China and the Netherlands sign social security treaty
The social security treaty with China was signed on September 12, 2016. Still, as the treaty does not apply to all Dutch and Chinese social security components, the consequences in both countries should be assessed carefully.
20 September 2016
Social security treaty with China
Minister of Social Affairs Asscher and his Chinese colleague signed a social security treaty on September 12, 2016. After Japan (effective in 2009) and India (effective in 2011), China is the third Asian country with which the Netherlands has concluded a social security treaty. Other than the treaties with India and with Japan, however, the treaty with China does not apply to all Dutch and Chinese social security components.
The treaty allows employees who are seconded to China from the Netherlands to be partially insured for social security in the Netherlands, for a period capped at five years. Family members who accompany the employee to China, too, will be partially insured for social security in the Netherlands. This will solely be different if they start to work in China as an employee or a self employed person. Likewise employees who already work for a Dutch employer in China will be able to invoke the treaty once it has entered into force. As from that date they can once again be partially insured for social security in the Netherlands. The Social Insurance Bank (SVB) will issue a Certificate of Coverage (secondment statement) if requested, stating that the related employee is insured in the Netherlands. It is recommended to apply for the statement within six months after the start of the secondment. Special provisions apply to some groups of employees, such as sailors, aircrew and civil servants.
The treaty does not apply, however, to all social security components. The Dutch section of the treaty applies to the general Old Age Pensions Act (AOW), the Surviving Dependants Act (ANW) and the Unemployment Insurance Act. The treaty does not apply to the invalidity insurance (under the Work and Income (Capacity for Work) Act), the Sickness Benefits Act (ZW), the Long Term Care Act (WLZ) and Healthcare Insurance Act (Zvw). Hence, employees who are seconded to China or who fall under the special provisions referred to above, will not be covered by a Dutch basic health insurance while they are seconded. Just like in the current situation an adequate international health insurance continues to be necessary.
As the Chinese section of the treaty solely regards the basic pension insurance and the unemployment insurance, employers will not be able to obtain a full exemption in China and they might still need to pay contributions to insure medical care and industrial accidents. In China, though, this may differ per region. On the other hand, no income-related contribution under the Healthcare Insurance Act will be due in the Netherlands.
When the treaty will become effective is still unknown. How Chinese social security contributions should be processed in Dutch payroll records or personal income tax returns will be announced later on.