Can Employment in Cyprus Be Counted Towards a Pension in Ukraine?
The issue of applying for a pension often receives serious attention only when a person approaches retirement age. As a result, many people discover questions concerning their insurance record, the amount of their future pension and even whether they have accumulated sufficient service to qualify for a pension at all.
One of the most common problems when applying for a pension is having a sufficient insurance record. If a person has worked in Ukraine, determining the relevant insurance record is generally more straightforward than where part of their employment history was accumulated abroad. Recognition of foreign periods of employment for pension purposes depends, among other things, on the existence and terms of international social security agreements between Ukraine and the country concerned. Such agreements may establish rules under which periods of insurance or employment completed in one country can be taken into account when determining pension entitlement in another.
A significant number of Ukrainians live and work in Cyprus and therefore may accumulate periods of insurance under the Cypriot social security system. For a person who has worked in Cyprus and later applies for a pension in Ukraine, an important question is whether the insurance record accumulated in Cyprus can be taken into account when determining pension entitlement in Ukraine.
The recognition of such periods depends on the international legal framework applicable between Ukraine and the Republic of Cyprus. In the absence of an applicable bilateral or multilateral social security agreement providing for the aggregation or recognition of insurance periods, periods of employment and social insurance accumulated in Cyprus may not automatically be included in the Ukrainian insurance record for the purpose of granting a Ukrainian pension.
At the same time, pension entitlement and pension taxation are separate legal issues. Ukraine and Cyprus have concluded a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The Convention regulates the taxation of various categories of income, including relevant pension payments, and may therefore be important for individuals who receive a pension from one country while residing in the other.
Therefore, a person who has worked both in Ukraine and Cyprus should separately analyse two issues: whether their Cypriot insurance periods can be recognised for the purpose of establishing pension entitlement in Ukraine, and how pension payments will be taxed if the pensioner resides in Cyprus. The applicable rules should be checked at the time of the pension application, taking into account the international agreements and pension legislation then in force.
