EU Regulation Nr. 883/2004 generally stipulates that an employee is only subject to the social security legislation of one EU Member State, which is usually the country where the employee physically works. Consequently, this is the country to which the mandatory social security contributions should be made.
While income taxes can be due in several countries (working time spent in different countries), social security is only due in one country.
In case of a simultaneous employment in two or more Member States, an employee is normally subject to the social security legislation of the country of residence if a substantial part of the work (or at least 25%) is performed in this Member State.
Teleworking abroad or working from home in another country, can therefore have a direct impact on the applicable social security legislation.
During the pandemic, employees were suddenly forced to telework or work from home abroad on behalf of their employer based in another Member State. As a result, the Administrative Commission for the Coordination of National Social Security Systems introduced the ‘COVID-19 No Impact Period’ (NIP). The NIP initially expired on 30 June 2022, but was then extended until 31 December 2022.
As a result, any working time spent abroad (telecommuting for 25% or more), would be disregarded for determining the competent state for the applicable social security legislation. There were no specific formalities for the employer or employee to be able to benefit from this. This extra time allowed every administration, employer and individual involved to organize themselves more adequately. It also enabled the Administrative Commission to further evaluate the specific situation of cross-border teleworking.
The NIP was subsequently extended again until 30 June 2023. As from 1 July 2023 onwards, this transitional period will normally come to an end and the EU social security coordination rules will have full effect again.
This transitional period only applied to social security, not to the mandatory Limosa declaration. Since 1 July 2022, a Limosa declaration must be made again for those teleworkers to whom it applies.
As a reminder, a Limosa declaration is required for those teleworking in Belgium in the service of a foreign employer (or as a self-employed freelancer). This obligation was temporarily suspended due to the COVID-19 force majeure situation, but this definitely ended on 30 June 2022.
Due to the measures taken during the pandemic, remote work has taken an important place in the corporate culture of many companies. If you (tele)work more than 25% from your home country, you will be subject to the legislation of your country of residence and your employer must pay the contributions to that country instead.
Since telework is definitely here to stay, the EU has setup an Ad Hoc Working Group on Telework with 42 experts from 20 different countries (incl. Switzerland, Liechtenstein and the UK) to discuss their recommendations in view of issuing an updated regulatory framework. An interim report was published in November 2022, but the final conclusion will be made available in March 2023. Those new rules will then be further implemented in the different EU Member States.
At this point it is a given fact that the existing regulations are no longer suitable for hybrid and other flexible forms of employment. The regulatory suspension was obviously only a temporary measure and we are in urgent need of new rules.
We understand that the Working Group has proposed to introduce a rule that less than 40% teleworking abroad should have no impact on the applicable social security regime. We will update you as soon as the final report is available in a few weeks…