New EU framework agreement on cross-border telework
Karsta Dietert
by Karsta Dietert
Antiquated European Union social security standards make it difficult to flexibly employ qualified cross-border workers. The Multilateral Framework Agreement on Cross-Border Telework, which came into force on 01 July 2023, is a first step to make things easier.
What is interesting about this?
Imagine a client wants to hire a qualified person from a bordering country on a full-time basis. However, this person will only accept the position if they can work from home (i.e. in their neighbouring, home country) for at least 2 days a week.
For cases like this, there is already a change in social security (SI) law in the EU. No longer does SI law at the employer's registered place of business apply, but instead SI law in the employee's country of residence if the employee works 25% of the time in their country of residence. This is based on Article 13 of EU Regulation 883/2004.
The employer must, with significant administrative expense, register in the employee's country of residence and pay SI contributions there, according to applicable foreign law. The 25% worktime limit has now been extended to less than 50% – i.e. 49.99% for home office cases. Up to this limit, the social security law of the country in which the employer is based continues to apply.
In particular, a condition for this is to file an application based on Article 16(1) of Regulation (EC) 883/04. The application must be made in the state whose SI law is to apply according to the framework agreement. The application must be made in principle for the future, but can currently also be made retrospectively until, at the latest, 30 June 2024.
The framework agreement only applies to social security law and therefore does not apply to tax law and labour law. How this affects a choice of law for employment contracts under the Rome I Regulation has therefore not yet been conclusively clarified.
Who is joining?
The following countries have currently joined: Austria, Belgium, Croatia, Czech Republic, Finland, France, Germany, Liechtenstein, Luxembourg, Malta, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Netherlands, and Slovakia.
Tip: Together with your clients, take advantage of the flexibility offered by the framework agreement when it comes to choosing SI law when employing professionals in cross-border cases.
Over the past 25 years, KPP Steuerberatungsgesellschaft mbH has developed into one of the leading tax consulting firms in the Lower Rhine region. The company offers tax, legal and consulting services. Due to its proximity to the Netherlands, KPP has extensive experience in advising on cross-border matters, especially for foreign companies investing in Germany.
Karsta Dietert is a lawyer admitted to the German Bar and a Certified Compliance Officer. She specialises in labour law, in particular in cross-border matters. Contact Karsta.
GGI member firmKPP Steuerberatungs-gesellschaft mbHKleve, Emmerich, Weeze, GermanyT: +49 2821 72 04 0
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