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Fairfax Newsletter January 2021

Newsletter 001/2021

                                                10th January 2021

Changes in 2021

Social Insurance maximum insurable income increase, National Health Insurance System Contributions and change of Income Tax Legislation concerning the tax allowances

Fairfax Ltd wishes to inform all employers about the changes that will be put in effect in 2021.

SIF Insurable Income increase

According to the provisions of the Social Insurance Law of 2010 the rate of social insurance contribution is applied to a maximum level of earnings. The maximum level of yearly insurable earnings up to 2020 was €54,864, while from 2021 the maximum level of  insurable income will be increased to €57,408 per annum.

There will be no further change at the contribution rates currently in effect.

National Health Insurance System

Employer and employee contributions remains the same.

Employers continue to contribute 2.90% on the employee’s earnings, and the employees will contribute 2.65% .The employer is responsible for paying both their own and their employees’ contributions through Social Insurance or Income Tax Office Services, depending on the nature of income, by means of deductions/contributions on their salary.

It should be noted that NHIS contributions are paid on all employee earnings (as earnings are defined in the Social Insurance and Income Tax Law) up to €180,000. There is no indication now that the maximum income for NHIS purposes will be increased.

Tax Allowances

20% or Max amount of EUR 8,550 annual exemption

On 15th December 2020, an amendment of the article was put in force. The purpose of the amendment is to extend the application of the 20% tax exemption for expats working in Cyprus. The amendment of the article applies until the tax year 2030.

The exemption is available for a period of 5 years for employment commencing during or after 2012 and it applies from the tax year following the year of commencement of the employment.

How can we help?

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Many thanks,

Fairfax Team