Officials||1,85%||2,90%||On the remuneration of the Government Official|
For every natural person, the total maximum annual amount on which contributions will be paid is € 180,000.
In case that the natural person is not a tax resident of Cyprus, he/she will pay contributions only for the income, earnings and pensions that derive from the Republic of Cyprus, excluding dividends and interest.
- Employees’ contributions to GHS will be deducted by the employer from the total earnings of the employees (as defined in the Social Insurance Law) and, together with the employer’s contributions, will be paid to the Social Insurance Fund (0701), as in the case of the respective contributions to the Social Insurance Fund.
- The maximum annual insurable earnings for employees applicable for the purposes of Social Insurance Fund contributions do not apply in the case of GHS.
- The final date for the payment of the withholding tax to the GHS and the employer's own contribution is the end of the month following the month of deduction.
- The deductions provided for in relation to the GHS will be included in the IR7 form.
- Contributions from self-employed persons to GHS are paid up to the sum of Social Insurance’s insurable earnings to the Social Insurance Fund, whereas contributions on income of self-employed persons beyond these sums are paid to the Tax Commissioner (0213 and 0313).
- GHS contributions on dividends(0703 and 0723) or interest (0702) received by an individual from sources within Cyprus are deducted by the payer (as in the case of the special defence contribution on the relevant income) and paid to the Tax Commissioner at the end of the month following the deduction.
- GHS contributions on rents received by an individual from sources within Cyprus are deducted by the payer, provided that the payer is a company, partnership, the Republic of Cyprus or a local authority (as in the case of special defence contribution) and paid to the Tax Commissioner (0714) at the end of the month following the deduction.
- GHS contributions on rents received by an individual from sources within Cyprus by another individual and for which no deduction is made under paragraph 6 above are paid to the Tax Commissioner by the individual who receives the rents (0704). The collection is made as for the Special Defense Contribution at the last yearly half of the income 30/6 and 31/12.
- GHS contributions on income from abroad or on any other income not mentioned above, are paid by the individual who receives them to the Tax Commissioner (interest 0712 and dividends 0713).