Telework in Europe: the new official Framework Agreement on social security is out !

Following our previous newsletter on this topic, we are now pleased to inform you that the expert working group consisting out of 20 different EU Member States has now officially published the “Framework Agreement on the application of Article 16 of Regulation (EC) No. 883/2004 in cases of habitual cross-border telework” (hereafter referred to as “Framework Agreement”). The purpose of this Framework Agreement is to bring an appropriate response to the increase in cross-border telework in Europe following the Covid-19 pandemic.
This Framework Agreement shall enter into force on 1 July 2023 as long as at least two Member States have signed it. As a reminder, until 30 June 2023 we are still in a period of tolerance during which the physical presence of a person is not taking into account to determine the competent state to levy the social security contributions.
The purpose of this Framework Agreement is that it enables an employee who carries out habitual cross-border telework in Europe to remain subject to the legislation of the State in which the employer has its registered office or place of business, although this person teleworks in its State of residence less than 50% of its total working time.
Reading in detail the new Framework Agreement, it mentioned amongst others that :

• it is not applicable to self-employed persons;
• It does not cover activity other than telework pursued in the State of residence of the employee and real activity in the State where the employer has its registered office;
• the cross-border telework must be agreed between employer and employee formally or informally. The request for the application of the Framework Agreement (which will be based on art 16. of Regulation (EC) No. 883/2004) must be made in consent between both parties;
• such agreement made between the State of residence of the employee and the State in which the employer has its registered office or place of business will be valid for 3 years (with extensions possible upon request) and the duration will be specified in an A1 certificate.

Based on the above, we remind you that as from 1 July 2023, outside the scope of this Framework Agreement on crossborder telework, the general rule to determine the competent social security State will apply again.
According to the EU Regulation on social security Nr. 883/2004, an employee is subject to the social security system of the State in which its employer is located (with exception for a secondment and simultaneous employment).
In case of activities in two or more Member States (simultaneous employment), the employee is subject to the social security system of the State of residence provided the employee works more than 25% in the State of residence. If this is not the case, a decision tree has to be verified to determine the applicable social security regime.
We will keep you informed on the further progress of this Framework Agreement (especially when Member States will effectively sign and ratify this document).
It is important to check for each combination of Member States whether the Framework Agreement has been agreed by both States, since the Framework Agreement does not apply to a country that does not participate.
We advise employers with international teleworkers to identify which employees regularly work from home. Employees who want to telework up to 50% in the country of residence without the social security legislation of the country of residence becoming applicable, can apply to the social insurance authorities of the employer's country of residence for a so-called Article 16 agreement.
In case you have employees who work crossborder or you are a foreign employer with staff teleworking from another EU member state, please contact Stijn Sablon (stijn.sablon@mazars.be) or Bart Van Laere (bart.vanlaere@mazars.be).