Social contributions and GESY in Cyprus in 2026: rates for workers, employers and self-employed

Two mandatory streams: social insurance and GESY - this is not an income tax

The first thing you need to learn about Cyprus: mandatory deductions from income are not one figure, but at least three different streams that are easy to confuse. There is an income tax, which goes to the general budget, and there are two targeted contributions with their own funds, rates and ceilings.

• Social Insurance Fund. These are pensions, unemployment benefits, sick leave, maternity leave, and disability payments. The fund is managed by the Social Insurance Service under the relevant ministry.
• GESY / GHS. Public healthcare system launched in 2019-2020. Contributions to it give the right to be treated by general practitioners, specialists, hospitals and receive prescription medications.

These contributions are considered separately from income tax in Cyprus and are withheld regardless of whether your income is eligible for tax relief. You don’t have to pay income tax at all (for example, at the non-taxable minimum), but social security and GESY are accrued from the first euro of your salary. That is why a competent calculation of net income always takes into account all three streams at once, and not just the tax scale.

Social insurance: employee and employer rates in 2026

The basic social insurance rate in 2026 is 8.8% for the employee and 8.8% for the employer. This rate is effective from January 1, 2024 and is fixed for a five-year period, after which, by law, it will gradually increase by approximately 0.5 percentage points every five years (the next step is in 2029). The long-term target laid down in the legislation is an output of 10.7% by 2039.

An important point about the employer: his workload is not limited to just 8.8%. On top of social insurance, he pays contributions to several auxiliary funds from the same salary:

• Social Cohesion Fund - about 2.0%, and this contribution is considered without a ceiling, from the entire salary.
• Redundancy Fund - about 1.2%.
• Human Resource Development Authority (HRDA) - about 0.5%.

In total, the employer’s total burden on the wage fund (social insurance plus GESY plus auxiliary funds) comes out to approximately 15-15.4% above the gross salary. This needs to be budgeted for when you plan to hire employees through a Cyprus structure.

Social insurance for self-employed: 16.6% and conditional income

Self-employed people pay social security at a higher rate - 16.6% in 2026. The logic is simple: for an employee, the total burden of 17.6% is divided in half between him and the employer (8.8% + 8.8%), and the self-employed pays both for himself and conditionally for the employer, so the flat rate is close to this amount.

But there is a key feature that is often forgotten. A self-employed person pays social insurance not from actual income, but from conditional insured income (notional income), which the state establishes for each profession and category of activity. For each profession, a lower and upper threshold for such income is set, and the thresholds are revised once a year.

• If your actual income is below the established minimum for the profession, the contribution is still calculated from this minimum.
• If your income is higher, you can pay from the actual amount, but within the limits of the insured income ceiling.

This means that a beginning freelancer with a small turnover can pay significantly more than it seems based on the percentage of actual revenue. Before registering as a self-employed person, it is important to calculate in advance the minimum contribution specifically for your professional category, so that there are no surprises.

Insured income ceiling: €62,868 in 2026

Social insurance is not calculated for any amount, but only within the maximum insured income. For 2026, this ceiling is set at 62,868 € per year, which is equivalent to approximately 1,209 € per week or approximately 5,239 € per month.

What does this mean in practice:

• From part of the salary up to the ceiling, social insurance is withheld at a rate of 8.8% (and the employer pays the same amount).
• From part of the income over 62,868 € per year social insurance is not charged at all - neither from the employee nor from the employer.

Therefore, for high salaries, the effective social insurance rate decreases: the more income exceeds the ceiling, the less of it is consumed by the contribution. For example, with a salary of 120,000 € per year, social insurance is counted only with 62,868 €, and the remaining almost 57,000 € of this contribution are free.

It is important not to confuse this ceiling with the GESY ceiling - these are two different limits (62,868 € vs 180,000 €), and they work independently of each other. The social insurance ceiling is revised by the state annually taking into account the growth of average salaries.

GESY (GeSI): what is this system and who does it cover?

