Publish date 2023-08-18
Reading time Lästid: 5 min

Social Security for a new Era of Remote Work: A Cross-Border Agreement

Social security has always been an important aspect of employment, ensuring that individuals are protected and have access to various benefits and services. With the rise of remote work, especially during the Covid-19 pandemic, there has been a need to adapt social security regulations to accommodate the changing nature of work. Sweden, along with several other EU/EEA states and Switzerland, has taken a significant step by signing a joint agreement that allows increased opportunities for cross-border telework within the European Union and the European Economic Area (EEA). 

What does the new agreement entail?

The agreement, which is based on a proposal from the Administrative Commission, grants exemptions from the main rules of EU Regulation 883/2004 for telework in the state of residence up to 49%. Under the general rule of the Regulation, if an individual works in their Member State of residence for 25% or more, they are covered by the social security system of that Member State and are required to pay social security contributions accordingly. 

Are there any exemptions?

With the new agreement in place, participating states have committed to exempting individuals from this general rule when they work in their home country for up to 49%. This exemption applies under specific conditions, including having one or more employers in a Member State, conducting remote work through digital connections (similar to work performed on the employer's premises), engaging solely in teleworking in the Member State of residence, and residing in one of the signatory states. Additionally, the employers must be registered in one of the signatory states for the agreement to apply.

It's important to note that the exemptions do not apply to individuals who regularly perform work other than telework in their Member State of residence, such as customer visits or missions, or to those who regularly work in a third state. Furthermore, self-employed individuals are not eligible for these exemptions. 

How do you apply for an exemption?

To apply for an exemption, individuals must submit an application based on Article 16 of the Regulation to the competent authority of the country in which they wish to belong to the social security system. The competent authority, usually the state where the employer is registered, will issue an A1 certificate if the requirements for exemption are met. Importantly, the agreement eliminates the need for approval from the Member State of residence before the certificate can be issued, streamlining the process. 

The exemption granted through the agreement is valid for a maximum period of three years. After this period, individuals can apply for an extension if needed. Retroactive applications are also possible but limited to a maximum of three months. However, for retroactive certificates to be issued, social security contributions must have been paid in the State of employment throughout the relevant period. It's worth noting that retroactive applications submitted by 30 June 2024 can cover periods from 1 July 2023 onwards. 

Which states have signed the agreement so far?

The agreement came into force on 1 July 2023, and exemptions cannot be granted for periods before this date. As of now, the states that have signed the agreement include Austria, Belgium, Croatia, the Czech Republic, Finland, Germany, Liechtenstein, Luxembourg, Malta, the Netherlands, Norway, Poland, Slovakia, Spain, Sweden, and Switzerland. For states that join the agreement later, coverage will begin from the first day of the month following the date of signature. 

What is the purpose of this agreement?

This joint agreement signifies a significant development in adapting social security regulations to the increasing prevalence of remote work within the EU/EEA. It aims to provide greater flexibility for individuals engaged in cross-border telework, ensuring that they have appropriate social security coverage and benefits. As the nature of work continues to evolve, it is essential for regulations to adapt and support the changing needs of the workforce. The agreement sets a positive precedent for international collaboration and paves the way for further advancements in social security provisions in the context of telework. 

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Författare av detta blogginlägg:
Milena Boyanova
Milena Boyanova works as a Senior Manager in the Expatriate Payroll department at Aspia's office in Stockholm.