After many employees (by necessity) got a taste of the possibilities of working from home, many of them have continued to work from home (partially). Working 100% in the office is no longer the norm. For employees who work in their country of residence, this has no further impact on their social security position, but for employees whose country of residence is not the same as the country of work, it may well affect their social security position.

What was the rule again?

Prior to corona, the rule within the EU/EEA context was that persons working in two countries of which 25% or more work from their country of residence are insured in their country of residence. For a frontier worker, residing in Belgium who was first fully employed at an office in the Netherlands, this meant a social insurance obligation in the Netherlands. Under these regulations, if this person decides to work 2 days at home (40% of working time), the social security obligation would shift to Belgium. The social security systems of the country of residence and the country of work can be quite different, which can create major financial and administrative complications for both employees and employers. 

During the Corona period, it was agreed at the European level that change of workplace could be temporarily ignored for determining which social security system was applicable, so that working from home did not affect the employee's social security position. This arrangement was repeatedly extended pending new agreements within Europe for frontier workers working from home. The current extension runs until July 1, 2023. 023.

As of July 1, 2023

On July 1, 2023, the Framework Agreement on Cross-Border Telework will enter into force. Based on this framework agreement, the social security legislation of the country of work can continue to apply when an employee works less than 50% of the working hours at home in the country of residence However, the framework agreement must be signed by both the state of residence and the state of employment. This percentage, which the Netherlands has also advocated, was chosen so that part-timers who work four days can also work from home regularly. However, each EU country can use a different percentage. 

Currently, the following countries have signed the framework agreement: The Netherlands, Germany, Switzerland, Liechtenstein, Czech Republic, Austria, Slovak Republic, Belgium, Luxembourg, Finland, Norway and Portugal. Germany and Belgium signing the agreement is obviously the most significant for the Netherlands. 

To benefit from these renewed agreements, an A1 declaration must be applied for in the working country on the basis of the so-called Article 16 agreement. Based on this, the regular designation rules (with the percentage of 25%) of the currently valid regulation are deviated from. In the Netherlands, it is the Sociale Verzekeringsbank (SVB) that issues A1 declarations. However, the SVB has had very little time to implement the framework agreement before July 1, 2023, so they will at least work with a contingency scenario to still be able to handle the expected flow of applications. 

From July 1, 2023, employees can apply for the exception in accordance with the framework agreement, with the SVB. The main requirements for filing such an application are:

  • You are an employee; 
  • You reside abroad; 
  • You only work for an employer(s) based in the Netherlands; 
  • You work from home between 25% and 50% of your total working time in your country of residence. 

Your employee completes the application through the website and must send it to the SVB by mail. In the period between July 1, 2023 and July 1, 2024, the application can be filed up to 1 year after, with the condition that social security contributions have only been paid in the Netherlands during that period. After July 1, 2024, the application can be filed up to 3 months after, subject to the same condition. 

This framework agreement means there will finally be more clarity on the consequences of working from home for frontier workers. However, there are still a number of uncertainties at this point. Little or no attention has been paid to the possible conflicting interests between the employee and employer. Little attention has also been paid to self-employment. Another not unimportant point is that Belgium qualifies the employment of a director/(major) shareholder (DGA) on the basis of the rules of the source country while the Netherlands does so on the basis of its own national legislation. Furthermore, this solution only applies to social security and not to taxation. Working from home by your employee may still have tax consequences, therefore. The government is focusing on tax measures to facilitate working from home by frontier workers from a tax perspective. For example, the Netherlands would like to include a working-from-home measure aimed at frontier workers in the bilateral tax treaties and provide more certainty with respect to possible problems relating to permanent establishments. As soon as there is more news, we will of course keep you informed.