GESY (Government Health System, in Greek - GeSI) is the universal healthcare system of Cyprus, fully operational since 2020. In essence, this is an analogue of compulsory health insurance: in return for contributions, a person gets access to doctors and treatment almost throughout the country.

What GESY covers:

• Family doctor (personal GP) to whom each participant is assigned.
• Doctors-specialists in the direction.
• Inpatient treatment in public and private clinics connected to the system.
• Prescription medications, laboratory tests, diagnostics.

Fundamentally important: participation in GESY is mandatory for everyone who has income in Cyprus, including tax residents with passive income and pensioners. The contribution is taken not only from salaries, but also from pensions, rent, dividends and interest. We provide a detailed analysis of what exactly the system covers and how to attach to it in the material about medicine and the GESY system in Cyprus. Here we will focus on contributions.

GESY rates by income category in 2026

Unlike social insurance, GESY is structured more widely: contributions are taken from almost all types of income, but at different rates depending on the category of payer. Here's the full picture for 2026:

• Worker - 2.65% of salary.
• Employer - 2.90% of the employee’s salary (that is, the company pays almost 3% extra for each employee).
• Self-employed - 4.0% of income (for the self-employed this is a single increased rate, since they do not have an employer who would pay their share).
• Pensioners - 2.65% of the pension amount.
• Income from rent, dividends, interest - 2.65% from passive income.

Please note the rate for passive income: even if you do not work in Cyprus, but receive rent here or are registered as a tax resident with dividends, the GESY of 2.65% is still charged. This is often an unpleasant discovery for those who planned to live in Cyprus solely on investment income. We examine resident status in more detail in the material about Cyprus tax residence.

GESY ceiling: €180,000 per year and maximum contribution

GESY has its own income cap, and it is much higher than Social Security. Contributions to the health care system are calculated on income within the limits 180,000 € per year, in total for all sources.

How does this work:

• The limit is 180,000 € - general for all types of income together: salary, pension, rent, dividends, interest. They are added up, and the contribution is taken within this amount.
• For income over €180,000 per year, GESY is not charged.
• Since the basic rate for an individual is 2.65%, the maximum annual GESY contribution per person is approx. 4 770 € (2.65% of 180,000 €).

That is, no matter how much you earn, your personal ceiling on payments in GESY for the year is limited. This is important for wealthy residents with large passive income: their total medical contribution is predictable and does not grow indefinitely. Let me remind you that the GESY ceiling (180,000 €) and the social insurance ceiling (62,868 €) are two different limits that apply in parallel to the same income.

Summary table of rates and ceilings 2026: social insurance and GESY

Let's collect all the rates and limits in one table - this is a working cheat sheet for calculating the burden on income in 2026. Social Insurance and GESY are shown separately because they have different bases and different ceilings.

A small but important detail: employer auxiliary funds (cohesion ~2.0%, reduction ~1.2%, personnel ~0.5%) are paid only by the company, they do not affect the employee. But the cohesion fund is accrued without a ceiling - from the entire salary.

Who transfers contributions and how: employer, self-employed, individual

Payment mechanics vary depending on which category you fall into. Let's look at three typical scenarios.

• Hired employee. You don’t need to count anything - all deductions are made by the employer. He deducts 8.8% social security and 2.65% GESY from your salary, adds his contributions and transfers the total amount to the funds monthly. On the payslip you see your gross salary, deductions and take-home pay.
• Self-employed. Here all responsibility is on you. You need to register with the Social Insurance Service, determine your professional category and conditional income, and pay contributions yourself - usually quarterly. GESY 4% and social insurance 16.6% are transferred according to the established schedule; Delays incur penalties.
• Individual with passive income. If you have rent, dividends or interest, GESY 2.65% on these amounts is declared and paid through the annual tax return or withheld at source, depending on the type of income.

Late registration and payment is a common mistake of new arrivals. This is especially true for the self-employed and those who live on passive income: they often learn about the obligation to pay GESY after the fact, with accumulated penalties.

