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Home office for cross-border commuters – new social security agreement

In recent years, the trend towards working from home and teleworking has increased thanks to the internet and modern technologies. Especially during the pandemic, employers and employees have increasingly adapted to working from home. In addition, companies are expected to offer at least some opportunities to work from home in order to remain attractive as an employer.

This can become a problem for cross-border commuters, since the physical place of work is a decisive criterion for social security law. So far, working from home for more than 25% of the working time has led to a change to the social security system of your country of residence.

From July 1st, 2023, the multilateral framework agreement on the application of Art. 16 Para. 1 VO (EG) 883/04 for normal cross-border telework will come into force. Under certain conditions, this agreement allows employees to do up to 49.99% of their working time in the form of telework in their country of residence, while the social security law of the employer’s country applies.

Prerequisites for the application of the Framework Convention

In order for the framework agreement to apply and for employees who work remotely between 25% and 49.99% to continue to be insured in the German social security system in their respective country of residence, the following conditions must be met:

– The employee must remain connected to the employer’s work environment and customers via information technologies during telework in the country of residence.

– There must be no third country in which the employee usually works. Occasional business trips to third countries are permitted and do not affect the application of the Framework Convention.

– An exception agreement within the meaning of the framework agreement is in the interest of the employee and the employer submits a corresponding application to the competent authority.

If the requirements of the Framework Convention are not met, a regular request for an exception agreement can be made, which will be processed on a discretionary basis.

If no exception agreement is desired, the competent authority in the country of residence must determine the applicable social security law. If the home office work exceeds 25% of the working time, the social security law of the country of residence will very likely be applied.

Scope of Application

In addition to Germany, the Multilateral Framework Agreement has already been signed by Switzerland, Austria, the Netherlands, Belgium, Luxembourg, the Czech Republic, Lichtenstein, Slovakia, Finland and Norway. It is expected that other European countries will follow their example.

Please note that the framework agreement only deals with questions of social security law and that tax and labor law questions remain unaffected.

Application

German employers whose employees meet the requirements of the framework agreement can apply for the respective exception agreement with the National Association of Statutory Health Insurance Funds, DVKA. The exception agreement is initially concluded for a maximum of 3 years, but can be extended by a new application.

Conclusion

The multilateral framework agreement on the application of Art. 16 Para. 1 VO (EG) 883/04 for normal cross-border telework enables cross-border commuters to work from home for up to 49.99% without a change in social security law being necessary. In order to benefit from this agreement, employers must apply for an exception agreement with the DVKA. If you have any questions or need assistance with the application, please do not hesitate to contact us.

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