Social security for cross-border workers: the main rule

According to European legislation, an employee is covered for social security in the country where they reside (country of residence) if they perform at least 25% of their working time in the country of residence. During the COVID-19 pandemic, an exception was made to prevent changes in the social security status of cross-border commuters due to their home-based work. However, this exception will no longer be applicable as of July 1st, 2023.

New rules as of July 1st, 2023

To accommodate cross-border workers and their employers, a framework agreement has been drawn up. Under this agreement, cross-border workers can work from home for up to 50% of their working time without becoming covered for social security in the country of residence, subject to certain conditions. This agreement only applies if both the country of residence and the country of employment sign the agreement. The Netherlands, Belgium and Germany (amongst other countries) have signed the agreement. The new rules will be effective from July 1st, 2023.

For example, an employee resides in Belgium and works for an employer based in the Netherlands. Previously, the work was entirely carried out in the Netherlands, but now the employee works from home two out of five days per week. The framework agreement can be applied in this case, and the employee remains insured in the Netherlands. The employer is not required to start contributing social security premiums for the employee in Belgium.

When does the new rule not apply?

In order to apply the framework agreement, certain conditions must be met. The agreement cannot be applied in the following situations:

• Working in more than two countries: the framework agreement can only be applied if the employee performs work in the country of residence and in the country where the employer is based. If the employee in the example also works in France, the regulation does not apply.
• Working at a foreign branch of the company: the framework agreement can only be applied to employees who telework from home. If the employee in the example regularly works at the Belgian branch of the employer's company, the conditions are not met.
• Manual work: the framework agreement applies only to employees who telework from home. Telework refers to work that is location-independent and maintains a digital connection to the employer's work environment. Manual work (such as assembly and installation work) does not qualify as telework.
• Self-employed individuals: the framework agreement only applies to employees and cannot be applied to self-employed individuals.

If the conditions for the framework agreement are not met, the main rule applies. If a substantial amount (more than 25%) of work is performed in the country of residence, the employee will generally be covered for social security in that country.

If the conditions are met, an A1 certificate must be obtained from the country where the employer is based in order to apply the framework agreement. The A1 certificate can be requested starting from July 1st, 2023.

Want to know more?

At ABAB, we are happy to be of service by sharing knowledge, providing advice, and ensuring clarity. If you would like to know more about working with employees in different countries, please contact Loes van Baast, global mobility specialist - tax, on telephone number: 040-2942601 or send Loes an e-mail.