Do I have to pay for the new Cyprus health service if I have completed the S1 form?

This weeks Question for ProACT Know How:

ProACT Sam clarifies a confusion in the new Cyprus Health System GESY and the New National Health Insurance Tax in Cyprus.

Our Client Asks:

Everything I can see about Cyprus Health System GESY on various websites, state that pensioners have to pay 1.7% of their pension for the 1st year.

UK retired expat friends are saying that you do not have to pay for GESY if you have completed an S1 Form, which we have.

ProACT Know How Reply:

There are a number of contradictions in the rules, which will get worked out as the scheme unfolds. 

New Cyprus Tax

National health insurance tax payments started March 2019 for working expats in Cyprus and those receiving Cyprus pension.

The New National Health Insurance Tax is due on the 2019 return, a process just starting that will bring these conflicts to light, and force decisions and clarifications.

There is the Cyprus budget to come in June/July and tax rules may be changed then for 2019 tax returns. 

In Cyprus income tax,  defence levy on savings, pension tax and property tax are all treated as a separate tax. 

For non working tax residents the national Health insurance tax ( NHIT) is a liability on pension, rental income, bank interest and dividends. 

Cyprus pension payments from 1st March 2019 already have this new tax deducted at source. 

All Cyprus tax residents have a requirement to submit a tax return from 2019, because the national health insurance tax is a separate tax with no personal allowance. 

We are seeking clarification on the position regarding expats, Tax and Social insurance. 

Currently the Cyprus government need to offer a concession to exempt expats with S1 from NHIT Taxes.

Retired Expats and EU Health Agreements - the S1

The other factor to consider is Brexit. S1's are issued under the EU social  insurance agreements, to transfer the Healthcare benefits from an EU Expat’s home country to their country of resident.

In Cyprus this allows any EU Expats with an S1 to register for Cyprus Health System.

However with a no deal Brexit S1 Health transfers could stop completely. EU countries including Cyprus will be waiting to see what Bexit deal emerges. 

If UK leaves EU with no deal  - S1 could be withdrawn, unless a bilateral agreement between Cyprus and UK governments is agreed.

The S1 under the old Cyprus medical rules ensured retired expats qualified for a Cyprus medical card, expenses paid from UK to Cyprus. The ‘restricted qualification' by social insurance contributions or S1 is no longer valid.

The new Cyprus national health system is set up on a completely different basis.It is a universal health scheme available to all tax residents/citizens and their family (EU and non EU)

Cyprus are still accepting S1 and revenue from the UK for health care. After Brexit UK expats will still qualify for medical based upon tax residence - with or without an S1.  Based upon Tax Residency and the new national insurance tax. This is collected by the social insurance for working people in Cyprus, or in tax returns for investment income. 

Cyprus Health System is Free

With an S1 Expats will be entitled to free health care under the Cyprus Health System GESY

The system is universally available to all. GP visits are free.

There are small patient payments, Euro 1-10 generally, paid for tests and pharmacy and consultant treatments. These co-payments by patients is considered part of the free service by Cyprus and are subjected to a means tested maximum of Euro75-300 euros a year.

So medical treatment in the Cyprus Health System may well be considered free for S1 patients.

Taxes Are Due

There is a new tax introduced to Cyprus, the National Health Insurance Tax. This is a separate tax on earnings, savings and  investment - the National Insurance Health Tax. 

This is payable on earnings, pensions, dividends, interest, rental income and pensions. 

There are special tax treatments for expats Living and Working Abroad in Cyprus: 5% expat pensions, 0% defence levy tax for non-doms, tax free Cyprus International Trusts.

There is no expat exemption currently for this new Health Insurance Tax.  We are seeking to clarify whether expats with an S1 will be exempt from this new tax, currently, that is not the case.

ProACT Know How

ProACT Expat Experts are here to help, if you need any help and assistance on how to qualify for and register in the Cyprus Health Service.

For more information on how Gesy affects and works for expats, download our guide.