Without application of the new regulation, the employee who works 25% or more of the agreed working time in his country of residence is subject to the social security legislation of his country of residence. The 25% limit is increased to 50% or more.
This exception applies only in the situation where the employee lives in EU Member State A and, apart from teleworking in his country of residence, he works exclusively in the neighbouring EU Member State B where his employer is located. The division of work between the two countries must have been agreed between employer and employee.
In that situation, if the employee works less than 50% in his country of residence, he is compulsorily insured in the country where his employer is established, applying the cross-border telework rule.
The test against the 50% criterion takes place per period of twelve months (not per calendar year). The burden of proof on the scope of work in both states is the responsibility of the employer.
The telework arrangement does not apply if the employee also performs business activities in his country of residence that do not qualify as telework for his employer, or works in a third country, whether for his employer or not.
The scheme applies only if the proper document A1 form has been issued. The document A1 is issued for a maximum of three years.
If the employee works 50% or more in his country of residence or if the A1 form is not requested in time, the social insurance legislation of the state of residence will apply. The employer will then be required to withhold and remit social insurance contributions according to the legislation in the country of residence.
If at any time it appears that not all conditions are met, the legislation of the employee's state of residence will apply retroactively.
- Until 1 July 2024, a document A1 can be applied for retroactively for a maximum period of twelve months prior to the date on which the request was submitted, under the condition that during this period social security contributions were paid into or the employee was otherwise covered by the social security scheme of the EU Member State in which the employer has his registered office or place of business.
- From 1 July 2024, a document A1 can be applied for retroactively if the requested period prior to the date on which the request was submitted does not exceed three months. The same condition applies.
Should you have any questions with respect to the above, please contact your trusted adviser or one of the tax advisers of our Employment & Benefits team.