05. December 2023 There is also an increasing number of working models related to office work that do not correspond to the traditional models, such as working from abroad, for example when visiting family abroad over Christmas.
The following example illustrates possible issues that need to be considered:
Case study: Mr Mayer, an office worker, would like to take four weeks’ leave in December to visit his wife’s family in Brazil for Christmas. However, the employer has imposed a holiday ban for the first two weeks of December, particularly as there are many orders to be processed during this period. However, he offers Mr Mayer the “workation” working model. This means that Mr Mayer can work wherever he is during this time. This can be done within the framework of an agreement between the employer and the employee.
The applicable labour law is primarily based on the usual place of work; temporary work abroad is not harmful. Only if the usual place of work cannot be determined is the applicable labour law based on the country in which the employer has its registered office. In addition, the parties can choose the applicable law. However, especially in the case of short stays abroad, it is advisable to retain the labour law of the home country (in this case Austria), as a change can lead to various complications.
However, a choice of law must not disadvantage the employee compared to the otherwise applicable legal system. Some mandatory rules of the country of employment must always be observed, even if a different legal system is generally applied.
From the point of view of social security law, the principle of territoriality generally applies, i.e. a person is subject to the legislation of the state in whose territory the work is carried out. There is an exception in the case of secondment. Here, according to the principle of emanation of § 3 para. 2 lti. d ASVG, there is an obligation to pay social insurance in Austria for a further five years, even if the work is not physically carried out in Austria. In relation to third countries, there is often a risk of double insurance, i.e. the obligation to pay contributions in several countries. If there is a social security agreement between Austria and the respective country, double insurance can be avoided. Austria has already concluded a social security agreement with Brazil, but it has not yet entered into force. This means in this specific case:
As long as the social security agreement is not yet in force, a possible social security obligation in Brazil would have to be examined. Social security contributions must still be paid to Austria.
The social security agreement with Brazil does not cover sickness insurance. In the case of medical services received in Brazil, the employer would first have to make advance payments for the employee according to § 130 ASVG; subsequently, the amounts spent could be reclaimed within the limits resulting from the obligation to pay medical services in Austria. The difference would be borne by the employer. It would therefore be advisable to take out supplementary health insurance for the period of the employee’s stay in Brazil.
Income tax
As Mr Mayer maintains his family residence in Austria during his stay in Brazil and his stay in Brazil does not exceed 183 days in the relevant tax year, the question of establishing a permanent establishment or income tax liability in Brazil should not arise. Mr Mayer’s income remains 100% taxable in Austria.
In addition, it would have to be checked in Brazil whether an appropriate residence or work permit needs to be applied for.
Conclusion
If employees work abroad, the employer in particular must always closely monitor the employee’s professional stays in order to avoid any tax obligations abroad, be it a corporate income tax liability because a permanent establishment is established as a result of the employee’s work or a possible wage tax withholding obligation because the double taxation agreement assigns the right to tax the employee’s income to another country.
In addition, social security risks must be taken into account. For example, employment in a country with which Austria has not concluded a social security agreement can lead to higher contributions. In cases of secondment, Austria has the right to levy social security contributions on the basis of the employee’s income for a further five years from the start of the secondment according to § 3 para. 2 lit. d ASVG. If the third country is also authorised to levy social security contributions under national law, there is a risk of double payment of contributions.
The employer is also obliged to make advance payments in the event of necessary medical treatment of the employee abroad in accordance with § 130 ASVG, which relates in particular to health services (accident treatment). In Austria, the costs incurred can be reimbursed by the domestic insurance provider within the limits resulting from the obligation to provide health services in Austria (for non-reimbursable amounts, it is advisable to take out supplementary health insurance).
We will be happy to advise you (info@artus.at).
PS: Please note, that we are no native speakers and that our blogposts were translated with the help of google translate.
