25 August 2015

Fourth update Annex II FMP

EU / CH shuts (a) back door to the residency allocation

Previously, if an employee worked for both an employer abroad and an employer in his country of residence, he was always subject to the social security legislation of his country of residence. This was partly objectionable; already resulting in the instances where marginal, possibly even unpaid, employment (e.g. temporary bartender, youth football coach) in the country of residence led to allocation under that country’s social security legislation. For the main employer, accountable under foreign law, this led to administrative costs and social security risks. In particular, there was the risk of having to pay social security contributions again, because they were initially paid at the wrong place. Since January 2015, in such cases an allocation in the country of residence requires the employee to carry out a 'substantial part' (i.e. at least 25%) of his employment there. Otherwise, the rules in the country of residence of the (principal) employer shall apply.

Also remaining unchanged in the fourth update of Annex II to the Free Movement of Persons Agreement EU / CH is, that employees employed by two or more employers of whom at least two are domiciled in different contracting countries outside the country of residence, and regardless of the quantitative workload, will continue to be subject to the social security law of the country of residence. The new coordination law applies directly to decreed allocations from January 2015. However, people can remain under the old regulation for a maximum of a further ten years, if the underlying facts do not change.

Examples:
A German residing in Germany working 85% in Switzerland for a Swiss employer and 15% as a temporary worker for an employer in Germany → re: allocation in Switzerland.

Swiss domiciled in Switzerland working 20% in Germany for an employer established in Germany and 10% in Switzerland (home office) and 70% in Italy for an employer based in Italy to → unchanged: allocation in Switzerland.

Author: Barbara Meyer

Photo: Isiwal/Wikimedia Commons

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