Due to generally much lower tax rates than in Western European countries, temporary workers (especially from Eastern European countries) are covered by social security in the country of establishment of the temporary employment agency and not in the country of deployment.
Workers can obtain an A1 certificate if the scope of application of Art. 12(1) of Regulation 883/2004 is opened for them. This means that a worker is subject to the legislation of the member state in which his/her contractual employer usually operates, provided they are posted to another member state for a maximum of 24 months and do not replace another posted person there. A concretisation of this provision can be found in Art. 14(2) of Regulation No. 987/2009. The words “usually active there” refer to employers who usually carry out significant activities other than purely internal administrative activities on the territory of the Member State in which the undertaking is established.
The ECJ has ruled on this. Selection and recruitment in the Member State is not sufficient.
In the ECJ case, a Bulgarian temporary employment agency entered into an employment contract with a Bulgarian national, placing him temporarily at the disposal of a German employer. In order to prove that only contributions under the Bulgarian social security system were to be paid, the temporary employment agency applied to the Bulgarian authority for an A1 certificate. This certificate was refused by the authority, which the temporary employment agency appealed against. The Bulgarian court then referred the question to the ECJ as to what requirements should be placed on the characteristic of usual activity under Article 12(1) of the Regulation. Of particular interest here was whether it was sufficient for the temporary employment agency to conclude employment contracts in the country of its establishment alone.
The ECJ judges answered in the negative: a temporary employment agency is only “normally active” in the country of its establishment if it supplies a significant number of workers to undertakings established in that country. It is not sufficient if the company only selects and hires workers in Germany. It is only through the provision of these workers that it actually generates its turnover (ECJ, judgment of 3 June 2021, Case C-784/19, call no. 226872).
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