Working from home: EU social security framework agreement on telework

Furthermore, the Covid-19 crisis transition period ends on this date, emphasizing the importance of taking appropriate measures.

Rules for workers in several Member States

In case that an employee performs employment activities in two or more Member States, the employee is subject to the social security system of the home country provided that the employee works more than 25% in the home country. During the Covid-19 crisis, this rule was temporarily put on hold as a lot of employees were – at that time – forced to work from home through telework. This temporary transition period will end on 1 July 2023 and the original rules will apply again.

In the world of today, where working from home (telework) has become a common practice for many professions, a long-term solution is required to guarantee this flexible way of working and to avoid a switch in social security system due to an increase in teleworking days. A solution to this issue is provided based on the article 16 of the EU Social Security Regulation nr. 883/2004 (further: Regulation).

New possibility from 1 July 2023

The current rule, stipulates that, when an employee working in two or more Member States simultaneously and works more than 25% in his / her the home country, the employee is subject to the social security system of the home country.

The exception to this rule (that may apply from 1 July 2023) is based on the article 16 of the Regulation which allows for Member States to deviate from the general rule by mutual agreement. Such agreement will become applicable to employees working for an employer residing in one Member State and employees teleworking from another, being their State of residence.

This means that as of 1 July 2023, employees, who work less than 50% of their working time through telework in the home country over a period of 12 months, will remain socially insured in the Member State in which the employer resides. If the 50% teleworking-from-home-threshold is exceeded, the employee will become subject to the social security system of the home country, implying that the employer should register for the social security purposes in the that Member State.

It should be noted that both employer and employee need to agree that this exception provided by the article 16 applies in the situation at hand. Otherwise, the general rules of the Regulation will remain applicable. Please note that the 50% threshold may be adjusted as some EU Member States have indicated that they consider that this threshold should be set at a lower percentage.

Important is to always verify for each Member State combination, whether the framework agreement has been agreed by both Member States. As of today, the agreement has been signed by 10 states, including the Netherlands, Belgium and Germany.

Time for action

Given that the Covid-19 transition period will expire on 1 July 2023, the social security position of your employees may change if they (partly) telework. The new exception to the Regulation, if correctly applied, is a positive development and may prevent an employer from having to register in other Member States in certain situations. This also may prevent that the employee 'accidentally' becomes socially insured in another Member State, including all the consequences that entails.

We recommend that you make an inventory of all your employees who work cross-border (in several countries or in a country other than the employer) and discuss this with your adviser at Mazars.