Global Social Security Newsletter March 2016 www.pwc.com/globalmobility

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Global Social
Security Newsletter
March 2016
Global Social Security Newsletter
Introduction
Welcome to the March 2016 edition of our global social security newsletter, bringing you
updates on changes in the social security regimes of various countries across the PwC network
in the period from 1 January 2016 to date.
We hope that you enjoy reading the updates and as always, please feel free to contact us should
you have any queries or require further clarification on any of the issues raised in the newsletter.
Regards
The PwC social security network
Bart Elias
Social Security Leader - Europe, Middle East, Africa and India
Please visit our dedicated website for details on the social security regimes in place in over 100
countries in the PwC network: www.pwc.com/socialsecurity
Contact
Bart Elias, Partner
Social Security Leader, EMEA
+32 3 259 3156
[email protected]
Colm Waters, Senior
Manager
+353 1 792 6531
[email protected]
Olan Deasy
Editor
+353 1 792 5802
[email protected]
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Global Social Security Newsletter
Countries & topics
• Austria
• France
• Switzerland
• Belarus
• Germany
• Ukraine
• Brazil
• Malaysia
• EU/EEA Updates
• Denmark
• Malta
• Finland
• Netherlands
• Bilateral Agreement
Updates
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Global Social Security Newsletter
4
Your country information
Austria
Social security contributions 2016
Mandatory insurance contributions - salaried employees
Type of insurance
Social security cap
Health
EUR 4,860 p.m.
Employer
Employee
3.78%
3.87%
Accident
EUR 4,860 p.m.
1.30%
0.00%
Pension
EUR 4,860 p.m.
12.55%
10.25%
Unemployment
EUR 4,860 p.m.
3.00%
3.00%
Other
EUR 4,860 p.m.
0.85%
1.00%
21.48%
18.12%
Recurring payments
Maximum p.m.
EUR
1,043.93
EUR
880.63
Maximum p.a.
EUR
12,527.16
EUR
10,567.56
EUR
2,039.26
EUR
1,664.06
EUR
14,566.42
EUR
12,231.62
Special payments
Maximum p.a.
20.98%
EUR 9,720 p.a.
Total Maximum p.a.
Voluntary continued insurance in
domestic pension schemes can (once
again) be claimed in addition to
foreign mandatory insurance starting
in 2016
Until recently multiple insurance was not
possible as the principle of single insurance
within the regulation (EC) 883/2004 or a
bilateral agreement does not provide for
insurance in two pension systems. However,
multiple insurance was possible if the state in
question explicitly or tacitly allowed it.
17.12%
The new regulation in the Social Law
Amendment Act (effective from 1 January
2016) introduced the possibility for multiple
insurance under Austrian law as long as there
have been 12 months of mandatory insurance
within the Austrian pension scheme
immediately before the start of the continued
insurance.
However, domestic voluntary insurance
months must not be added to foreign
mandatory insurance months, which were
collected for the same period, in order to gain
pension rights. It should be considered
whether voluntary continued insurance is
economically reasonable if a mandatory
insurance already exists in another
contracting member state. The evaluation of
the issue’s feasibility depends on whether the
continued insurance contributions are
tax-deductible (in Austria or abroad), as well
as on the extent of the difference between the
Austrian and foreign pension levels.
Global Social Security Newsletter
5
Your country information
Belarus
Brazil
Denmark
Increases in contributions required in
qualifying for pension
The Brazilian Social Security Ministry
published Ordinance n. 1 on 11 January that
provides an adjustment to the social security
tax rates as of 1 January 2016. The new rates
are applicable to all beneficiaries of the Social
Security System, including foreign employees
working for a Brazilian company under a work
contract.
Danish implementation of the Posted
Workers Enforcement Directive
On 1 January 2016 the Edict of the President
of the Republic of Belarus “On the Issues of
Social Security” dated 31 December 2015 No.
534 (hereinafter – “the Edict”) came into
force. As per the Edict, the minimum work
record with payment of social security
contributions qualifying for retirement
pension has been increased from 15 years to
15 years and 6 months. This will continue to
grow by 6 months annually until it reaches 20
years.
Changes affecting foreign offices and
employees/self-employed operating in
Belarus
Social security changes introduced also affect
representative offices of foreign companies
operating in Belarus, as well as foreign
nationals and stateless persons registered as
individual entrepreneurs or employed in
Belarus. From 1 January 2016, they are now
obliged to pay social security contributions to
social security system on the same conditions
as Belarusian legal entities and individuals.
The general contribution rates are 1% for
employees (pension coverage) and 34% for
employers (including 28% pension coverage
and 6% other social security benefits).
