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Cross-border employment? Mind the transitional period for the EU regulation!

Do you have employees who work in several countries, who you already employed before 1 May 2010? Make sure to check in time whether they may be covered by social insurances in another country from 1 May 2020! An important transitional period will expire on 30 April 2020.

Which EU rules for cross-border employment have applied since 1 May 2010?

Based on the current European regulation, which stipulates what social security system applies in the event of cross-border employment (Regulation 883/04, applicable since 1 May 2010), an employee is covered by social insurance in his country of residence if he works there for 25% or more of his time. If he works there for less than 25%, he will in the majority of cases be covered by social insurance in the country in which the employer has its registered office.

And which rules applied before 1 May 2010?

Under the old regulation (1408/71) there was no 25%-limit and the employee was covered by social insurance in his country of residence as soon as he worked there for 1 day per month on average. An employee was more easily covered by social insurance in his country of residence under the old regulation than under the current regulation.

Do you have employees who already worked for you before 1 May 2010?

For some employees, however, a transitional arrangement was provided for. Based on this arrangement, these employees are still covered by social insurance in their country of residence under the old regulation. This transitional arrangement will expire soon, so from that time onwards, these employees may be covered by social insurance in a country other than the country that has applied so far. If that is the case, you as the employer will be obliged to calculate and pay social security contributions in a country that is not their country of residence. Obviously, this will impact your payroll administration.

Frequently occurring situations

Below you will find 2 frequently occurring situations. A distinction should be made here between the employee who works for 1 employer and the employee who works for 2 employers (in both cases, the employee falls under the transitional arrangement):

Situation 1: The employee works for one employer

  • The employee works in his country of residence
  • He works there for less than 25%
  • The employer does not have its registered office in the employee’s country of residence

In this situation, the transitional arrangement ends on 30 April 2020. As a result, the employee will no longer be covered by social insurance in his country of residence from 1 May 2020.

Situation 2: The employee works for two employers

  • The employee works for one employer in his country of residence, for less than 25%
  • The employee works for the other employer in another country

In this situation, the transitional arrangement ends on 27 June 2022. As a result, the employee will no longer be covered by social insurance in his country of residence from 28 June 2022.

How can you prevent problems?

We recommend that you study your employees’ position under social security law and make sure that you still pay social insurance premiums in the right country by 1 May 2020. If you have outsourced your payroll administration to Interfisc, please inform us about any changes in good time.

Do you need assistance in identifying the consequences for your employees? Or in setting up a payroll administration in another country? In both cases we will be happy to help you. In addition to providing tailor-made advice, we can also organise a Working Across Borders workshop for your HR or personnel department on location. In this workshop we will outline the rules for you. Feel free to contact us to discuss the possibilities.

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Since 1972, Interfisc has offered international HR & Payroll solutions in the Netherlands, Belgium, Germany, France, the United Kingdom, and Italy. We do this from our offices in the Netherlands and Belgium, and with an international team of around 45 committed and caring employees. 

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