As described in the June 2015 issue of tax:watch, a case before the European Court of Justice has recently given rise to concern among business travellers and their employers in relation to social security coverage.
The concern was that the case could lead to business travellers being covered by social security in many European countries as they visit these countries as part of their work.
This would be a problem due to the fact that business travellers and their employers might be required to pay contributions to social security in many different countries.
Further, the business traveller would likely experience inferior social security coverage – for example in relation to benefits that require a period of accrual before the individual is eligible to receive the benefit.
Fortunately, due to the specific work pattern of the employee subject to the case before the European Court of Justice, the case has no implications for most business travellers.
The case has now been withdrawn by the Cypriot court that submitted the case to the European Court of Justice with request for a preliminary ruling.
The question then remains, where employees in similar situations as the employee subject to the case before the European Court of Justice are to be covered by social security.
Before the case was withdrawn, the advocate general released his proposal for a ruling by the European Court of Justice.
In the proposal, the advocate general stated that the Polish employee of the Cypriot temporary employment agency should be deemed covered by Cypriot social security during the employment period as opposed to social security in all the different countries where the work was performed.
Even though the case was withdrawn before a verdict was passed by the European Court of Justice, it is only natural to expect that the social security authorities in the different European countries will follow the proposal by the advocate general in future similar cases as the proposal represents the most likely outcome of the case had it not been withdrawn prior to a verdict was passed. Further, the proposal currently represents the most likely outcome, if a similar case is brought before the European Court of Justice in the future.
Hence, looking forward, there may not be an issue at all for employees in similar situations as the Polish employee subject to the case before the European Court of Justice.
However, it is always advisable to assess the social security position and request any necessary certificates of coverage when sending employees to work abroad. BDO can help your business in this matter if required.
The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.