The panel discussion on “Key Considerations for Social Security and Tax Compliance during an Employee Assignment” provided valuable insights into the complexities of managing tax and social security obligations when employees are posted internationally. Below are the main takeaways from the session:
The discussion began by addressing the essential role of social security and tax compliance for both employees and employers during cross-border assignments. Maria, a representative from Belgium’s National Social Security Office, introduced key statistics highlighting the trend of Romanian workers being posted abroad, particularly in Belgium. She emphasized that understanding these statistics is crucial for organizations managing posted workers and that compliance with social security regulations hinges on adhering to specific requirements, including obtaining the A1 form.
A significant portion of the presentation focused on the regulatory framework provided by the EU’s 883 Regulation, which facilitates coordination among member states regarding social security systems. Maria explained that the fundamental principle under this regulation is that employees must pay social security contributions in the country where they work. For posted workers, exceptions exist, but organizations must still fulfill conditions related to prior coverage, duration of stay (limited to 24 months), and maintaining the substantive activity in the home country.
The session also highlighted the importance of correctly managing documentation, such as the A1 form and the LioA declaration, as these serve as proof of compliance with social security obligations. The panel underscored that employees should always possess their A1 form during assignments to ensure they remain compliant with authorities in the host country.
The conversation shifted towards tax compliance, emphasizing the complexities involved in identifying the tax residency of employees on assignment. It was noted that tax liabilities depend on factors such as the duration of the assignment (specifically whether the employee exceeds 183 days in the host country), the economic employer rule, and whether the employee’s costs are covered by the host company. Organizations must be cautious, as declaring an employee’s residency can lead to further tax liabilities in both the home and host countries.
Specifically, a case study of a Czech construction company planning to send workers to Germany illustrated how tax residency and compliance obligations can vary based on the assignment’s specifics. The need for organizations to assess tax agreements between their home and host countries is critical to avoid double taxation.
The panel concluded with a discussion on the importance of maintaining accurate records of tax and social security filings for a minimum period, ensuring compliance even after employees finish their assignments. Both speakers encouraged a proactive approach to managing these complexities, advising that organizations familiarize themselves with respective regulations and maintain proper communication with tax and social security authorities.
Overall, the session emphasized that understanding the regulatory landscape surrounding posted workers is essential for mitigating risks and ensuring compliance in an increasingly globalized workforce. The panelists encouraged participants to seek expert guidance when navigating these intricate legal requirements.
Social Security Coordination Expert at RSZ - ONSS
Managing Partner at Nestlers Group
