For companies and freelancer
No business trip or any other foreign employment within the EU, EEA or Switzerland without an A1-certificate
Since enacting the regulation (EG) 883/2004 on May 1, 2010, employers are required to inform the responsible insurance institution about every single foreign assignment and to consider social-security-related specifics. This means that any professional cross-border activity within the European Union (EU)/European Economic Area (EEA) and to Switzerland requires an individual application for an assignment certificate (A1-certificate) according to the legal framework.
Protection against the obligation to pay double contribution obligations
When assigning employees abroad, the A1-certificate is an official document proving that the employee belongs to only one social security system and determines that only one legislation is applicable (generally the one of the home country). The A1-certificate intends to avoid the obligation to pay double contributions or short-term and possibly repeated changes between the social security systems of different countries as well as time-consuming (de)registration processes.
The insurance coverage remains generally effective, if a German employer sends an employee from Germany to another country to perform work there on behalf of the employer. However, insurance coverage is normally not granted for employees working abroad for a foreign company or who are engaged by a legally independent subsidiary. In these cases, the insurance coverage complies with the legislation of the foreign country.
Validity of the A1-certificate for foreign assignments of up to a maximum of 24 months
The validity of the A1-certificate comprises a period of up to two years. The duration of the assignment can be limited through the assignment agreement or in advance due to the nature of the employment. Therefore, an assignment does not only exist in cases where the employee is deployed abroad for one or two years. Even for one-day business trips, short meetings or conferences abroad, an A1-certificate needs to be carried.
For assignments of more than 24 months, a certificate of exemption (special agreement) is required. This special agreement is available on the homepage of the DVKA (Deutsche Verbindungsstelle Krankenversicherung Ausland, www.dvka.de/), an institution, which is taking care of (health) insurances abroad.
The A1-certificate is provided for only one concrete sending country
If employees usually perform their work in several member states and reside in Germany, the National Association of Statutory Health Insurance Funds (GKV-Spitzenverband, DVKA) determines the responsible EU-State, in which social security contributions have to be paid.
Corresponding applications can be found on the homepage of DVKA
Electronical application and certification process as of January 1, 2019 As of January 1, 2019, the electronic application and certification process A1 is binding for the employer and participating organization(s). The applications for A1-certificates as well as certificates of exemption must be electronically submitted to the responsible institution (health insurance, pension insurance or DVKA, please see below) via data transmission from a system-tested program (e. g. payroll accounting system or a payroll program) or, alternatively, by a fill-in assistance such as sv.net (https://standard.gkvnet-ag.de/svnet/).
Only in justified individual cases, a paper-based application is still permissible until June 30, 2019 within the framework of a transitional regulation.
In general, employees and employers have to confirm the information about the foreign assignment or the cross-border-activity. Tax consultants, management consultancies and other professional groups can also be authorized for this procedure, however, in this case, a copy of the power of attorney has to be provided.
Issuance of the forms
The forms are issued – depending on the insurance situation – by different authorities:
The responsible authority processes the A1-application electronically and reviews if the A1-certificate can be issued. If the requirements for the continued validity of the German legislation are met, the electronical submission of the A1-certificate to the employer usually takes three working days.
Obligation to carry the A1-Certificate abroad
The employer has to print the A1-certificate in color immediately upon receipt and has to hand it over to the employee. This printout is the original certificate and has to be carried by the employee abroad. A copy should be kept in the personnel file of the seconded employee. Generally, it is recommended to forward a third copy to the company of the host country.
If the A1-certificate is not available before starting to work abroad, it is recommended to carry the confirmation of receipt of the request or the copy of the questionnaire at first. Generally, the request should be filed in a timely matter before the foreign assignment starts to ensure it is available at the beginning of the trip abroad and can be carried by the employee to avoid sanctions.