Employee contributions are subject to tax at a
maximum rate of 11% regardless of their
monthly salary and are limited to BRL 570,88
on a monthly basis, according to the following
new tax table:
Denmark has initiated the hearing process for
legislative proposals in order to transform the
so-called Posted Workers Enforcement
Directive into Danish law. The directive will
give authorities across Europe enhanced
enforcement mechanisms for ensuring
employer compliance for posted workers in
the EU.
The Enforcement directive aims at promoting
correct compliance with the Posting of
Workers Directive and does not directly regard
social security. The new directive is applicable
to workers that are genuinely posted in the
sense of the Posting of Workers Directive. In
order for Danish authorities to check whether
an employee is genuinely posted to Denmark,
the authorities will initially seek confirmation
that an application for an A1 certificate has
been made or an A1 obtained.
BRL 570,88
Also, the legislation proposes to expand the
already existing obligation for the foreign
service provider to register employees that are
sent to Denmark. The expansion will mean
that information about the employees’ social
security must now also be provided upon the
registration of the employee. The most
efficient manner to ensure that correct
information is provided is for the foreign
employer to provide an A1 certificate.
Please note that the value of BRL 570,88 is the
contribution limit, even if the income received
is greater than the amount of BRL 5,189,82, as
outlined in the table.
Based on the proposal, foreign service
providers having employees in Denmark
should ensure that A1 certificates are obtained
or at least applied for before sending the
employees to Denmark.
Contribution
Salary from
(BRL)
Up to
(BRL)
Social
Security
Rate (%)
0
1,556,94
8%
1,556,95
2,594,92
9%
2,594,93
5,189,82
11%
Ceiling
Contribution
Global Social Security Newsletter
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Your country information
Finland
France
Employer‘s social security rates for
2016
Foreign employees assigned to France
from countries without a social
security agreement with France: the
temporary exemption from old-age
state contribution is no longer
available
The employer’s social security charge is 2.12%
in 2016, which amounts to a 0.04% rise since
2015. Also, the employer’s unemployment
insurance contribution has increased to
1%/3.9% for total paid salaries exceeding
€2,044,500 in 2016 (previously 0.80%/3.15%
on total salaries exceeding €2,025,000).
Employee’s social security rates for
2016
Employee’s unemployment insurance
contribution has increased from 0.65% to
1.15% in 2016.
Employee’s pension insurance contribution for
2016 is 5.70% for employees aged under 53
and 7.20% for employees of age 53 or over.
The relationship between the two payments of
sickness insurance contribution (2.10%/2015)
has also been adjusted. In 2016 the daily
allowance contribution equals 0.82%
(0.78%/2015) and the medicare contribution
1.28% (1.32%/2015).
Additionally, from 1 January 2016, the
renewed Act on Employment Accidents and
Occupational Diseases shall be applied for
injuries resulting from an accident at work or
an occupational disease.
Foreign employees assigned to France from
countries without a social security agreement
with France are subject to French social
security contributions. However previously,
they could, under certain conditions, benefit
from a temporary exemption from the state
old-age contribution (total employee-employer
contribution to the state pension of 15.45% of
the gross salary subject to a cap and 2.20% on
the gross salary). The law 2015-1702 of 21
December 2015 has removed this possible
exemption as from 1 January 2016.
Assignees to France, who are covered
by a certificate of coverage issued
pursuant to a bi-lateral social security
agreement, are liable to French
unemployment contributions:
The Director of Legal Affairs of the
unemployment scheme has confirmed a
change in interpretation of the scope of article
L. 5422-13 of the French Labour Code on
unemployment insurance obligations (“all
employers must insure all their employees
against the risk of loss of employment”).
It has been a long-standing practice by the
unemployment scheme to not require that
assignees to France who are covered by a
certificate of coverage issued pursuant to a
bi-lateral social security agreement (which, in
virtually all cases do not provide an exemption
from unemployment insurance charges) be
covered by French unemployment insurance if
the employer is located outside of France.
Citing the Unemployment Agreement of 14
May 2014 and the circular n°2014-34 of 23
December 2014, concerning the competence
of the URSSAF of the Bas Rhin, which sets
forth the procedure for affiliation and
contributions by foreign employer, and the
absence of an explicit exemption under such
bi-lateral agreements, the Director of Legal
Affairs now takes the position that no
exemption applies.
The practical impact of this would be the
requirement for the foreign employer to
register with the URSSAF of the Bas Rhin in
order to pay the unemployment contribution
and to issue a French-form payslip.
Representations are being made to the
Director to reverse this position based on the
inability of such employees to obtain the
protection that unemployment insurance is
designed to provide. However, there is a
considerable body of case law holding that the
obligation to pay contributions is unaffected
by the right to obtain benefits.
Global Social Security Newsletter
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Your country information
Germany
Malaysia
Malta
The following social security contributions and
rates are applicable as of 1 January 2016 in
Germany.
