Do I have to pay for the new Cyprus health service if I have completed the S1 form?
ProACT Sam answers the question ‘Do I have to pay for the new Cyprus health service if I have completed the S1 form?’ and clarifies confusion with the new Cyprus Health System GESY, and the New National Health Insurance Tax in Cyprus.
Completed the S1 form in Cyprus?
Our Client Asks:
Everything I see about the Cyprus Health System GESY on various websites states 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 Response:
There are a number of contradictions in the rules concerning how to pay for the Cyprus Health System GESY. This will get worked out as the scheme unfolds, however, let’s take a look at the system as it stands today:
New Cyprus Health Tax
Cyprus health tax payments started from March 2019. These payments apply to both working Expats in Cyprus, and for those receiving Cyprus pension.
The New National Health Insurance Tax is due on the 2019 return, a process that will bring the issues to light, forcing decisions and clarifications.
The Cyprus budget, due in June/July may see tax rules changed for 2019 tax returns (edit: our recent 2020 article on the ‘Health Tax for Cyprus Tax Residents’ indicates there still remains some confusion over this tax. We hope to see continued improvements!).
In Cyprus income tax, the levy on savings, pension tax and property tax are each 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.
From 1st March 2019, Cyprus pension payments 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 an S1 form in Cyprus) from NHIT Taxes.
The S1 form in Cyprus: Retired Expats and EU Health Agreements
The other factor to consider is Brexit. S1 forms are issued under EU social insurance agreements, to transfer healthcare benefits from an EU Expat’s home country to their country of residence.
In Cyprus this allows any EU Expats with an S1 to register for the 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 Brexit deal emerges.
If the UK leaves the EU with no deal, the S1 form/agreement could be withdrawn, unless a bilateral agreement between Cyprus and UK governments is agreed.
Under old medical rules, the S1 form in Cyprus ensured retired Expats qualified for a Cyprus medical card, with expenses paid from UK to Cyprus. The ‘restricted qualification' by social insurance contributions or S1 is no longer valid.
The new Cyprus health system is set up on a completely different basis. It is a universal health scheme available to all tax residents/citizens and their families (EU and non EU).
Cyprus is still accepting S1 forms and revenue from the UK for healthcare. After the Brexit transition period, UK Expats will still qualify for medical treatment based upon tax residence; with or without an S1 form, however, this will be based on tax residency and the new National Insurance Health Tax. It is important that Expats consider registering for tax residency prior to the end of the Brexit transition period on 31st December 2020. For more information on this, read our article on Brexit Expat Residency and Travel.
The National Insurance Health Tax is collected by the social insurance for working people in Cyprus, or via tax returns for investment income.
Brexit is clearly an important factor when it comes to the healthcare of Expats Living and Working Abroad. We have put together a FREE ‘Brexit Checklist for Expats’ listing 10 important areas to follow as an Expat living in an EU country (or an EU Expat living in the UK). Download it for free here.
For further information, we recommend you download our 24 page guide ‘How Brexit Affects EU & UK Expats Living & Working Abroad’.
S1 Form in Cyprus entitles Cyprus Expats to free healthcare
With an S1 form in Cyprus, Expats will be entitled to free healthcare under the Cyprus Health System GESY.
The system is universally available to all. GP visits are free.
There are small patient payments, 1-10 Euros 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 subject to a means-tested maximum of 75-300 Euros a year.
Medical treatment in the Cyprus Health System may be considered ‘free’ for S1 patients (subject to what happens as a result of Brexit negotiations).
Taxes Are Due
The new tax introduced to Cyprus is the National Health Insurance Tax. This is a separate tax on earnings, savings and investment.
The National Health Insurance Tax 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 form will be exempt from this new tax, currently, that is not the case. (Update July 2020: UK Expats are exempt from healthcare charges and they qualify for healthcare in Cyprus when they become resident. Visit https://proactpartnership.com/blog/new-health-tax-for-cyprus-tax-residents for more information).
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.