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Social security when working in different European countries

26 June 2015

A case before the Court of Justice of the EU has given rise to concern among business travellers and their employers in relation to social security coverage. Fortunately, the case has no implications for most business travellers.

A pending case before the Court of Justice of the European Union has recently given rise to publicity and significant concern has been expressed regarding social security coverage for business travellers and their employers.

The concern is that the case could lead to business travellers being covered by social security in many different European countries as they visit these countries as part of their work.

This would be a problem as business travellers and their employers might be required to pay contributions to social security in many different countries. Further, the business traveller would likely experience inferior social security coverage – for example in relation to benefits that require a period of accrual before the individual is eligible to receive the benefit.

Fortunately, the reality is that the case has a much narrower application. For most business travellers, it has no implications at all.

The case concerns a Polish resident employee of a Cypriot temporary employment agency. The employee worked consecutively for shorter periods of time in different EU countries - none of which were Poland or Cyprus. The subject of the case is whether the employee should be covered by social security in the country where he temporarily worked - thereby following the main rule of social security coverage – or whether he should be covered by social security in the home country of the employer – Cyprus – according to an exception to the main rule.

The question arises due to the fact that one of the work countries and the work periods were undetermined at the time of conclusion of the employment contract and at the time where the authorities had to determine in which country the Polish employee were covered by social security.

The situation for most business travellers is different. Most business travellers are either performing a significant part of their work in their home country and/or the home country of the employer and they are not risking to be covered by social security in every European country they visit when travelling on business.

The case does, however, have implications for employees of temporary employment agencies under similar circumstances as the Polish employee of the Cypriot temporary employment agency. Further, the case will have implications for business travellers that do not work significantly in their home country or the home country of their employer.

Fortunately for these employees and their employers, the recently released opinion of the advocate general states that the Polish employee of the Cypriot temporary employment agency should be deemed covered by Cypriot social security during the employment period as opposed to social security in all the different countries where the work was performed. Hence, there may not be an issue at all. The verdict of the court is expected later this year.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.