Employer And Employee Contributions And Deductions For The Year 2020

Panayiotis DamianouManaging Director, PD Audit

Social Insurance Fund:
The rate of contribution, as of 01.01.2020, for employed persons is 21.5% of their “insurable earnings”. Out of this rate, 8.3% is payable by the employer, 8.3% by the employee, while a further 4.9% is payable by the State (maximum insurable earnings are €1.055 gross weekly income or €4.572 gross monthly income). As of 01.01.2024, there shall be further increases.

Fund for the Protection of Employees Rights in the Εvent of Insolvency of the Employer
Financed each month with a transfer of 16,6% of the contributions paid by employers to the Redundancy Fund; no additional contribution needs to be made specifically to the above fund.

Redundancy Fund
This Fund is exclusively financed by employer contributions, equal to 1.2% on the employee’s earnings and they are payable along with the social insurance contributions (subject to maximum insurable earnings).

Industrial Training Fund
The rate of contribution to the Fund is 0,5% on the employee’s earnings, fixed by regulation (subject to a maximum of €1.055 gross weekly income or €4.572 gross monthly income).

Social Cohesion Fund
The rate of contribution is 2% on the employees’ earnings. The proceeds are used for the payment of social allowances to balance off the increase of the value added tax rate and the capital gains tax rate.

Central Holiday Fund: If an employee works 5 days per week then he is entitled to a minimum of 20 working days whereas if he works 6 days per week he is entitled to 24 working days, unless he is entitled to more days provided by any other Law, custom or collective agreement. The contribution rate to the Central Holiday Fund is 8% for the minimum leave and is payable wholly by the employer. The employer may apply to be exempted from the said contribution if they have opted to pay the employee annual leave directly with full pay and the annual leave scheme is more beneficial than the Law (e.g. 21 days of leave for a 5-day employee or 25 days of leave for a 6-day employee).

General Healthcare System
Pursuant to the General Healthcare System Law 89(I)/2001, as amended, the Healthcare Insurance Fund (which finances the new universal General Healthcare System) is financed by contributions payable by the employers, employees/beneficiaries, and the State. The rate of contribution for employed persons is 10,25% of their earnings. Out of this rate, 2,90% is payable by the employer, 2,65% by the employee, while a further 4,70% is payable by the State. As of 01.03.2020, when inpatient treatment will also be phased into the GHS, the rate of contribution for employed persons shall be increased to 10.25% of their earnings. We note that registration of a beneficiary with the GHS can take place through the online portal ( https://registration.gesy.org.cy/#/registration ) and the employees can do it by themselves. At no stage of the process of registration does the portal request information on one’s employment. When it comes to the employer, no separate registration with the GHS is required, other than the regular registration with the Social Insurance Services; contributions to the Healthcare Insurance Fund take place simultaneously with the social insurance contributions, through social insurance, and no payments to a separate authority shall be made.

Employer’s Liability Insurance
Pursuant to the Obligatory Occupational Insurance Law 174/1989 as amended, there is an obligation on the employer to be insured against any responsibility for an accident or occupational injury to employees, including permanent residents of Cyprus and employees abroad.
Please refer to the summary table below for your convenience.

SUMMARISED TABLE:

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P.D. Audit Tax Team
Email: info@pdaudit.com
Tel: 25 82 82 33
37E, Griva Digeni Street
Niki Court, Office 21
CY-3106, Limassol
Cyprus

This summary contains general information only as such we do not assume any liability for any loss whatsoever sustained by any person who relies on this summary letter.