Digging deeper into the GESY deduction

In the sphere of health services, the term GESY is an acronym for the Greek term “Geniko Systima Ygeias”. In English, it translates into a “General Healthcare System”. The concept of GESY was born out of the need for a comprehensive insurance scheme that covers the healthcare needs of all the residents of a country. This system operates through the contribution of funds from various parties such as the state, employers, employees, pensioners, income earners, and even the unemployed. In relation to professionals like ofthalmiatroi (ophthalmologists) and odontiatroi (dentists), the terms ofthalmiatroi gesy and odontiatroi gesy denote practitioners who are part of the GESY network. These are doctors who’ve agreed to provide services under the GESY scheme and to accept payments as per the negotiated tariff rates.

The GESY Deduction on Dividends and Interest Income

A key feature of the GESY system is the manner in which it is funded. To ensure adequate funding, a range of income sources has been tapped into, which includes contributions based on dividends and interest income.As per provisions of the GESY law, all dividends and interest received by Cyprus tax residents from sources within or outside of Cyprus are subject to a GESY deduction. This deduction is added to the contributions made by other income earners to fund the system. The rate of deduction varies depending on the type of income:
  • For interest income, the contribution to GESY is 2.65%.
  • For dividend income, the contribution is also set at 2.65%.
These deductions are withheld at source, which means the payer withholds the money and pays it directly to the GESY fund. However, for interest income received from abroad, the Cyprus tax resident is required to calculate and pay the GESY contribution independently.

Calculating the GESY Deduction

The calculation of the GESY deduction on dividends and interest income is relatively straightforward.For instance, let’s assume a person receives €1000 as dividend income in a given tax year. The GESY contribution on this income would be:
  • Dividend income: €1000
  • GESY contribution rate: 2.65%
  • GESY contribution: €1000 * 2.65/100 = €26.50
The GESY contribution in this case would be €26.50, which would be deducted at source and remitted to the GESY fund.For interest income, the process is the same. If a taxpayer earns €2000 in interest income from a foreign source, they are obligated to calculate and pay the GESY contribution themselves.
  • Interest income: €2000
  • GESY contribution rate: 2.65%
  • GESY contribution: €2000 * 2.65/100 = €53.00
In this case, the GESY contribution owed by the taxpayer would be €53.00.In historical context, the idea of deducting contributions for health insurance from income sources like dividends and interest is not new. The pioneer of modern business, Henry Ford, once said, “The highest use of capital is not to make more money, but to make money do more for the betterment of life.” This underlying principle is at the core of the GESY deductions approach, and it ensures that resources are directed towards offering quality healthcare to all residents.Therefore, the GESY contribution from dividends and interest forms a significant part of funding the General Healthcare System. It ensures that crucial healthcare services, from ofthalmiatroi gesy to odontiatroi gesy, remain accessible to everyone in the community.

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