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Employees in border areas frequently work in more than one country. In addition to the question where you will pay income tax, you should also ask questions such as: What happens if I get sick or become disabled, and how about my pension?
Income tax is based on the three principles of temporary work: Which company pays me, what is the duration of the project and how many days will I reside in the project country? This determines in which country you will pay income tax.
Within the EU, social security legislation is uniform. Specific EU indication rules determine which social system should be applied, as an employee may be insured in a single country only.
The EU criteria are based on:
If your employee works in his/her country of residence for more than 25%, he/she falls within the scope of the country of residence’s social system. If he/she works in more than one country other than the country of residence, the employee falls within the scope of the employer’s country’s social system. If the employee has more than one employer, however, the country of residence’s social system applies. Nevertheless, this also has the necessary exceptions, such as crew of a ship. It remains a complex issue; it is easy to miss things.
Furthermore, it is not organised automatically. You will have to apply for a so-called A1 mandatory insurance statement and monitor it in order to prevent having to pay social premiums in both countries unnecessarily.
If your employee also works in countries outside the EU, you should check if there is a treaty regarding social security between his/her country of residence and the non-EU country.
Bol International has extensive experience in cross-border labour, and is happy to assist you.
Determining whether or not someone is classed as an employee or a contractor according to the European Directive’s rules is based on the national rules of the country where the work takes place.
This can be so complex that the social security bodies of the countries of work and residence have to consult in order to determine the social security status.
In principle, this is not possible within the EU. However, if a person is also working outside the EU in a country with which the country of residence does not have a treaty, the employee may be liable for social insurance in more than one country.
In principle, this is possible for a maximum period of 2 years. This is subject to certain conditions however, for example, the employee may not be stationed abroad to replace someone.