Social Security - 25% working time and/or salary is the only relevant factor

If you have employees who regularly travel and work in more than one EU member state, the question may arise as to which country's social security rules apply to these employees. A recent ruling by the EU Court of Justice provides legal certainty in this area.

In the case in question, a Dutch resident worked as a skipper for a company based in Liechtenstein, working in the Netherlands, Belgium, and Germany. Logbooks showed that 22-24% of the work was performed in the Netherlands. The EU directive is clear on this matter. If an employee works less than 25% in the EU country where they reside, the social security system of the employer's country applies. When calculating the 25%, only the proportion of working time and/or salary is relevant.

In this case, the Dutch social security institution insisted on the application of Dutch social security, arguing that other circumstances, such as where the employee lives, where the company is registered, or where the ship is moored, should be considered when determining the 25% threshold. However, the EU Court of Justice confirmed in its ruling that only the proportion of working time and/or salary is a relevant factor to be considered.

This ruling thus brings legal clarity and uniformity in the application of EU social security rules and helps employers and employees know which social security system they should follow, regardless of the countries involved.

Our advice to both employers and employees working in multiple EU countries is to ensure that working time and income in each country are recorded, as these data determine the applicable social security coverage and thus also the wage obligations for the employer.