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International employment
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Teleworking is usually performed from your home office, but with a good internet connection, you can work anywhere in the world. From 1 July 2023, it will be possible to allow limited teleworking from abroad under certain conditions, without compromising social security.
According to European Regulation 883/2004, a employee can only be subject to the social security system of one country. In principle, an employee living and working in Belgium pays Belgian social security contributions and taxes.
If your employee works on a recurring basis in different countries, the regulation determines which member state can levy social security. For an employee performing at least 25% of working time in his or her country of residence, the social security system of the country of residence applies. This applies to both employee and employer's contributions.
For example: Are you a Belgian employer and employing a Dutch employee? If your employee works from home two days a week and works the other days at the office in Belgium, this employee is covered by the Dutch social security system. Consequently, you have to join up with the Dutch government services to pay Dutch social security contributions.
During Covid, lots companies were forced to close their doors. Employees working across borders were also required to work from home. To avoid this resulting in a change in social security, the international social security authorities decided that 'compulsory home working' should not affect the applicable social security system. This tolerance expires on 30 June, which basically means that the European standard rules, as described above, become applicable once again.
Although the pandemic is now largely behind us, structural teleworking has become well established. Therefore, a new European framework agreement makes it possible to deviate from the usual 25% rule under certain conditions.
The criteria are as follows:
Specifically, employees working remotely remain subject to the social security system of the country employing them, provided they perform less than 50% of their working time remotely. If they work at least 50% abroad, they are still covered by the social security system of their country of residence.
The framework agreement will remain in force for five years, with automatic renewal for the same period each time. Meanwhile, both Belgium and the Netherlands have signed the agreement.
For example: As a Belgian employer, do you employ a Dutch employee from 1 July 2023 who works two days a week from home and three days a week at the office in Belgium? If so – just as under the old rules – this worker falls under the Dutch social security system. However, subject to agreement between employer and employee, both parties can decide to still apply the Belgian social security system. A request must then be submitted to the social security authorities for this purpose.
Also participating are Germany, Finland, Liechtenstein, Luxembourg, Austria, Norway, Slovakia Republic, Czechia and Switzerland. Other countries may join this story in the coming months.
As under the current rules, an A1 document will be issued when invoking this exception procedure. The application must be filed in the country where the employer's registered office is located.
The new rules may be applied both to existing situations of cross-border employment and to new situations. Unfortunately, the scheme does not apply for tax purposes and the employee becomes taxable in his or her home country from the first day of teleworking. This may also impose additional obligations on the employer.
Employing employees across borders? Our experienced consultants are at your service with legal advice, practical support and an approach tailored to your organisation.
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