What is the amount of contributions a Cyprus employer is obliged to pay?
Earnings considered for the payment of contributions in Cyprus.
The earnings taken into consideration for the purpose of payment of contributions to the Social Insurance, Annual Holidays with Pay, Redundancy and Human Resource Development Funds, are those up to a maximum amount which is normally fixed every year. For the Social Cohesion Fund the total earnings are taken into consideration without a maximum amount.
Earnings include the basic salary, the cost of living allowance, commissions, the 13th/14th salary or the 53rd/56th week, overtime etc. For the purpose of calculation of the payment of contribution, the gross amount of earnings is taken into consideration, i.e. before the deduction of any taxes and contributions.
The amount of contributions paid by the employer to the Central Holiday Fund is considered as part of the earnings for the purpose of calculation of contributions to the Social Insurance Fund, the Redundancy Fund, the Human Resource Development Fund and the Social Cohesion Fund.
Earnings payable to the employee for periods exceeding one week or one month, such as 13th salary, earnings of the 54th week, commissions etc., are taken into consideration for the purpose of payment of contributions to the Social Insurance, Annual Holiday with Pay, Redundancy and Human Resource Development and Social Cohesion Funds, up to the amount that when added to the earnings of the employee for the above period are not higher than the maximum amount for that period.
Apprentices whose earnings are lower than half of the amount of the basic insurable earnings are considered to receive earnings equal to the half of this amount for the purpose of payment of contributions to the Social Insurance Fund. For the purpose of payment of contributions to the other Funds, their real earnings are taken into account. The amount of basic insurable earnings is normally fixed every year.
Amount of contributions.
Contributions payable by the employers to the above-mentioned funds are calculated as a percentage on the earnings of the employee as explained below:
A. Social Insurance Fund
i.Contribution Rate 13.6% (20.2% since 1.1.2014, 21.5% since 1.1.2019, 22.8% since 1.1.2024, 24.1% since 1.1.2029, 25.4% since 1.1.2034 and 26.7% since 1.1.2039): 6.8% (7.8% since 1.1.2014, 8.3% since 1.1.2019, 8.8% since 1.1.2024, 9.3% since 1.1.2029, 9.8% since 1.1.2034 and 10.3% since 1.1.2039) is payable by the employer and 6.8% (7.8% since 1.1.2014, 8.3% since 1.1.2019, 8.8% since 1.1.2024, 9.3% since 1.1.2029, 9.8% since 1.1.2034 and 10.3% since 1.1.2039) by the employee. In case an employer implements an occupational pension scheme without payment of contributions on the part of the employees, then the employer pays 10.15% (11.65% since 1.1.2014, 12.4% since 1.1.2019, 13.15% since 1.1.2024, 13.9% since 1.1.2029, 14.65% since 1.1.2034 and 15.4% since 1.1.2039) and the employee 3.45% (3.95% since 1.1.2014, 4.2% since 1.1.2019, 4.45% since 1.1.2024, 4.7% since 1.1.2029, 4.95% since 1.1.2034 and 5.2% since 1.1.2039).
ii.For apprentices, the rate of contribution is the same as of all other employees i.e. 13.6% [changes accordingly as a(i)]. However, the rate of contribution of the apprentice is 6.8% [changes accordingly as a(i)] on his real earnings. If the real earnings of the apprentice are lower than half the amount of the basic insurable earnings, then any amount of contribution on the difference between the real and the half amount of the basic insurable earnings is payable wholly by the employer.
iii. The employer is responsible for the payment of his and his employee’s contributions. He is entitled, however, to deduct the amount of contributions he pays on behalf of his employee from the earnings of the employee for the period for which he pays contributions.
B.Central Holiday Fund
The rate of contribution to the Central Holiday Fund varies according to the length of annual leave, to which the employee is entitled, as shown in Tables I and II. The contribution to the Central Holiday Fund is entirely payable by the employer.
Contribution Rate 1.2%. The contribution to the Redundancy Fund is wholly payable by the employer.
D.Human Resource Development Fund
Contribution Rate 0.5%. The contribution to the Human Resource Development Fund is entirely payable by the employer.
E.Social Cohesion Fund
Contribution Rate 2%. The contribution to the Social Cohesion Fund is entirely payable by the employer.
An employer who employs an employee with earnings €1000 per month and is entitled to 20 days of annual leave (five days per week of work), pays contributions to the five Funds as follows:
Time of payment.
The employer is liable to pay contributions to the previously mentioned Funds by the end of the calendar month which follows the month for which contributions are due. For example, January 2014 contributions must be paid by the 28th of February 2014. If the last day of the month is Saturday, Sunday or a public holiday, the last day for the payment of contributions is the following working day.
In case of delay in the payment of contributions by an employer, an additional charge must be paid to the Social Insurance Fund and the Social Cohesion Fund fixed as a percentage of the contributions due and rising progressively according to the time of delay. For the first month of delay the charge is 3% and increases by 3 points for each month of delay after the first month up to a maximum of 27%.