Risks of non-compliance
If an A1 certificate is not carried, the employment abroad may be regarded as an uninsured activity and thus as illegal employment. Despite existing social security agreements, in case of a missing A1-certificate, employees may be subject to the legal provisions applicable abroad, so that additional social security contributions or double payments of social security contributions may have to be paid.
Further risks are:
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Here you can download this information.
Tax alert on the major changes resulting from the 2019 MEXICAN FEDERAL REVENUE LAW.
*The summary and comments provided by LEA member firm Garrido Licona y Asociados, S.C.
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Compensation received by an employee for the termination of his / her employment relationship is subject to taxation - provided that the preceding activity has been defeated by domestic taxation, the Finance Court Baden-Württemberg ruled.
The case of a worker who had moved to France and was still working for his German employer was discussed. His working wage was taxed in France. When the employment ended by a dissolution contract, the man received a settlement. The German tax office wanted to see these taxed to the proportion here in Germany, as it corresponded to the duration of his residence in Germany during the entire period of employment.
Rightly so, the Finance Court Baden-Württemberg ruled on 16th January 2018 (Case 6 K 1405/15). The severance pay is proportionately taxable to the extent that the income received for the previously exercised activity has been defeated by domestic taxation. The now limited taxable plaintiff had been fully taxable for a period of 260 months during the employment relationship. At least to that extent the compensation is subject to domestic taxation.
The cross-border commuter regulation only applies to an active activity. The severance pay, however, refers to a past activity. The double taxation agreement with France should be interpreted as meaning that the severance pay is based on the place of work principle.
(Finance Court Ba-Wü / STB Web)
The Financial Court (FG) Münster has decided that a taxation right for so-called third state revenues can not be exercised without regard to the provisions of the Double Taxation Convention (DTA) with the source state (third state).
Third-country income is income that does not come from the FRG or the other country of residence. In addition, if the Federal Republic of Germany has no right of taxation and the source state passes on its right of taxation to another state, the national readmission clause does not apply if the income in the source state is itself subject to the limited tax liability.
Germany - Switzerland - France
The plaintiff lived in the years of the dispute together with his wailing wife mainly in Germany, worked in Switzerland and moved into France, a second home, from which he visited every working day his place of work in Switzerland. DBAs exist between all three states (Germany-Switzerland, Germany-France and Switzerland-France). The wages payable for employment in Switzerland were taxed in France. Switzerland did not tax the wages due to the cross-border regulations of the DBA Switzerland-France. In their income tax declarations, the plaintiffs treated the wages as being tax-free in Germany. The tax office, on the other hand, included the wages in the assessment basis for income tax assessments.
No application of the national readmission clause
The FG Münster brought the action against this with judgment of 1st July 2018 (ref. 1 K 42/18 E). The court first denied the application of the national recidivism clause, stating that income resulting from an activity carried out in Switzerland is subject to limited taxation in Switzerland. The fact that Switzerland "passed on" its right of taxation for that income to France under the Double Taxation Convention concluded with France does not meet the requirements of the readmission clause.
Revision approved for fundamental importance
In view of the fact that the Federal Republic of Germany is entitled to a right of taxation on wages in relation to France, the court states that Germany can not exercise this right of taxation without taking into account the DBA concluded with Switzerland. Since Germany has allocated the right of taxation for Switzerland's wages earned in Switzerland, Germany can not rely on France for having a right of taxation for third-country income.
Because of the fundamental importance of the issue, the Senate has approved the revision of the Federal Finance Court.
(FG Münster / STB Web)
A creditor may seek enforcement of benefits under a contract for works in the Member State in which those services were provided under the contract.
The European Court of Justice (ECJ), by order of 4th October 2018 (Case C-337/17), clarified the legal responsibilities in international construction business involving subcontractors. In the case under negotiation, two Polish companies had concluded contracts for the execution of construction works. Subcontractors were also employed under a provision of national law which established joint and several liability of the investor with the executing contractor. In addition, real estate purchases in Spain played a role.
