Coronavirus: Cross-border workers working from home? Pay attention to social security
Do you employ cross-border workers in your company? Or do you otherwise employ workers who live outside the Netherlands and have been working (partly) from home since COVID 19? Then pay close attention to their social security position!
What is social security?
Social security is the system of laws and measures that ensures that people still have an income in the event of incapacity for work, illness, retirement or unemployment. Social security is paid for, among other things, by contributions on wages. The main rule in cross-border employment relationships is that social security contributions are paid in the country where the work is performed. There is an exception to this if the employee performs at least 25% of his work in his country of residence. In that case the employee is or will become socially insured in his country of residence.
An employee of a Dutch company who lives in Belgium and usually works in the Netherlands is socially insured in the Netherlands. If this employee works at least 25% of his working hours in Belgium, this social security position moves to Belgium. In that case, the Dutch employer must pay contributions in Belgium. Failure to pay premiums, or to pay them correctly, can result in fines and additional taxes.
Agreements on social security for cross-border workers
Now that, due to the coronavirus, many employees, including cross-border workers, work entirely or partially from home, the regular system could lead to a change in the social security position of cross-border workers. To prevent that negative effect, several countries have made mutual agreements in this perspective. The Netherlands, Belgium and Germany have agreed that working from home due to the coronavirus, has no effect on the social security position of cross-border workers. So even if a German employee works completely from home due to COVID19, his social security position remains as it would have been if he had carried out his work at the usual place (the Netherlands). Working from home due to the coronavirus therefore does not affect the social security position of the cross-border worker. On a side note: similar arrangements have been made for taxes.
For now, these agreements apply until December 31 2021. Given the current developments, an extension seems logical. But keep a close eye on whether this actually happens. Without these agreements, working from home in the country of residence can have major consequences.
In addition, this exception only applies if the work at home is for corona reasons, i.e. because of a work-from-home obligation or work-from-home advice. This means that if it is no longer necessary to work from home due to the coronavirus, but hybrid working is continued for other reasons, you can expect social security consequences. Make sure to obtain information in time.
Want to know more?
ABAB Global Mobility Services has in-house expertise for legal and tax support for employers and expats. Please contact Lis van Engelen, legal counsel employment law, on +31 485 561301 or send Lis an e-mail.