GHS Payments to be Increased on The 1st March 2020

Taxation for the first phase of the General Health System (GHS) in Cyprus commenced on 1st March 2019 and from 1st June 2019 all beneficiaries were able to access the care services such as doctor visits, medicine and laboratory examinations.

The first taxation phase introduced the payments from the employee and employer to the General Health System fund.

The percentages from 01/03/2019 up until 29/02/2020 and from 01/03/2020 and onwards are as follows:

Contributor’s Category 01/03/2019-29/02/2020 01/03/2020 onwards
(1) Employees/ pensioners/income earners/persons holding an office 1,70% 2,65%
(2) Employers 1,85% 2,90%
(3) Self-employed 2,55% 4,00%
(4) The Republic or natural/legal person responsible for the remuneration of Officers 1,85% 2,90%
(5) The Republic 1,65% 4,70%


The contributions are calculated based on the gross emoluments of each employee (including benefits in kind).

The second phase of the taxation of the GHS in Cyprus is due to commence on 1st March 2020. This will therefore mean that employees will contribute 2,65% of their salary and employer will contribute 2,90% of the salary of each employee. The increase being 56% for employees and 57% for employers from the first phase.

For the purposes of calculating the contributions, gross emoluments are limited to €180.000 per annum (except for categories (2), (4) and (5).

The contributions will increase in order of the General Health System to be able to commence its full operations by 1st June 2020.


For any questions or clarifications on the above amendment please contact our team of tax and payroll advisors.



Benefits in Kind

According to the Article 5 of the Income Tax Law, as from 1st January 2019 the benefits provided to an employee from holding an office or employment are subject to tax. These include benefits provided to a member of his family either in cash or otherwise.

Benefit in Kind (“BIK”) is considered to be the benefit that is, or is deemed to be, granted in connection with any employment or the holding of an office.

Categories of BIKs

  • Benefits in kind in relation to cars
  • Accommodation and use of assets
  • Other benefits in kind

Exemptions as a general principle apply to the extent where the payment or reimbursement to the employee or officer is made against actual costs incurred supported by receipts.

Other more specific exemptions include:

  • Computer equipment
  • Telephone services
  • Childcare facilities
  • Goods consumed in the workspace
  • Newspapers
  • Awards for long-term service
  • Christmas parties and events
  • Subscriptions to professional bodies
  • Training courses/scholarships
  • Uniforms and specialised attire
  • Relocation expenses


The value of the benefits in kind is taxed the same way as the gross earnings, through the submission of TD7. Employers are required to declare the benefits in kind provided by them or by their connected companies.

For any questions or clarifications on benefit in kind tax and rules please contact our team of tax advisors.

Income Tax Law Amendment

The House of Representatives has amended the Income Tax Law published in the Government Gazette on 20th December 2019 and will have immediate effect for the 2019 tax year.

Although in the Gazette is not clearly stated, this is applicable from the tax year 2019 onwards.

The amendment increases the limit of allowances from 1/6th to 1/5th of an individual’s taxable income before such allowances.

The allowance consists of the following aggregated contributions and premiums:

  • Social Insurance Fund
  • Approved Pension and Provident Funds
  • General Healthcare System (GHS)
  • Life Insurance policies (maximum 7% of the insured amount)
  • Medical and other approved funds (maximum 1,5% of remuneration)


Employers should therefore re-consider their payroll calculations moving forward based on the above amendment.


For any questions or clarifications on the above amendment please contact our team of tax advisors.