The judges of the ECJ clarified that the holder of claims is generally free to bring an action for annulment of a claim against the court of the place where the obligation has been or should be fulfilled. Otherwise, the creditor would be required to bring his claim before the court of the defendant's domicile, and that jurisdiction may be absent from any connection with the place of performance of the debtor's obligations to his creditor.
Since, in the present case, the claim of the creditor is to safeguard his interests in the execution of the obligations under the works contract, that place is Poland.
(European Court of Justice / STB Web)
If the employer temporarily postpones the employee to work abroad, the times required for outward and return journeys must be remunerated as work. This was decided by the Federal Labor Court.
The plaintiff is employed by the defendant construction company as a technical employee and has an employment contract to work on changing construction sites in Germany and abroad. From 10th August to 30th October 2015, the plaintiff was sent to a construction site in China. At his request, the employer booked a return flight in business class instead of a direct flight in economy class, with a stopover in Dubai. For the four days of travel, the employer paid the plaintiff the contractually agreed remuneration for eight hours each, for a total of € 1,149.44 gross. In his claim, the plaintiff demands reimbursement for another 37 hours on the grounds that the total travel time from his home to the external job and back is paid as work.
Revision was partially successful
The Labor Court dismissed the claim. The State Labor Court upheld the plaintiff's appeal. The defendant's appeal was partly successful in the Federal Labor Court (BAG). If the employer temporarily postpones a worker abroad, the journeys to and from the external job would be made solely in the interests of the employer and should therefore be remunerated as work. In principle, the travel time required for a flight in economy class is required, according to the judges in their judgment of 17th October 2018 (ref. 5 AZR 553/17).
Renegotiation at the state labor court
In the absence of sufficient findings of the Regional Labor Court on the extent of the travel times actually required of the plaintiff, the Senate could not decide on the matter conclusively and has therefore referred them back to the State Labor Court for renegotiation and ruling.
(BAG / STB Web)
Since 29th September 2018, EU-wide rules for electronic identification (eIDAS Regulation) have come into force. It aims to help citizens and businesses cross-border access to their online services.
These include the ability to file tax returns online, open a bank account or start a business, enroll in schools and access medical information online, while ensuring the principles of personal data protection. Cross-border use of electronic identification systems can save European businesses and governments more than € 11 billion annually.
EU countries must recognize identification systems of other Member States.
Since 29th September 2018, all EU countries are required by law to recognize national electronic identification systems from other Member States that have already notified and comply with the eIDAS Regulation. Germany and Italy have completed their application procedure, Luxembourg and Spain are close to completion, and Croatia, Estonia, Belgium, Portugal and the United Kingdom have also started.
(EU Commission / STB Web)
The report is provided to LEA Global by Dr. Nick Molinaro, Performance Consultant with LEA member firm Wiss LLP.
Dr. Molinaro is a scheduled presenter at the upcoming World Conference in October. He is a licensed psychologist and a consultant in sport and performance psychology working in association with Wiss & Company to bring executive performance assessment and development capabilities to clients.
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We thought you would find the following article and slides of interest - Cyber-Related Claims Without a Breach? They’re Coming.
The materials are provided to LEA by Joseph Brunsman and Daniel Hudson with the Chesapeake Professional Liability Brokers, Inc.
For questions or further information please contact:
Joseph E. Brunsman Bio
P: +1 443.949.5228
If you have clients that operate a business that is involved with obtaining, managing or using the personal data of residents of the European Union, note the date May 25, 2018. That’s when the General Data Protection Regulation /GDPR becomes the law.
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This Sage document is a summary of what you should know regarding GDPR.
Sage’s dedicated GDPR website can be found at https://www.sage.com/en-gb/gdpr/
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In this issue of China Briefing:
Dezan Shira & Associates is our partner and a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in Asia. Since its establishment in 1992, the firm has grown into one of Asia's most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam, Dezan Shira Asian Alliance member-firms in Indonesia, Malaysia, Philippines and Thailand, as well as liaison offices in the United States, Italy and Germany.
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