How contributions affect net income: calculation example

I’ll show you with a hypothetical example how social security and GESY eat up part of your salary before income tax. Let's take an employee with a gross salary of 40,000 € per year (this is below the social security ceiling, so contributions are calculated from the entire amount).

• Employee social insurance: 8.8% of 40,000 € = 3,520 € per year.
• GESY worker: 2.65% of 40,000 € = 1,060 € per year.
• Total contributions per employee: about 4,580 € per year, or approximately 11.45% of gross salary.

That is, even before income tax, about 11.5% of salary goes to mandatory contributions. After this, the tax scale is applied to the remaining base. For the employer, the picture is even clearer: on top of this 40,000 €, he pays his 8.8% social insurance, 2.90% GESY and contributions to the funds - a total of about 6,000 € on top, and the real cost of the employee for the company is close to 46,000 €.

The conclusion is simple: when planning a move or hiring in Cyprus, always consider the full burden - social security, GESY and income tax together. Calculation based only on the tax scale gives a deceptively optimistic picture.

Common mistakes and misconceptions regarding contributions

Over the years of practice, we see that the same mistakes are repeated by newcomers over and over again. I will list the most typical ones so that you can avoid them.

• Consider contributions as part of income tax. No, these are separate threads. The tax benefit does not exempt you from social insurance and GESY.
• Forget about GESY from passive income. Rent and dividends are subject to a 2.65% contribution, even if you are not employed anywhere.
• Underestimate the minimum contribution of the self-employed. Social insurance is calculated from conditional income from the profession, and not from actual earnings - at the start, the payment may be higher than expected.
• Confusing ceilings. 62,868 € for social insurance and 180,000 € for GESY are different limits, they are not interchangeable.
• Thinking that dividends are completely free of contributions. They don’t have social insurance, but they do have GESY 2.65%.

The state revises rates, thresholds and ceilings annually, so you should always check the current figures on the official portal Cyprus government services (gov.cy) or with a consultant before settlements.

Salary versus dividends: how contributions affect the income structure

This is where the fun begins for business owners and self-employed people. Social insurance and GESY are calculated on earned income - wages and income from self-employment. But dividends are not subject to social insurance at all. This creates a temptation to pay yourself the minimum salary and withdraw the main part in dividends.

But I’ll be : the scheme is not as simple as it seems at first glance, and it has several pitfalls.

• GESY with dividends is still there. Social insurance does not take dividends, but a GESY contribution of 2.65% on dividend income is charged (within the total ceiling of 180,000 €). It is not possible to avoid contributions completely.
• Non-dom status. Non-domiciled residents are exempt from SDC on dividends and interest, and this makes a big difference. But GESY still pays non-dom dividends. We analyze the details of the status in the material about non-dom regime in Cyprus.
• The minimum wage is in question. A director’s salary that is too low may raise questions from the authorities and may not provide sufficient retirement experience. The balance between salary and dividends must be calculated individually.

The right structure depends on your status, income and plans. This logic should be laid down at the stage company registration in Cyprus, and not redo it after the fact.

Bottom line: how to read your contribution load in Cyprus

Let's put everything together into a short and understandable picture. In Cyprus, income is subject to two mandatory contributions in addition to income tax: social insurance and GESY. These are not fines or additional taxes, but payments for pensions, benefits and access to medicine.

What is important to keep in mind:

• The employee pays 8.8% to social insurance and 2.65% to GESY - about 11.5% of salary before tax.
• The employer pays his 8.8% social insurance, 2.90% GESY and contributions to funds - a total of about 15% above the salary.
• The self-employed person bears the highest rate - 16.6% social insurance and 4% GESY, and social insurance is calculated from conditional income.
• Passive income (rent, dividends, interest) is taxed only by GESY at 2.65%.
• Two ceilings - €62,868 for social insurance and €180,000 for GESY - limit contributions for high incomes.

For most people moving to Cyprus, the main practical conclusion is this: calculate your net income taking into account all three streams at once, and if you are a business owner or self-employed, think in advance about the structure of your salary and dividends, taking into account your non-dom status. This is the kind of work that is better done at the start than to overpay for years.