Wrap-up of International Social Security developments in 2022 and points of action | Deloitte Nederland

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Wrap-up of International Social Security developments in 2022 and points of action

Towards the year-end we herewith provide our summary of the 6 most relevant topics and points of attention during 2022 from an International Social Security perspective. In the summary you will find a wrap-up of developments and what to do before/after 31 December 2022.

28 November 2022

As we are nearing the always busy year-end we herewith provide you with our summary of the most relevant topics and points of attention from an International Social Security perspective during 2022. Below you will find 6 relevant topics and lastly a summary of the actions employers should to take.

Guidance Administrative Commission about ‘teleworking’

In June 2022 the Administrative Commission published its ‘Guidance Note on telework’ containing their advice to the social security authorities of the several EU/EEA countries regarding how to deal with the several varieties of ‘teleworking’. This guidance entered into force as per 1 July 2022 but a transition period was considered until 1 January 2023 and has only recently been extended till 1 July 2023. As you might know the current flexible approaches of the authorities are extended until that date.

The most important take-away’s from the guidance are:

A. European definition of ‘teleworking’ was introduced;
B. Teleworkers can qualify as ‘posted employees’;
C. Flexible approach aimed for cross border commuters. See more in paragraph 2 below;
D. Special circumstances of teleworkers could qualify for exceptions. A request should be submitted to the social security authorities of the countries involved.

Given the transition period ends on 1 July 2023, consequences of non-compliancy will apply as per that date. We advise employers to update their processes to implement the required formalities for remote workers from abroad and make all arrangements to avoid a social security switch to another country.

Flexible approach for cross border commuters

The flexible approach applied by the SVB to cross border commuters has also been extended until 1 July 2023. The Administrative Commission advises the social security authorities of the member states to bilaterally conclude a structural agreement with respect to cross border commuters.

If this is not done before 1 July 2023 and if there is no extension of the current flexible approaches, then cross border commuters are forced to comply with the rules as concluded in the EU Regulation 883/2004. This means that the employee and the employer could be confronted with a social security switch if the employee works from home as from 25% or more of his workdays (equal as per the standard before the COVID pandemic started in March 2020).

We advise employers to prepare, communicate and agree on the way of work for your cross border commuters in order to remain compliant and avoid severe and undesired consequences of non-compliancy, financial impact and administrative impact beyond 1 July 2023.

Brexit: what is the status?

The transition period of Brexit ended as per 31 December 2020 and is now almost 2 years behind us. Even during 2022 there were still topics to be clarified, but the most important ones should now be clear. As a summary again the (clarified) points of attention for situations touching the UK:

  • Existing cross border situations on 31 December 2020 remain falling under the rules of the EU regulation 883/2004 as long as the individual remains to be in a cross border situation touching the UK.
  • Assignments as a ‘posted worker’ can only continue under the home country social security scheme up to a maximum period of 24 months. No extension possible.
  • There is no ‘exception’ article on the basis of which the social security authorities can mutually agree on exceptions to the main rules for coordination of the social security position of individuals.
  • During 2022 it became clear that the Long-term Care Act (Dutch: Wlz) and Health Insurance Act (Dutch: Zvw) are in scope of the Trade and Cooperation Agreement.

In case not yet done, we advise employers to create a clear approach on how to implement the specifics of Brexit into their assignment policies.

Developments around the update of EU Regulation 883/2004

In December 2016, a proposal was submitted to amend the EU Regulations 883/2004 and 987/2009 on several topics. Early this year the latest provisional agreement has been published, which contains the following main elements:

  • An employee who is hired with a view to be sent to another Member State must have been subject to the sending Member State’s legislation for at least three months.
  • Once an employee has completed 24 months of assignment in another Member State, no new period may start for the same Member State until at least two months have lapped. It is not sure yet how this relates to the mutual consent article that allowed an extension to a maximum period of five years.
  • Frontier workers who become wholly unemployed must apply for an unemployment benefit in the former work State instead of their residence State. Exceptions can be made for employees who have been working in the work State for less than three months.
  • Jobseekers can take their unemployment benefits to another Member State for six months instead of the current three months.

Note that this still is a draft text that has to be confirmed by the Permanent Representatives Committee and presented to the European Parliament. We do not know yet when this will happen.

A1 withdrawals by SVB

In principle an individual’s wage must be processed on the payroll of the entity with which the employee has concluded the employment contract. Subsequently an A1 certificate could be obtained for the employee on behalf of that same entity.

Occasionally multinational companies have expats switching to other entities’ payroll (e.g. a separate expat payroll) and doing so change payment of Dutch social security contributions to the Dutch wage tax number of another entity. During 2022 the SVB has more and more focused on withdrawing A1 certificates that have been applied for or granted based on an incorrect Dutch wage tax number.

We advise employers to check if all A1 certificates (i) are obtained under the same Dutch wage tax number as where the social security contributions are paid from and (ii) if that Dutch wage tax number belongs to the entity that holds the employment contract.

Voluntary insurance process

During 2022 the UWV changed their approach on paying pay back voluntary insurance contributions in case of a late notification when voluntary insurance should end. The voluntary insurance will no longer be cancelled retroactively and the overpaid voluntary insurance contributions will no longer be refunded.

Hence, employers should send notifications timely to the UWV. As you might be aware voluntary insurances are also bound to filing deadlines in case of a new application and therefore we advise employers to (re- ) evaluate if their processes for applying, payment of invoices and ending voluntary insurances are organized and coordinated properly.

As a summary, employers should

  • Update their processes to implement the required formalities for remote workers from abroad and make all arrangements to avoid a social security switch to another country.
  • Prepare, communicate and agree on the way of work for your cross border commuters in order to remain compliant and avoid severe and undesired consequences of non-compliancy, financial impact and administrative impact beyond 1 January 2023.
  • Have all Brexit relevant topics processed and included in your assignment policies.
  • Anticipate that the changes in EU Regulation 883/2004 may enter into force during 2023
  • Check if all A1 certificates (i) are obtained under the same Dutch wage tax number as where the social security contributions are paid from and (ii) if that Dutch wage tax number belongs to the entity that holds the employment contract.
  • (Re-)evaluate if their process for applying, payment of invoices and ending voluntary insurances are organized and coordinated properly.
    In case you have any questions about the above, please reach out to your regular contact at Deloitte or to one of our social security specialists.
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