It can be advantageous for you as a company to employ temporary workers from Eastern Europe. On the one hand, you can react flexibly when more staff are needed. On the other hand, you can reduce your costs. On the other hand, there are special legal and tax issues.
What is the social security situation for the employment of temporary workers from Eastern Europe?
When we talk about social insurance, we mean things like health insurance, pension insurance and unemployment insurance.
Temporary workers from Eastern Europe are generally covered by social security in their home country. However, they are also subject to certain social security contributions in the country in which they work, depending on the applicable laws and regulations.
As an employer, you must ensure that your temporary workers have a A1 certificate which certifies that they are still subject to the social security obligations of their home country while working abroad. This certificate is important in order to avoid double taxation and problems with the recognition of insurance periods.
As an employer, you are also generally obliged to pay social security contributions for your temporary workers. These are based on the applicable rates and regulations in each country. It is important that you are aware of the current contribution rates and deadlines and ensure that you pay all contributions on time.
You should be aware that you may be held liable for non-payment of social security contributions for your temporary workers. It is important that you properly maintain all necessary documentation and evidence and comply with all legal requirements in order to minimise liability risks.
What tax issues arise when employing temporary workers from Eastern Europe?
Employing temporary workers from Eastern Europe can also have tax implications that can vary from country to country. Here are some important tax issues you should be aware of as an employer:
- Income taxTemporary workers from Eastern Europe are generally liable for income tax in their home country. However, they may also be liable for income tax in the country in which they work, depending on the applicable laws and regulations.
- Double taxation agreementMany countries have double taxation agreements (DTTs) in place to avoid double taxation of income. As an employer, you should be aware of the applicable DTAs between the home country of your temporary workers and the country in which they work and ensure that you take all necessary steps to take advantage of these agreements.
- Income tax deductionAs an employer, you are generally obliged to deduct income tax from the salaries of your temporary workers and pay it to the relevant tax authorities. It is important that you are aware of the applicable tax rates and regulations and ensure that all deductions are made and reported correctly.
- Value added taxIn some cases, you may also have VAT obligations in connection with the employment of temporary workers from Eastern Europe, especially when it comes to services that are provided across borders. It is important to understand the applicable VAT rules and make all necessary declarations.
Practical recommendations for employers
Given the complexity of social security and tax issues when employing temporary workers from Eastern Europe, it is advisable to follow some practical recommendations:
- Legal adviceYou should seek legal advice in good time to ensure that you comply with all applicable laws and regulations and minimise potential liability risks.
- Documentation and recordsIt is important to properly maintain all relevant records and evidence and to carefully document all transactions and payments in order to be able to prove that all legal requirements have been met in the event of an audit or inspection.
- Ongoing trainingThey must regularly inform their employees about the applicable social security and tax regulations and ensure that they are up to date with the latest developments and changes.
Do you need support?
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