Effective from March 2016 to December 2017,
the minimum statutory rate of the employees’
contribution to the Malaysian Employees’
Provident Fund (EPF) has been reduced from
11% to 8% in respect of the employees below
age 60, and 5.5% to 4% for the employees age
60 and above.
From 1 January 2016 the following social
security rate changes have been introduced:
Social security contributions
West
Month
East
Year
Month
Year
Contribution ceiling in the statutory
pension insurance
EUR 6,200
EUR 74,400
EUR 5,400
EUR 64,800
Contribution ceiling in the statutory
unemployment insurance
EUR 6,200
EUR 74,400
EUR 5,400
EUR 64,800
Contribution ceiling in the statutory
health and long-term care insurance
EUR 4,237.50
EUR 50,850
EUR 4,237.50
EUR 50,850
Upper income limit in the health and
nursing care insurance
EUR 4,687.50
EUR 56,250
EUR 4,687.50
EUR 56,250
Social security rates
Total
Employer
Portion
Employee
Portion
health insurance*
14.6%
7.3%
7.3%
long-term care insurance**
2.35%
1.175%
1.175%
pension insurance
18.7%
9.35%
9.35%
unemployment insurance
3%
1.5%
1.5%
Furthermore, only the employer has to pay
contributions for U1, U2, insolvency and to the
accident insurance.
* An additional health insurance contribution
is incurred which is only to be paid by the
employee. The amount of the additional
contribution depends on the health insurance in
place.
** An additional long-term care insurance
contribution of 0.25% is incurred for employees
from the age of 23 without children.
However, employees can opt to maintain the
original 11% rate (or 5.5% for employees
above age 60) by completing the requisite
form and submitting it to their respective
employers, who will then forward it to the
nearest EPF office.
There is no change to the employers’ statutory
minimum contribution rates.
Salaried persons
Social security contributions amount to 10%
of the employee’s basic weekly wage, payable
by both the employee and the employer
subject to a minimum and maximum
contribution. The maximum contribution
varies depending on the age of the insured
person - for employees born before 1 January
1962, the current maximum weekly
contribution is €34.49 and for employees born
on or after 1 January 1962, the current
maximum weekly contribution is €42.57.
Self-employed persons
Social security contributions amount to 15%
of the self-employed person’s annual net
income earned during the previous year and
are also subject to a minimum and maximum
contribution. The maximum contribution
varies depending on the age of the person - for
persons born before 1 January 1962, the
current maximum weekly contribution is
€51.73 and for persons born on or after 1
January 1962, the current maximum weekly
contribution is €63.86.
Global Social Security Newsletter
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Your country information
Netherlands
Legislative proposal submitted to
implement the Enforcement Directive
The Dutch Minister of Finance submitted a
legislative proposal in view of the
implementation of the Enforcement Directive
(2014/67/EU). The purpose of this directive is
to protect the rights of posted workers and to
avoid so-called ‘social dumping’. The proposed
legislation captures rules on the minimum
terms of employment for posted workers
(hard-core terms of employment) and a
reporting and documentation obligation. It is
announced that the new legislation will be
implemented at the latest on the 18th of June
2016.
The new legislation will apply if employees
from other EU countries work in the
Netherlands for their foreign employer, or a
foreign employment agency, or in case they
are posted to a Dutch group entity. Certain
activities and groups of workers are excluded.
However, the reporting obligation is extended
to foreign self-employed individuals.
Posted employees are eligible for the so-called
‘hard core’ employment conditions to ensure
equal treatment and working conditions.
These conditions capture provisions on
minimum wages, holiday arrangements and
working hours. Guidelines are provided on
what type of reimbursements for costs related
to working outside the country of origin need
to be paid on top of the minimum wage.
EU service providers will need to provide
up-front information about which activities
will be carried out in the Netherlands, which
employees will carry out these activities and
the duration of the work performed. In
addition, certain documents will need to be
kept in the workplace, such as identity
documents, payslips, employment conditions
and social security (A1) documents. Finally, a
local contact should be appointed and the
recipient of the services is obliged to verify the
reporting. These new requirements will
increase the administrative burden for
employers posting EU employees to the
Netherlands and it seems that for all postings
to the Netherlands from day 1 a social security
document will need to be in place. Further
guidance is expected.
Opinion of the Advocate General in the
Wieland/Rothwangl case
EU Advocate General Sharpston recently
delivered his opinion in the Wieland/
Rothwangl cases. The main question was
whether Regulation No 1408/71 and
Regulation No 859/2003 preclude
Netherlands rules which, in the 1960’s,
excluded third-country nationals from
insurance in respect of old-age state pension
benefits. The cases involved two former
seafarers who in the 1960’s worked on board a
Dutch home based sea-going vessel. Both
individuals were Austrian and were
considered third country nationals since
Austria was not (yet) a member of the
European Union at that time. In 2008 and
2009 respectively the individuals applied for
old-age Dutch state pension benefits, after
Austria had acceded the European Union. The
applications were however rejected by the
Dutch social security authorities.
