The burden for both employers and employees in Cyprus is getting bigger and bigger these days with higher contributions to the Social Security Fund on the one hand. And, on the other, the gradual contribution to the island’s recently implemented General Health Scheme (Gesy).
Employee and employer contributions to the Fund increased from 7.8% to 8.3% since January 1, 2019. At the same time, the gradual rise in contributions to Gesy means additional costs to both the disposable income of employees as well as to the businesses that have hired them.
Specifically, as of March 1, 2019, employers contribute 1.85% to earnings of an employee who also contributes 1.7%. As of March 1, 2020, employees’ contributions to Gesy will reach 2.65% and 2.9% for employers.
Insider, along with EY Cyprus Tax Adviser Herodotos Hadjipavlou, have studies these changes and concluded that the overall additional cost for a company employing 100 employees with 12 monthly salaries of 1,200 euros and another 100 employees with salaries of 2,200 reaches €469,200.
In addition, with the increase in the Fund’s contribution for employers from 7.8% to 8.3% along with fixed contribution rates such as the Social Cohesion Fund and Surplus Fund, the total cost to the employer rises by €489,600.
In addition, with the implementation of the first phase of Gesy the cost for this business amounts to €552,500, and with the implementation of its second phase this gets higher, gradually reaching €607,920 per year from 2021 onward.