Who is Exempt from Cyprus Health System Payments and Taxes?
ProACT have confirmed how and who can get an exemption to the New Cyprus Health Insurance Taxes
Below we detail how all EU Expats could receive exemption from Cyprus Health Insurance Taxes. In this update we confirm who qualifies and what taxes are paid and how to get an exemption certificate.
Who Qualifies for the new Cyprus General Health System from 1/6/19
Any Cyprus citizen qualifies for the new universal health system in Cyprus as well as any Expat registered Living and Working Abroad in Cyprus.
All Expats resident in Cyprus qualify for the radically different cyprus health system offering free healthcare at point of use.
This includes EU Expats as well as non EU Expats.
The Cyprus Health System extends to residents of the UK Sovereign bases in Cyprus.
Any registered user is defined as ordinarily resident in Cyprus and hence a tax resident. Under International and Cyprus tax laws you are ordinarily resident in a country where you declare worldwide income. Registered users of Cyprus healthcare system are expected and assumed to declare their worldwide income in Cyprus.
This may bring existing income outside Cyprus into tax.
In addition if one member of a family qualifies for the Cyprus Health Service dependants can register for health care including spouse and dependant children up to age 26. Dependants don’t need to be working so could be non eu spouse without a work permit, or students.
What Are the Free Health Care Service
It is important to distinguish between Free Health services for all users, the costs of Cyprus health services and the class of people entitled to an exemption from the costs.
All register users of the Cyprus Health Care System are entitled to a number of free GP appointments a year and free medical treatments.
What are Costs to Pay for Treatment
Unless a registered user has an exemption certificate, all users pay contributions based upon usage up to a maximum of €75-300 per year (depending upon income).
These include €1 for each prescription, €10 for a consultant appointment, with a €6 fee for lab tests or treatments from nurse or physiotherapist and similar healthcare professionals.
What are Costs to Pay of New National Insurance Health Tax
A new health insurance tax is introduced from 1st March and is payable by all tax residents, unless they have an exemption certificate.
This tax is paid on world wide income, at source for cyprus income, or through a cyprus tax return and temporary tax system.
Tax is due on worldwide earned income, payroll, rental income. pension income. dividend income and savings tax income.
The National Health Insurance Tax (NHIT) is a new tax, and is separate to Special Defence tax on Savings, and Expat Pension tax Rules, and Non Dom certification. NHIT also applies to income overseas.
For Example, Dividends earned outside Cyprus, by a Non Dom Expat, could be free of special defence tax at 17%, but subject to NHIT at 1.7%.
Exemption from Costs of Cyprus Health Care System
Under the EU Social Insurance Agreements including healthcare, EU government provide cross border social welfare and medical cover treatment. This can involve any two governments paying for the social and health care benefits for their citizen Living and Working Abroad in another EU Country.
Any EU Country cannot discriminate against EU Citizens, apart from their own, and must treat the same people equally.
All EU Expats can qualify for an exemption of Cyprus Healthcare costs
To qualify for an exemption from the Treatment Costs and the NHIT Tax Costs an EU Expats must qualify to receive an S1.
Generally this means that the EU Expats is in receipt of a state pension. It could also include a spouse, even if that spouse is below a state pension age.
Only if in a receipt of an S1, can an EU Expat get an exemption from the costs of Cyprus Health System.
All other EU and Non EU Expats Living and Working Abroad in Cyprus pay treatment costs and the new NHIT Tax cost, even if living on income investments, savings, rentals or pensions.
Including people who may pay no Income Tax in Cyprus previously, they now have a liability for the new NHIT Tax.
Exemption Certificate
To get exemption from pharmacy, healthcare treatments or NHIT taxes each EU Expat must have an S1, tax residency in Cyprus, be registered with the healthcare system confirming residency and GP, in order to submit a written application for an exemption certificate.
Many people have already registered an S1 in Cyprus (or its predecessor E121), unfortunately into a paper system.
The new Cyprus Health System in an online system and so the process requires all S1 to be re-registered.
If this process is not done there will be no exemption from treatment costs or NHIT tax assessments. The pharmacist and doctors all have access online to the records, you will only get exemption if correctly registered.
Exemption certificates for National Health Insurance Tax do not impact on Non Dom, Special Defence Tax, Expat Pension Tax, or tax on overseas income.
EU Expats either are liable to tax costs on worldwide income, or exempt from tax costs on all worldwide income.
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 contact us.