Activities in third countries
Activities in third countries can no longer be ignored for social security purposes
After years of uncertainty, earlier this month Advocate General A. Rantos rendered an Opinion addressing whether activities carried out in third countries should be taken into account when determining the social security obligations of employees. Employees who work in more than one EU Member State are insured for social security purposes in their country of residence based on the Regulation EC No. 883/04 coordinating social security systems, if they perform a substantial part of their work there.
Why is this Opinion important?
If the Court of Justice of the European Union (CJEU) follows the Advocate General’s Opinion, the social security position of employees may change.
An employee can only be insured for social security purposes in one country. In order to ensure social security contributions are paid in the right country and to ultimately claim rights, it is therefore important to determine which country this is. If an employee works in more than one EU Member State, they are insured for social security purposes in their country of residence if they perform a substantial part of their work there.
The indicative criteria of working time and/or remuneration are important for determining this ‘substantial part’. In practice, the working time is often used. A substantial part is defined as 25%. Member States differ as to which days should be taken into account in determining this substantial part: only the working days performed on the territory of the Member States, or also activities performed elsewhere.
Based on seven different perspectives, the Advocate General believes that all activities, including those performed in third countries, should be included. Until now, the Dutch Social Insurance Bank (Sociale Verzekeringsbank; SVB) has held a different view, believing that activities in those countries should not be included. If the CJEU follows the Advocate General’s Opinion, it will mean that the SVB will have to revise its position, potentially changing the social security position of employees.
If, based on the current view, the working days in third countries have not been taken into account when calculating whether an employee works substantially in the Netherlands, the ‘working in the Netherlands’-percentage may decrease once these working days are included, resulting in the employee no longer being insured for social security purposes in the Netherlands.
Consequences of the Advocate General’s Opinion
Although the Advocate General’s Opinion is not binding, it can influence the final judgment to be rendered by the CJEU. We recommend closely monitoring these developments to ensure the social security position of employees is properly arranged.
If you would like help in determining which social security legislation applies to you or your employees, feel free to contact one of the writers of this post or another member of our People Services team.
