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General Health System (ΓεΣΥ-GHS)

The General Health System (ΓεΣΥ-GHS) is a modern, anthropocentric health system whose main objective is to provide quality health care services to beneficiaries. Main characteristics:

  • the universal coverage of the population
  • the equal treatment of all beneficiaries
  • the provision of a complete package of care services by the beneficiary
  • social solidarity

For the operation of the GHS, a Fund will be set up to which the Contributions will be paid for its financing and from which the Provider will be compensated. The GHS Fund will be managed by the Health Insurance Organization (HIS).

The contributions for the first phase have begun to be paid on 1 March 2019 and for full implementation on 1 March 2020, with a maximum contribution of €180.000.


  • Employees (1.7% as at 29/02/2020 and 2.65% as from 01/03/2020 on gross earnings)
  • Employers (1.85% as at 29/02/2020 and 2.90% as from 01/03/2020 on gross earnings)
  • State (1.65% as at 29/02/2020 and 4.70% as from 01/03/2020 on the income from employees, employers, Officers and Pensioners)
  • Self-employed workers (2.55% as at 29/02/2020 and 4% as from 01/03/2020 on gross earnings)
  • Pensioners (1.70% as at 29/02/2020 and 2.65% as from 01/03/2020 on pension)
  • Rentier (1.70% as at 29/02/2020 and 2.65% as from 01/03/2020 on gross earnings)
  • Officers (1.70% as at 29/02/2020 and 2.65% as from 01/03/2020 on gross earnings)
  • Persons responsible for payment to officers of their intended earnings (1.85% as at 29/02/2020 and 2.90% as from 01/03/2020 on gross earnings).

In case a physical person is not a tax resident in Cyprus, he will pay contributions only for his income, earnings and pensions derived from the Republic of Cyprus, excluding dividends and interest.

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Targeting fictitious company transfers abroad

According to legislation and information from the cooperating states, it will attempt to “close” the tax frontier with the Ministry of Finance to stop the phenomenon of fleeing businesses and traders in countries with lower tax rates and to frighten those who have transferred their activities abroad.

Large charges

Oversupply and high insurance contributions force more and more taxpayers and businesses to turn to countries like Cyprus and Bulgaria where tax rates are at 12.5% and 10%, respectively. Contrariwise, in Greece, the corporate tax rate has reached 29% (with the IMF proposing to reduce it to 10% while the advance tax payment is 100%). Taking into account the increased contributions, as well, the operation of an entity is now required. At the same time, thousands of taxpayers’ applications are pending from foreign tax residences, who have decided to look elsewhere for their fortune.

According to information, the volume of applications has surpassed every precedent, but bureaucracy and excessive excitement, to the detriment of circumvention of European legislation, create big issues to the taxpayers. According to legislation, for those who live abroad for over 183 days, the income which is taxable in Greece, is this which received in Greece and not for worldwide. A basic requirement is to declare the change of their residency in the Register of the WHO and in the corresponding authorities of the country where they are now residing. They also have to designate a tax representative in Greece.

However, a lot of companies have set up offices in neighboring countries without having any activity or employees. Most of them are service companies and aim to reduce tax burdens.

Finance Minister, Mr Euklidis Tsakalotos, answering a relevant question, emphasizes that when business activities remain in Greece and there are no changes in ownership and administration, migrations seem to involve fictitious transfers. Obviously, these are unlawful business practices that seek to benefit from a favorable tax regime and abuse the freedoms granted by the law of E.E. In this context, it is expected that the relevant controls will be stepped up while legislative regulation is being prepared. Based on this a new information is required in the tax declarations for the tax year ended 31 December 2018, where the tax payer has the obligation to declare the expenses from Non-Member States or from countries with preferential tax legislation.

Mr. Tsakalotos noted that the relevant departments of the Ministry of Finance are paying particular attention to the phenomenon of moving Greek businesses to neighboring countries with low tax rates.

