22. December 2022 In 2022, changes have occurred in some areas with regard to cross-border activities. This is not least due to the normalization of the Covid situation in the area of social security or due to decisions of the AT supreme court (for example in connection with family benefits or withholding tax for inbound personnel leasing). Below you will find a small excerpt of the most significant changes.
Changes in the areas of home office and social insurance
In principle, an employee within the EU/EEA can be subject to social security obligations in only one country. The territoriality principle (place of activity) applies primarily. If the employer and the residence of the employee are not in the same country or if an employee works in two countries (e.g. in his member state of residence for more than 25 % of his total working time, such as in a home office), the member state of residence may be entitled to collect social security (soc.sec.) contributions for the worldwide income subject to social security (according to the coordination rules of the Reg. (EC) 883/2004).
During the pandemic, the EU Administrative Commission for the Coordination of the Social Security System decided on an exception in this respect, according to which the social security responsibility does not change to the Member State of residence due to a Covid-related home office activity (especially if the employer is not domiciled in the employee’s Member State of residence).
However, as of June 30th, 2022, this Covid exception has basically expired. The Administrative Commission then published a guidance note, especially since the normalization of the Covid situation means that “force majeure” can no longer be used as a valid legal basis as of July 1st, 2022. Therein it was stated that cross-border home office activity occurs when the employee performs his activity outside the place of work where he usually works. According to the Administrative Commission, home office only exists when the same activity that was previously performed at the employer’s workplace is now performed at the employee’s premises, and not, for example, when the employee works at the customer’s premises.
In order to avoid abrupt changes in social security jurisdiction, the Corona exception rule was initially extended until December 31st, 2022 and now until June 30th, 2023 by the Administrative Commission to give those affected time for necessary planning measures and processing.
This means that as of July 1, 2023, there could be a change in soc.sec. responsibility if a significant activity (at least 25 %) is still performed in the home office. This can lead to the employer having to register in the other state (namely where the employee works in the home office) and to pay soc.sec. contributions there.
Due to the more flexible arrangement pleaded for by the Commission, Austria has reached a bilateral agreement with Germany, according to which, as of January 1, 2023, up to 40% of the activity can be performed in the home office upon request, without a change of soc.sec. responsibility to the state of residence. The application of this 40% limit can be requested for a maximum of two years, but extension requests are possible. The application must be submitted to the “Dachverband der Sozialversicherungen” (DVSV). Due to the extension of the exception by the Commission, the agreement with Germany will not be effective until July 1, 2023.
Negotiations with other neighboring countries of Austria are in progress.
The following example is intended to illustrate the situation in relation to Germany as of January 1, 2023:
M is employed by the Austrian employer A. At the beginning of 2023, M agrees with his employer that he will work from his German place of residence. Thereupon, an application is filed with the DVSV for the period 1.1.2023-31.12.2024. Especially since the bilateral agreement with Germany will only become effective as of July 1st, 2023 (since the Covid exception still applies until that date) M could also work more than the agreed days in the home office until that date. Austria remains the competent state for social security. As of July 1st, 2023, the home office activity may amount to a maximum of 2 days per week.
Social security agreement with Brazil
In relation to third-country states, there is a risk of paying soc.sec. contributions twice for one and the same income. In order to avoid this, soc.sec. agreements have been concluded with a number of countries. These agreements are intended to coordinate social security responsibilities when working in the respective contracting states.
On May 17th, 2022, Austria signed a soc.sec.agreement with Brazil. It is not yet clear when the agreement will come into force. According to the agreement, the obligation to be insured in Austria continues for a further five years in the case of secondment to Brazil, provided there was an obligation to be insured in Austria for at least one month before starting work in Brazil. An extension is not possible. During these five years, there can be no obligation to pay contributions in Brazil. After expiration of these five years, an interruption of the activity in Brazil must take place for at least one year, so that no insurance obligation is triggered in Brazil. After this year, the 5-year period starts anew.
Health insurance is not regulated in the agreement. Any medical expenses would have to be borne by the employer; it is recommended to conclude a private health insurance.
AT family bonus plus for children abroad
Since 2019, it has been possible to claim for family bonus plus for eligible children. This is a deduction that directly reduces the tax burden by EUR 2,000 annually (2019-2021: EUR 1,500 annually) in full. The entitlement lasts as long as the child is entitled to Austrian family allowances (until the age of 18 or beyond if the child is studying, for example). From the age of 18, the Family Bonus Plus is reduced to EUR 650.00 per year (2019-2021: EUR 500.00).
For children living abroad, the family bonus plus could previously only be claimed if an application for difference payment (“Differenzzahlung”) was filed in Austria (for example, because the foreign state is primarily responsible for the payment of family benefits). Even if the family benefits are higher abroad and the difference payment would have amounted to EUR 0.00, this (zero) decision was previously necessary in order to be able to obtain a family bonus plus for parents who work and are liable to pay taxes in Austria. In the course of the Administrative Court decision of April 4th, 2022 (Ra 2021/15/0067), it was decided that an application for difference payment was no longer necessary. It is not important to file an application or to actually be entitled to family allowances in Austria, but only to meet the eligibility requirements for family allowances, regardless of the EU/EEA country, if one of the parents is obliged to pay social security in Austria. If there is no soc.sec. obligation in Austria, the children would have to live in Austria in order to meet the eligibility requirements for the family bonus plus.
We will be happy to provide more detailed information should any of these topics be relevant to you. In particular, please keep an eye on the date of expiry of the Covid exception rule with regard to social security jurisdiction (July 1st, 2023) in case you employ staff working in another EU/EEA member state.
PS: Please note, that we are no native speakers and that our blogposts were translated with the help of google translate.
