If you employ personnel abroad or deploy Dutch employees in another country, this has social security consequences. Where are your employees covered for social security purposes?? As an employer, how do you prevent having to pay social security premiums in multiple countries? What else should you bear in mind when personnel work in another country, either temporarily or in the long term? In this article we discuss a number of important points in relation to social security for cross-border employment.
Applicable rules
As an employer, you need to consider matters such as the applicable labour law and wage tax in the case of work abroad. In addition, it is important to establish where your employee is covered for social security purposes based on all the facts and circumstances. This assessment is affected by factors such as the length of the employment or posting abroad and the question of whether the employee is working in a single country or several countries at the same time.
Determining your employee’s insurance obligation involves different rules for:
Insurance Regulation countries: those countries that fall under the EU Insurance Regulation (EER countries and Switzerland). This EU regulation determines in which country your employee is covered by for social security purposes;
Social security treaty countries: those countries with which the Netherlands has concluded social security treaties. The applicable treaty stipulates which social security legislation applies to your employee and the country in which you and your employee need to pay social security premiums. The conditions for these matters differ depending on the individual treaty countries involved and each situation must be assessed separately;
All other countries: if you are resident or established in the Netherlands as an employer and your employee works in another country but not in an Insurance Regulation or social security treaty country, the national laws of the Netherlands and the employee’s country of work determine where the employee is covered for social security purposes.
Local withholding obligation?
Once it is clear where your employee is covered for social security purposes, you need to establish whether you have an obligation as an employer to register and pay premiums in that country. This assessment is based on national law. As an independent member of the global Baker Tilly International network, we can easily and efficiently call in the support of trusted local advisors.
A1 certificate
Temporary employment in another country can affect an employee’s social security position. An A1 certificate (certificate of coverage) is used to demonstrate that your employee continues to be covered in the country that has issued the certificate, even when they work temporarily in another country temporarily. This prevents any obscurity that might arise later as to the country in which you need to withhold and pay premiums. Potentially, it could already be relevant if your employee spends a week working abroad. Always make sure that your employees have a valid A1 certificate as soon as they go to work, temporarily or otherwise, in a country that is not their country of residence.
Voluntary insurance
Employees that go to work in another country and are therefore no longer covered by the social security scheme in the Netherlands can take out voluntary insurance to cover a portion of the national and employees insurance. This can, for example, ensure that the employee continues to accrue a state pension (AOW). Registration for the voluntary national insurance scheme is done via the Social Insurance Bank (SVB), while registration for the voluntary employees insurance scheme is arranged by the Employee Insurance Agency (UWV). As an employer you can opt to reimburse to the premiums for these voluntary insurance schemes. Please be aware that a reimbursement of voluntary national insurance premiums is subject to taxation. Reimbursement for the voluntary employees insurance premiums for the Occupational Disability Insurance Act (WAO), Work and Income according to labour capacity Act (WIA) and Unemployment Act (WW) are tax-free, insofar as these are reimbursements for the ‘statutory employers’ contributions’.
Expanding abroad? Be prepared!
As your company expands internationally, it may occur more frequently that your employees will have to work abroad, whether temporarily or in the long term. A good tax advisor is indispensable in such situations. We see that employees are often aware of the tax implications, but the social security position is not always completely clear. Our specialised Global Mobility advisors would be happy to explain what you need to consider in such cases - not just in terms of social security but also in relation to matters such as salary administration, tax, employment conditions and other obligations.
If you have any questions about international growth and personnel in another country, our Employment Advisory experts would gladly discuss how they can provide you with support!
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