In order to prevent tax competition among Member States, initiatives have also been taken at EU level, such as CbCR (Country by Country Report), for example the exchange of information on taxation between Member States, which allows national tax authorities to identify tax evasion systems

Transnational agreements

Officers from the Ministry of Finance mentioned that transnational agreements with Bulgaria and Cyprus will be signed shortly so that all these companies can be scrutinized. The same executives say that fines will be imposed on those companies that have been found to have set up businesses in Bulgaria, but in essence their business activities are in Greece. On the other hand, the Greek government will send data to all Bulgarian people working in Greece in order to find out if the Bulgarian authorities are receiving an indemnity from their country.

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New Double tax treaty between Cyprus and United Kingdom

·         New treaty has been signed between Cyprus and the UK, which replaces the treaty signed between the two countries in 1974.

·         It is expected that the new treaty will soon be ratified, thus it will become effective as from 1 January 2019.
The new treaty is generally based on the OECD Model Tax Convention framework with some modifications.

·         It applies to taxes on income as well as on gains from alienation of movable or immovable property.

·         For UK, the treaty covers the income tax, the corporation tax and the capital gains tax.

·         For Cyprus, it covers the corporate and personal income tax, the defense tax and capital gains tax.

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Double tax treaty between Cyprus and Saudi Arabia

The double tax treaty for the avoidance of double taxation  between Cyprus and Saudi  Arabia was signed on 3 January 2018. The treaty is expected to be ratified and come into force as from 1 January 2019.



Withholding  taxes on dividends:


  • There  is  no  withholding  tax in cases where there is at least 25% participation by a company that is tax resident in the receiving jurisdiction.
  • In all other cases the withholding tax is 5%.



There is no withholding tax on interest, as long as the recipient of the interest is the beneficial owner of the income.



Withholding  taxes on royalties (as  long  as  the recipient of the royalties is the beneficial owner of the income):


  • 5% in cases where the royalties are paid for the  use  of,  or  the  right  to  use,  industrial, commercial or scientific equipment
  • in all other cases the withholding tax is 8%


Capital gains

Gains arising from  the disposal of shares of a substantial  participation in the  capital  of  a  company  which  is  resident  of  a Contracting State may be taxed in that Contracting State.

A person is considered to have a substantial participation when this participation is at least 25% of the capital of that company, at any time within twelve months prior to the disposal of the shares.

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Interpretative Circular 14 Cyprus Tax Department

In accordance to the Interpretative Circular 14, the Cyprus Tax Department clarifies that as per Article 5(2)(f) when a company grants a loan or financial facility to:

  • its shareholder physical person
  • its director physical person
  • the spouse or relative of up to second degree of its director or

shareholder is deemed as obtaining a benefit equal to 9% on the average balance of the loan or financial facility at the end of each month.

This monthly benefit is also deemed to arise for non-Cyprus tax resident shareholders or directors and as from 1/1/2018 is calculated for the whole year irrespective of the actual days exercising physical duties in Cyprus.

The benefit is considered as income arising in Cyprus and increases a person’s taxable income.

If the benefit is more than the tax free amount of €19.500, then the company must calculate the income tax payable by this person and pay it through the Pay-As-You-Earn (PAYE) system.

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EU Publishes Blacklist of 17 Tax Havens

1. American Samoa,
2. Bahrain
3. Barbados
4. Grenada
5. Guam
6. South Korea
7. Macau
8. Marshall Islands
9. Mongolia
10. Namibia
11. Palau
12. Panama
13. Saint Lucia
14. Samoa
15. Trinidad and Tobago
16. Tunisia
17. United Arab Emirates

The countries on the blacklist face restrictions on EU funding or potential investments from the European Investment Bank. EU governments, meanwhile, can choose to impose their own sanctions against the blacklisted countries.

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New Non Domiciled Rules and Notional Interest Deductions

The new non domiciled rules were introduced to further entice corporate executives and high net worth individuals to take up residency in Cyprus.

The Special Contribution for Defense Law (the SDC Law) has now been amended to incorporate the non-domiciled rules exempting the income (whether actual or deemed) of persons who are not considered to be domiciled in Cyprus from payment of special contribution for defense tax, even if they are considered to be tax residents of Cyprus.

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Cyprus Company Law Updates


The Companies Law was amended by Law 97(I) and the provisions of the Amending Law are the result of the transposition of the EU Accounting Directive (2013/34/EU) into domestic law. All changes are effective for period beginning on or after 1 January 2016.

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