Rents and GeSY: Why Property Owners Also Pay Health Contributions
The Health Insurance Organisation Traditionally States That Gesy Is Not Funded Solely by Employment, but by All Income Sources Specified by Law, Based on Social Solidarity.
"Why should a citizen who already pays GeSY contributions from their salary or pension be asked to pay an additional contribution on the rents they receive?" This is the question raised every tax season by thousands of property owners who are called upon to pay both income tax and contributions to the General Healthcare System (GeSY) on the revenue they earn from leasing their property.
Under tax law, rental income is considered taxable income and is subject to income tax, as is the case with other forms of income. Furthermore, GeSY legislation stipulates that rents are also one of the income categories on which contributions are imposed to fund the public health system.
These are two distinct legal obligations with different purposes: income tax goes into the state's general revenue to fund public expenditure, whereas the GeSY contribution funds the Health Insurance Organisation (HIO) and the services it provides.
The issue sparks intense debate, particularly among small property owners who hold one or two properties and argue that the combined financial burden significantly increases the cost of maintaining their real estate. On the other hand, the Health Insurance Organisation explains that the contribution toward GeSY is not a second tax, but part of the funding mechanism for the health system, which relies on the principle of social solidarity and the participation of all income categories provided by law.
The Basic Principle of GeSY
According to the legislation, "contributions are paid not only on salaries, but also on pensions, officials' remunerations, and property income, which includes rents."
INK contacted accountants who stated: "Citizens do not pay twice for the same income. They pay contributions on each distinct category of income they earn, as specified by law. GeSY takes into account an individual's overall financial picture, not just their salary." As they point out, "the contribution on rents is neither a property tax nor an additional tax on rent, but a social insurance contribution to fund the public health system."
How Much an Owner Pays
The contribution rate stands at 2.65%.
Annual rental income of €12,000: contribution of €318.
Annual rental income of €18,000: contribution of €477.
Annual rental income of €30,000: contribution of €795.
At the same time, the law sets a maximum income cap of €180,000 per year, above which no contributions are levied.
How It Is Collected
If the tenant is a company or another legal entity, the contribution is withheld when the rent is paid and remitted to the Tax Department. When the tenant is a private individual, the responsibility for declaring and paying the contribution rests with the property owner.
It should be noted that the annual budget of the HIO exceeds two billion euros. The largest portion of revenue comes from employees, employers, self-employed individuals, and the state, while contributions from property income serve as one of the supplementary funding pillars.
