As discussed in the previous article, published on April 21, the possibility of performing remote working has assumed an important place in the choices of workers.
In this context, many employees have chosen to carry out their work from abroad, in remote mode, moving from Italy to another country, in most cases belonging to the European Union.
In the case of permanent transfer of the employee abroad, while maintaining an employment relationship with the Italian employer, the obligations and fulfillments need to be verified, mainly for the Italian employer.
The previous article analyzed art. 11, paragraph 3, letter a) of EC Regulation 883/1994, which establishes the principle of territoriality and according to which a worker is subject to the social security legislation of the country in which the work is carried out.
The provisions of the Regulation that – in the case of secondment or relocation – derogate from the general principle set out above do not apply in the case of voluntary transfers, which are not dictated by company requirements.
In the case being analyzed, the principle of territoriality is fully applied and the employer, as well as the employee, must pay social security and pension contributions in the place or country where the work is carried out.
Art. 21 of EC Regulation no. 987/2009 provides for the obligation of the (foreign) employer to comply with the obligations laid down by the legislation applicable to its employee, as if its registered office or place of business were located in the competent Member State identified on the basis of art. 11 above. In order to comply with these obligations, most EU countries provide for the appointment of an on-site social security representative, who takes on the obligation to calculate and pay the social security and pension contributions due; in some cases, in addition to the contributions, the payment of income tax will also be required, through the calculation and payment of withholding taxes.
In light of the above, it will be always necessary to carry out a detailed analysis of the legislation of the country to which the worker decides to move, in order to verify the required obligations and the ways in which it will be possible to fulfill them.
Below, we will analyze the cases of two European countries – Germany and Spain – and, in general, the obligations to be fulfilled for contribution purposes in those countries, in the event that – due to the type of activity carried out – the establishment of a local branch is not necessary.
The indications given below are based on the legislation currently in force in the countries concerned and must not be considered exhaustive.
Remote working in Germany
The German legislation in terms of social security obligations provides that the foreign (Italian) employer must fulfil its contribution obligations as if it was domiciled in Germany. The Italian employer will therefore be obliged to register with the competent authorities, providing the employee’s details, and it will be obliged to carry out payroll operations – on a monthly basis – for the payment of the amounts due (i.e. health insurance, long-term care insurance, pension contributions and unemployment insurance).
According to German law, the payment of income tax will be made on a self-assessment basis by the employee, who must then prepare his own tax return. In other words, the social security representative does not assume the typical obligations of a withholding agent.
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Remote working in Spain
Also in Spain, the employer must fulfil the social security obligations and it will be required to register (and register its employee) with the competent Spanish authorities and appoint a social security representative for non-resident companies.
In contrast to the German (and Italian) system, the social security representative office will also have to pay withholding tax on income paid to the employee, who works in Spain, if the circumstances so require.
In the cases analysed, should the worker return to Italy to carry out his/her work activity within the Italian terrirtory, in order to “derogate” from the principle of territoriality and avoid payment of contributions in Italy, he/she must request an A1 certificate to the foreign social security authority.