The EU Advocate General concluded that the
Dutch social security authorities were not
obliged to pay out Dutch old-age state pension
benefits to the individuals. The exclusion of
third country nationals from the Dutch
old-age state pension benefits at that time was
discriminatory, however allowed since Austria
was not yet a Member State of the EU.
Furthermore the individuals did not have any
period of Dutch social security coverage based
on Dutch national legislation prior to Austria
accessing the European Union. Therefore,
transitional provisions are not applicable.
Finally, the EU Advocate Generally noted that
it would be incompatible with the principle of
legal certainty if in such cases benefits were
awarded retroactively.
Global Social Security Newsletter
Your country information
Switzerland
Ukraine
Application of the EU regulation
883/2004 and 987/2009 between
Switzerland and the EFTA member
states
2016 Unified Social Contribution rate
changes
From 1 January 2016 EU regulations
883/2004 and 987/2009 - replacing the old
EC regulations 1408/71 and 574/72 - are
applicable between Switzerland and the EFTA
member states (Iceland, Liechtenstein and
Norway), including the adjustments based on
EU regulations 1244/2010, 465/2012 and
1224/2012.
Regulation 883/2004 lays down the general
principles regarding the coordination of social
security rights of persons moving within the
Community, with the detailed procedural and
administrative matters being dealt with in
Regulation 987/2009.
From 1 January 2016 new rates have been
introduced for the Unified Social
Contributions (USC).
USC is now only paid by employers. The
general USC rate is now 22% (instead of
36.76% - 49.70% range in previous years).
Employees no longer have to pay the
contribution (previously the rate was 3.6%).
The maximum base for USC was increased to
25 times the living wage for an employed
person (previously 17 times of the living wage
in 2015). Thus, the maximum base for USC
during 2016 will gradually increase from UAH
34,450 in January to UAH 38,750 in
December (or approx. EUR 1,150 - 1,300 at the
current exch rate). The minimal base for
income received at the main place of work
remains unchanged for 2016 - one minimum
wage for the respective month.
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Global Social Security Newsletter
10
EU/EEA Updates
European platform to tackle
undeclared work – draft EU legislation
endorsed
The next step in the adoption process is for the
European Council to formally endorse the
decision made by the European Parliament.
In February 2016, the European Parliament
accepted a proposal on the establishment of a
European platform to prevent undeclared
work.
In addition to the initiated process of
establishing a European platform to enhance
cooperation in the prevention and deterrence
of undeclared work, a motion to the European
Parliament on 7 January 2016 by the
committee on Employment and Social Affairs
proposes the establishment of a European
body of cross-border labour inspectors to
perform on-the-spot checks in suspected cases
of social dumping. It has been suggested that
the body would work in coordination with the
Platform.
The platform’s purpose is to enhance
cooperation between national authorities,
trade unions and employer’s associations in
the EU member states. The Platform will
support enhanced data exchange of best
practices among national authorities in the EU
Member states.
The Platform is to be regarded as one of
several measures, which is currently adopted
by the EU in order to ensure compliance with
regards to cross-border employer’s
compliance.
Global Social Security Newsletter
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Bilateral agreement updates
Entered into force:
Signed:
Negotiations
Turkey – Montenegro 1 December 2015
Korea (Rep.) – Quebec 24 November 2015
Denmark – Philippines 1 December 2015
Argentina – Ecuador 9 December 2015
China (People’s Rep.) – Romania 3 December
2015
Israel – Italy 1 December 2015
Morocco – Tunisia 10 December 2015
(approved by Morocco)
Australia – India 1 January 2016
Belgium – Moldova 1 January 2016
Belgium – Albania 1 January 2016
Quebec – Romania 1 March 2016
Albania – Romania 18 December 2015
(ratified by Romania)
France – Canada 21 December 2015
(ratified by France)
Canada – Peru 14 January 2016
(ratified by Peru)
Bulgaria – Brazil 1 February 2016
Bulgaria – Montenegro 1 February 2016
Morocco – Tunisia 6 February 2016
(approved by Morocco)
Turkey – Montenegro 12 February 2016
(clarifications published)
Morocco – Tunisia 24 February 2016
(approved by Tunisia)
Belgium – Israel 25 February 2016
(submitted for approval by Belgium)
Albania – Germany 26 February 2016
(approved by Germany)
Albania – Germany 8 March 2016
(approved by Albania)
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Bulgaria – Morocco 9 March 2016