Social Security & Teleworking - Update
28/06/23
In Brief
On June 30, 2023, the COVID-related transition period comes to an end and Article 13 of the Regulation (EC) n°883/2004 on social security (the Regulation) applies again in the situation of cross-border telework.
What does this imply?
The way forward from July 1, 2023
In 2022, the Administrative Commission (AC) of the European Union extended the application of a neutralisation period of social security rules for cross-border telework until June 30, 2023. This means that until June 30, 2023, cross-borders workers can telework from the State of residence without being penalised from unintended social security consequences.
As from July 1, 2023, cross-border workers will no longer be protected against a potential change of the competent State for social security due to accrued telework in their State of residence. Employers should therefore review the situation of their cross-border workers and undertake social-security related administrative formalities with the competent social security institutions. Such formalities consist in obtaining portable documents (social security certificate of coverage - A1/S1 statements) in view of securing cross-border teleworkers' social security positions.
Undertaking these formalities is mandatory in all situations of normal cross-border telework, including where no substantial activity (ie. less than 25% of their normal working time in their State of residence) is expected to be undertaken by the cross-border worker in the State of residence. In addition to social security formalities, other formalities may need to be undertaken, such as filing LIMOSA declarations in Belgium for the Belgian resident teleworkers. In certain circumstances, sanctions may apply in case administrative formalities are not complied with.
Derogation through individual telework agreement
In the meantime, the Ad Hoc Group (AHG) from the (AC) developed a model of framework agreement, which aims at raising the social security threshold for teleworking from 25% to 49% without triggering a change in the applicable social security regime, as a derogation based on Article 16 of the Regulation. Enrolment into such derogation is however all but straightforward as a number of conditions should be satisfied both at the the level of the employer and the employee concerned. Furthermore, this framework agreement does not apply automatically and Each Member State is free to opt-in or not.
At this stage, Belgium, as the designated depository state, has only captured the signature of twelve countries including Luxembourg and Germany, for an entry into force as of July 1, 2023. Decision of France is eagerly awaited considering the French cross-border population currently representing more than 120,000 individuals in Luxembourg.
You will find hereafter a link to the website listing the Signatory States as of today:
This framework agreement does not cover tax aspects. Cross-border workers continue to be subject to the tax thresholds agreed in the context of the applicable double tax treaties (34 days for Belgian and French residents and 19 days for German residents) which are far below the social security threshold estimated at more than 100 days a year for a full-time employment in the context of an individual telework agreement. In addition to those thresholds for individual taxation, employers should carefully consider potential permanent establishment aspects where some of their cross-border population undertakes telework.
What's next?
In order to help employers complying with social security formalities, the competent institution in Luxembourg (Centre Commun de Sécurité Sociale or CCSS) offers to centralise–for a temporary period–all the requests involving normal cross-border telework for either the determination of applicable legislation (Article 13 of the Regulation) or the application for individual agreement (Article 16 of the Regulation) in a dedicated platform which will be available as from July 1, 2023.
For cross-border workers to be covered under an individual telework agreement, Luxembourg employers will be able to initiate a retroactive application with the simplified procedure with the CCSS until June 30, 2024. Such possibility of retroactive application is however not foreseen for applications based on Article 13 of the Regulation (regular situation) and employers should therefore act promptly.
You will find hereafter further details on the process set up by the CCSS below:
