What are the upcoming changes in social security rules for your workers teleworking in the EU, the EEA and Switzerland as of 1 July 2023?
Do you have workers teleworking within the EU, the EEA and Switzerland? Then read this about the anticipated changes in the applicable social security rules.
The European regulation foresees the application of the social security of the country of residence (and not the social security of the country where the employer has its seat) when a worker works at least 25% of their working time from their country of residence. For example, if your company has its seat in Belgium and one of your workers teleworks two days a week from their home in Lille (> 25%), the French social security will apply and not the Belgian social security. As an exceptional temporary measure, this rule was deactivated by the Belgian (and other EU Members States) social security authorities, during the Covid-19 pandemic. Workers employed in Belgium could thus telework, even for 100% of their working time, from another Member State while still remaining subject to Belgian social security. However, at the Belgian level, this temporary measure will come to an end on 30 June 2023.
Situation after 30 June 2023
A new safety net has been foreseen for the situation post 30 June 2023. Indeed, workers teleworking from a residence abroad (25% of their working time or more) will not necessarily find themselves subject automatically to the social security system of their country of residence. Aware of the digitalisation of work and the new habits acquired during the pandemic, the competent EU institutions have drafted a Framework Agreement which has already been signed by Belgium, Germany, the Netherlands, Finland, Austria, Czech Republic, Slovakia, Luxembourg, Switzerland, Lichtenstein. As its name indicates, this Framework Agreement sets a framework between the signatory States to waive the application of the social security of the country of residence, provided the worker teleworks there less than 50% of the working time. In other words, the worker and the employer of a signatory State will be able to opt to maintain the liability to the social security of the country of the employer's statutory seat, as long as telework from the residence of the worker concerned in another signatory State amounts to less than 50% of their working time.
This waiver must be requested by the employer or the employee concerned (by mutual agreement) in the State where the employer is located. If it is accepted, a dedicated A1 certificate will be issued and the "50% limit" will apply for a (renewable) period of up to three years. Here is an explanatory memorandum on the practical details and the updated list of the States which have signed said Framework Agreement. Recommendations In anticipation of 30 June 2023, we already invite you to:
- Check if you have workers teleworking from their residence abroad in the EU, EEA and Switzerland and who wish to continue teleworking at least 25 % from there after 30 June 2023. If this is the case, we suggest to consider with them, the adjusting of your telework arrangement in anticipation of the end of the deactivation period by the Belgian social security authorities and/or in order to comply with the limits set out in future the framework agreement;
- Be aware of the tax obligations applicable to telework. Indeed, such a framework agreement strictly concerns social security rules. No tax agreement has been concluded with respect to telework between the States concerned;
- Review and update your telework policy and individual telework agreements in anticipation of such changes to align these documents with the upcoming framework agreement.
We are ready to guide you through these upcoming changes and to assist you in reviewing and updating your current telework arrangements.