Social security contributions in detail
Employers are required to pay contributions to the social insurance fund, annual leave fund, redundancy fund, human resources development fund and social cohesion fund for each employee. The contributions payable by the employer to the relevant funds are calculated as a percentage of the employee’s salary as follows:
- Social Insurance Fund – the contribution rate has been 21.5% since 1 January 2019 (8.3% is payable by the employer, 8.3% by the employee and 4.9% by the State. There is a cap on earnings in 2019 of EUR 54,648 (i.e. EUR 1,051 per week and EUR 4,554 per month). Employers are responsible for payment of both employer and employee contributions.
- Redundancy Fund – the contribution rate is 1.2%. Contributions to the Redundancy Fund are wholly payable by the employer and are subject to an earnings cap of EUR 54,648.
- Human Resource Development Fund – the contribution rate is 0.5%. Contributions to the Human Resources Development Fund are wholly payable by the employer and are restricted to the highest level of pay of EUR 54,648.
- Social Cohesion Fund – the contribution rate is 2%. Contributions to the Social Cohesion Fund are wholly payable by the employer and calculated on the total level of pay. There is no cap.
- Holiday Fund – the contribution rate varies according to the length of annual leave (if there is no exemption, it is around 8% and is restricted to a maximum level of pay). The contribution is paid entirely by the employer.
The National Health Insurance System (NHIS) commenced on 1 March 2019. NHIS contributions are split between employers and employees. Employers contribute 1.85% of the employee’s earnings and employees contribute 1.70%. The employer is responsible for paying both their own and their employees’ contributions to the Department of Social Insurance Services by withholdings from salary. NHIS contributions are paid on all of the employee’s earnings (as defined in the Social Insurance Law) up to EUR 180,000. The insurable earnings limit for Social Insurance Fund contributions does not apply in this case.
Note that there are different rates for self-employed people. Also, a person who leaves an employer and becomes self-employed may continue to pay into the social insurance system.
Author: George Z. Georgiou & Associates LLC
Date: April 2020
Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.