Employed persons: activities in two or more Member states
Current Regulations 1408/71 and 574/72
Key Points:-
There are special rules that determine which Member state’s social security legislation applies if an employee has a pattern of normally working in two or more other Member states. The current rules for people normally working in two or more Member states can be quite complex.
Generally, employees who normally work in two or more Member states are subject to the legislation of the Member state they reside in if they also work there. If they do not work in the Member state they reside in, they are subject to the legislation where their employer is registered or has a place of business.
There are different rules for transport workers who normally work in two or more Member states.
Employers apply to HMRC Residency for Form E101 to show that they and their employees are entitled to continue to pay National Insurance in the UK and are exempt from foreign social security contributions.
If under these rules the legislation of another Member state applies to the employee, the employer should obtain a Form E101 from the foreign authority in order to show HMRC they and the employee are exempt National Insurance in respect of the earnings paid to that employee.
Employment and earnings in other Member states are treated as being carried on in the Member state whose legislation applies
New Regulations 883/2004 and 987/2009
Key Points:-
From 1 May 2010 the new Regulation 883/2004 will contain new rules for people with a pattern of normally working in two or more Member states.
The legislation of the Member State of residence applies if he pursues a substantial part of his activity in that Member State; or
The legislation of the Member State of residence applies if he is employed by various undertakings or various employers whose registered office or place of business is in different Member States.
Only if he does not pursue a substantial part of his activity in the Member State of residence is he subject to the legislation of the Member State in which the registered office or place of business of the undertaking employing him is situated.
There will no longer be special rules for international transport workers such as aircrew or lorry or coach drivers who normally work in two or more Member states. These groups will be subject to the same rules as other people.
For most people the new rules will result in them being insured in the Member state of residence because they have a substantial part of their activities in their state of residence.
If the employee resides in the UK, employers and employees apply to HMRC Residency for Form A1 to show that you and the employee should continue to pay UK Class 1 National Insurance (employers may also have to pay Class 1 A or B) and are exempt from foreign contributions.
If the employee resides in another Member state but the employee also works in the UK, you should apply to the authorities in the Member state of residence and they will make a decision about which legislation applies – after contacting HMRC.
Employment and earnings in other Member states are treated as being carried on in the Member state whose legislation applies
When determining whether a substantial part of the activity of an employed person is pursued in a Member State HMRC will take into account:
The working time; and/or
The remuneration
If less than 25{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} of the person’s working time is carried out in the UK and/or less than 25{e68217344b855fcd608ed2c4c41f83644da7cd41ea524fbfa2ad06c632d3255d} of the person’s remuneration is earned in the UK this will be an indicator that a substantial part of all the activities of the worker is not pursued in the UK. Other criteria may also be taken into account. HMRC may look at the past but must also look at the position in the next 12 months. This will allow HMRC to take account of changing circumstances.
