The Dutch Sociale Verzekeringsbank And The Call For The European Social Security Pass

April 6, 2023

The Dutch social security authorities “Sociale Verzekeringsbank” (SVB) have extended their flexible approach towards frontier and remote workers until 1 July 2023, as was announced in November 2022. This approach, also known as the „no-impact“ position, allows employees to work from home without incurring any social security liability in their country of residence, as long as they work from home for 25% or more.

This extension of time gives the Administrative Commission and the authorities of the EEA countries and Switzerland the opportunity to further evaluate the social security implications of remote work, and to potentially establish structural measures concerning the social security of remote workers. A European proposal is currently being drafted in this regard, and it is set to be discussed at the end of March 2023 by the Administrative Commission.

In Germany the support for this bill is highly supported. If the agreement is signed, German cross-border workers will have the opportunity to work remotely up to 40% of the time while still being affiliated with the Luxembourgish social security system, compared to the current threshold of 25%. The agreement is expected to be signed by June, according to Minister of Social Security Claude Haagen. Additionally, Belgium is considering a similar agreement if no EU-level solution is found, and the Luxembourg government is engaged in technical discussions with France, though no bilateral negotiations have taken place yet.

If there are no multilateral or bilateral agreements in place by July 1, 2023, and the current flexible approach is not extended beyond this date, employers will have to manage their employees according to current regulations. This could result in a social security shift to the country of residence for employees who continue to work from home for 25% or more.

In March 2021, a pilot project for the European Social Security Pass (ESSP) was launched with the aim of investigating the possibility of a digital solution to streamline the interaction between mobile workers and national authorities, facilitating cross-border verification of social security coverage and entitlements. This would enhance the transferability of social security rights across borders while minimizing the risk of errors and fraudulent activities. The European Social Security Pass is a digital tool currently under development by the European Commission aimed at facilitating the cross-border verification of social security coverage and entitlements for mobile workers. The pass is intended to simplify the interaction between mobile workers and national authorities, reduce the risk of errors and fraud, and improve the portability of social security rights across borders.

The European Commission has stated that the European Social Security Pass will be voluntary and will not replace existing national social security identification documents. It is intended to complement these documents by providing additional information to national authorities to facilitate cross-border coordination and cooperation in the area of social security.

The ESSP would enable national authorities of the member state where a mobile worker intends to work to carry out real-time verification of their data. This would aid in combating social fraud and undeclared work, as well as making it easier for workers to track and claim their rights and social security contributions. However, the current pilot project only includes information on the social security coverage of mobile workers, with the next phase slated to commence in 2023.

The Dutch government, along with other Member States, supports the idea of multilateral agreements that would permanently relax social security compliance. Their objective is to establish a multilateral agreement with Belgium, Germany, and Luxembourg, at minimum. Current discussions involve increasing the 25% threshold to 40% or allowing employees to work from home for two days per week without triggering social security liability in their country of residence. The selection of either option may have a different impact on employees who are not working full-time.

Starting from April 25, 2023, employers who submit A1/CoC applications through the Dutch authorities‘ online system called “TWinternet will need to have „eHerkenning“ to log in, instead of using their username and password. This eHerkenning must be applied for and paid to a government-approved supplier. To access TWinternet, employers must have eHerkenning level EH3, which not only requires a username and password but also an additional verification through SMS or another token.

The ESSP will enable national authorities to verify data of mobile workers in real-time, combatting social fraud and undeclared work while making it easier for workers to claim their rights and social security contributions. The current pilot project only covers social security coverage information, with the next phase scheduled for 2023.

Members of the European Parliament are calling for quick introduction of EU social security pass writes https://www.pubaffairsbruxelles.eu. They have called for the European Commission to accelerate the creation of a digital European social security pass (ESSP) to promote the portability of social security entitlements for mobile workers. The ESSP will allow for real-time verification of mobile workers‘ data by national authorities in the member state where they intend to work, while respecting the diversity of national social security systems and complying with EU personal data protection rules. Emphasis is placed on the need for a legislative proposal for the ESSP to be presented by the Commission before the end of 2022, with the goal of reducing the administrative burden on mobile workers and facilitating their ability to track and claim their rights and social security contributions, as well as combating social fraud and undeclared work.

MEPs have emphasized that the implementation of the European social security pass (ESSP) should provide significant benefits for all parties involved, including mobile workers, businesses, employers, trade unions, and national authorities. The ESSP should uphold workers‘ rights and simplify administrative procedures, while respecting the diversity of national social security systems and not becoming a prerequisite for freedom of movement.

In terms of privacy concerns, members have stressed the importance of adhering to strict compliance with EU personal data protection regulations. Any exchange of information through the ESSP should only involve the relevant person and competent national authorities, with social security and personal data being safeguarded and not shared for any other purposes outside the enforcement of EU social security regulations.

While the current pilot project for the ESSP only covers social security coverage for mobile workers, MEPs want the initiative to be extended to other areas of EU labour law, including health insurance and pensions, and to complement the European e-ID and other EU social security digitalization initiatives.

Background information shows that the European Parliament has urged the European Commission since 2014 to introduce a legislative proposal for a European Social Security Number to establish an EU-wide digital tool for social security coordination. As part of its action plan for the European Pillar of Social Rights, the Commission launched a pilot project in 2021 to investigate the feasibility of a European Social Security Pass.

In the EU, EER and Switzerland, social security coverage for cross-border employees is determined by EU Regulation 883/2004, while outside the EU, it is determined by national legislation or social security treaties. If you work in multiple member states, you may be subject to social security legislation in your state of residence if you perform a substantial portion of your employment there, especially if your residence of work pattern has recently changed. However, if you do not perform a substantial part of your employment in your state of residence, you will be subject to social security legislation in the state where your employer is situated. It is important to seek advice on your specific situation and inform your employer, as it can have financial consequences for both you and your employer.

Sources:

https://www.pubaffairsbruxelles.eu/eu-institution-news/digital-europe-meps-call-for-quick-introduction-of-eu-social-security-pass-eu-parliament-press/

https://www.iamexpat.nl/expat-info/dutch-expat-news/tax-and-social-security-consequences-remote-working

https://www2.deloitte.com/nl/nl/pages/tax-news/articles/social-security-update-on-remote-work-and-other-developments.html?id=nl:2sm:3li:4dcom_share:5awa:6dcom:other

https://today.rtl.lu/news/luxembourg/a/2023100.html

Photo by Marco: https://www.pexels.com/photo/european-commission-flags-on-poles-13153479/

Related Articles

Historical relations: eyes on China and the Netherlands

Historical relations: eyes on China and the Netherlands

In celebration of the Chinese New Year, which started being celebrated on the 10th of February, this week’s article is delving into the historical relationships between the Netherlands and China. The close ties between the Chinese and Dutch people have been forged...

South Africa: focus on foreign investments

South Africa: focus on foreign investments

South Africa: focus on foreign investments This week’s article shifts the focus to another part of the world that is very important to Global Connect Admin and Global Connect Consultancy. Namely, South Africa and the foreign investments that are becoming more and more...