Teleworking across borders: where to pay social security contributions?

Teleworking became fully established. Even after corona, we more often stay at home to work. And this is no different for employees working for a foreign employer. But in which country will you owe social security contributions if you no longer drive to work abroad as often?

As we reported earlier, the home work that cross-border workers perform in their country of residence would not result in any change to the applicable social security system for the Belgian National Social Security Office. And this until 30 June 2023. So in principle, the cross-border worker will continue to pay contributions in the country where he or she works.

From 1 July 2023, this approach would cease to exist. From then on, the general European rules would be fully revived. However, the Administrative Commission for the Coordination of Social Security Systems put a stop to this. They recently reached a Framework Agreement for cross-border workers who are teleworking on a regular basis. You can consult the text here (only available in English for now).

This Framework Agreement allows the social security legislation of the employer’s Member State to continue to apply to cross-border workers:

• who are teleworking on a regular basis from their country of residence, other than the country in which their employer has its registered office; and
• who spend less than 50% of their total working time on teleworking.

To benefit from this deviating regulation, the employees or employers concerned must submit an application in the employer’s Member State. Upon agreement, the authorized social security institution will issue an A1 document.

The submission to the social security system of the employer’s country applies for a maximum period of three years. Afterwards, however, you can submit a new application.

What is important, is that both countries signed the Framework Agreement. If not, we must fall back on the well-known ‘25% rule’ in the EU regulation: an employee is socially insured in the country where he performs his work, unless he also performs part of his work from his country of residence. In that case, the social security legislation of the country of residence applies when he performs at least 25% of his total working time in that country of residence.

Moreover, the Framework Agreement also cannot be applied when the employee is engaged in activities in his country of residence other than teleworking.

The Framework Agreement is effective from 1 July 2023, provided that at least two European member states signed it at that time. It will then remain in force for five years with automatic renewal for the same period each time.

Meanwhile, both the Netherlands and Belgium have already indicated that they will sign this agreement. In the coming months, it will become clear which other countries will join this story.

This agreement offers a welcome solution in terms of social contribution for many employees. Unfortunately, it does not apply on the tax front. So the double taxation treaties simply continue to apply to determine the division of taxing powers between the various countries.