Social Security Treaty effective per September 1, 2017 | Deloitte

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Social Security Treaty effective per September 1, 2017

The social security treaty between the Netherlands and China becomes effective per September 1, 2017. The treaty does not apply to all social insurances and only offers partial coverage.

12 June 2017

Dutch version

In a previous newsletter we informed you about the social security treaty between that the Netherlands and China have concluded. Meanwhile it has been announced that the treaty enters into force per September 1, 2017. Other than the treaties the Netherlands concluded, the treaty with China does not apply to all Dutch and Chinese social security components.


Secondment to China

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 unless they start to work in China. You can apply for a Certificate of Coverage (secondment statement) with the Social Security Authorities (SVB) for employees who will be seconded to China.

As soon as the SVB has issued the CoC, you will have to send it to the company in China where your employees are seconded. Next, this company needs to file the certificate with the Chinese Ministry of Human Resources and Social Security within six months after the commencement of the secondment. It is recommended to apply for the certificate as soon as possible!

Note: The text of the treaty states that employees must have been in your employment and have worked in the Netherlands for at least one month before the secondment starts.


Some social insurances are excluded

The treaty does not apply to all social insurances. The Dutch section of the treaty

applies to:

does not apply to:

State Old Age Pension (AOW)

Long Term Care (WLZ)

Surviving Dependents Pension (ANW)

Healthcare (ZVW)

Unemployment (WW)

Disability (Wet WIA)

 

Sickness Benefits (ZW)

 

Child Allowance (AKW)

 

Hence, employees who are seconded to China can continue to accrue their state old-age pension (AOW). They will not be able, however, to maintain their Dutch basic health insurance while as regards medical care they will be subject to local Chinese legislation. So, just like in the current situation an adequate international health insurance continues to be necessary. It is likewise recommended to conclude a voluntary insurance for Disability (WIA) with the Employee Insurance Agency (UWV). In most situations a voluntary insurance for Sickness Benefits (ZW) is not necessary, since the continued payment obligation under Dutch labor law will usually continue to apply. The Chinese section of the treaty solely regards the basic pension insurance and the unemployment insurance.


Transitional provision

The treaty contains a transitional provision for employees who already work in China on the date the treaty enters into force. As from September 1, 2017 they will be able to invoke the treaty and once again they can be partially insured for social security in the Netherlands. This does require you to have applied for the CoC as soon as possible, to allow the Chinese entity to file the statement with the Chinese Ministry of Human Resources and Social Security before March 1, 2018.


Processing in the payroll records

As the treaty does not apply to all social insurances, we expect the processing in the payroll records to be different from most of the other treaties. If you second employees to China after September 1, 2017, you will continue to withhold AOW and ANW contributions in the Dutch payroll records. You no longer withhold any WLZ contributions. In addition, in the wage tax return you will pay WW contributions, but no contributions for the ZVW, the basic contribution under the WIA, and differentiated WHK contributions.

In China you will be exempted for the basic pension insurance and the unemployment insurance. You do need to pay contributions to insure medical care and industrial accidents. In China, though, such contributions may differ per region. In some regions foreign employers do not have to pay social security contributions.


Source: https://verdragenbank.overheid.nl/nl/Verdrag/Details/012991 en Tractatenblad 2016, nr. 146

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