Netherlands: The signing of a new Framework Agreement regarding the social security rules within the European Union

In brief

After the mandatory "working from home" measures that were implemented during the recent COVID-19 pandemic, voluntary hybrid and flexible work arrangements are now becoming more and more common in the labor market. When these arrangements include cross-border employment situations (i.e., employees living in one country, but working from home in another), they may well bring significant wage tax and social security complexities with them.

This client alert describes the new rules that the EU intends to introduce as of 1 July 2023, to regulate the social security coverage for cross-border employees who work from home in their country of residence.


In depth

Current EU social security regulations

Under the current EU social security regulations (Basic Regulation No. 883/2004 and Implementing Regulation No. 987/2009), employees who work in multiple countries that are covered by these regulations (hereinafter referred to as the ‘Regulation Countries’, a list of which can be found here) are insured in their country of residence, if they perform a ‘substantial part’ of their work in that country. Such a substantial part is deemed to exist in any case, if they work in their country of residence for at least 25% of their contractual working time, or if they earn at least 25% of their wages in their country of residence.

During the COVID-19 pandemic, the EU issued temporary rules for situations in which cross-border employees find themselves working from home in their country of residence for more than 25%. In such cases, the employee’s social security coverage does not need to shift to the country of residence, provided certain specific conditions are met. These rules will apply up to and including 30 June 2023.

1 July 2023: new Framework Agreement for teleworkers

As of 1 July 2023, the EU intends to implement new, and more definitive rules to regulate the social security coverage for cross-border employees who work from home in their country of residence (i.e., teleworkers). The implementation of these new rules has been structured through a so-called ‘Framework Agreement’.

If the conditions laid down in this Framework Agreement are met, employers whose employees work from home in cross-border situations may deviate from the 25% threshold mentioned above. In brief, the Framework Agreement prevents the employees’ social security coverage from shifting to their country of residence, if they work from home in their country of residence for less than 50% of their contractual working time. If the working time in their country of residence exceeds this threshold, the social security coverage will still shift to the country of residence.

Entry into force

The Framework Agreement is expected to enter into force on 1 July 2023 for the Regulation Countries that have signed the Framework Agreement by then. If a Regulation Country signs the Framework Agreement after 1 July 2023, it will only enter into force after the date of signing, and will not apply retroactively to 1 July 2023.

Technical briefings on the Framework Agreement are in fact still taking place, and it is therefore not fully clear at this stage which Regulation Countries will be a part of it (although we know the Netherlands have already signed it). We expect more details about the Framework Agreement, and the countries that will be a party to it, to become available in the coming weeks.

Recommended actions

How does this affect your organization?

The termination of the temporary rules that were introduced during the COVID-19 pandemic, could change the social security position of cross-border employees that were covered by those rules. As an employer, it is therefore important to consider the following points:

  • Identify the employees that may be affected by the termination of the temporary rules, analyze their social security position as from 1 July 2023, and inform them in case their social security position is impacted.
  • Adjust current A1-certificates, or apply for new A1-certificates for the impacted employees, within the applicable deadlines.
  • Review and adjust home-working and remote-working policies in accordance with the Framework Agreement (a country-by-country approach may be needed, as the Framework Agreement only applies if both of the Regulation Countries involved have signed it).

In the Netherlands, the executive body for the Framework Agreement will be the Social Security Bank (in Dutch: Sociale Verzekeringsbank, or "SVB"). As the Framework Agreement should already be fully implemented by 1 July 2023, the SVB expects that a large volume of work still needs to be carried out before that date (both by itself, and by affected employers and employees).

Depending on how many cross-border employees will be affected by the new rules within your organization, it is, therefore, advisable to start with the preparations mentioned above as soon as possible, to ensure all necessary actions are taken when the new Framework Agreement enters into force.

Please feel free to contact the authors of this client alert, if you require any assistance in this respect.

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