Home Office in Germany: Covid 19 special regulation expires at the end of June! A1 certificate now available fully electronically at ÖGK
Due to the Covid 19 pandemic and the associated travel restrictions, numerous employees were forced to work from their (foreign) home offices. Since many Covid 19-related special regulations regarding tax and social security expire on June 30, 2022, it is advisable to deal with the current and future regulations. In the area of social security law, a new tool from the Austrian Social Security Carrier (ÖGK) should simplify the application of A1 certificates.
Tax regulations
In accordance with the double taxation agreement (OECD Model Convention), the country of residence of the employee in general has the taxation right for income from employment. However, if the activity is carried out in another country, this may lead to a taxation right for the income from employment abroad. This is particularly the case if the employer's registered office is not located in the residence country of the employee. If the employment activity is carried out in the country in which the employer has its seat, that part of the remuneration which is attributable to working days in the source state (in this case, the country of the employer's seat) may be taxed in the source state. If, due to the Covid 19 pandemic, an employee also works in the home office in the residence state, which is not the country, where the employer has its seat, the taxation right is allocated between the residence state and the source state (state of the seat of the employer) based on the number of working days.
For the period of the Covid 19 pandemic, a consultation agreement was concluded between Austria and Germany, which included many facilitations, especially regarding the pandemic-related home office. For example, it was bilaterally agreed between Austria and Germany that working days on which an employee performs the activity in the home office only due to the Corona measures can be considered as working days spent in the contracting state in which the employee would normally have performed the activity. This rule could be used by notifying the employer and the competent tax office of the State of residence.
The consultation agreement with Germany and the Covid 19 exemptions agreed therein were extended for the last time until June 30, 2022. Thus, as of this date, the general regulations regarding the allocation of taxation rights will be applicable.
Social security regulations
For activities within the EU, the EEA and Switzerland (hereinafter referred to as "Member States"), Regulation (EC) 883/2004 is applicable. According to this Regulation, the social security regulations of only one state are applicable, even if a person is active in several Member States. According to the Regulation, in principle, the social security law of the Member State of residence is applicable if the person performs at least 25% of his activity in the Member State of residence. If less than 25% of the activity is carried out in the Member State of residence, the person is, in principle, subject to the social security legislation of the state in which the employer has its registered office.
As a result of the Covid 19 pandemic and the associated travel restrictions, numerous employees were forced to work from their home offices rather than from their employer's headquarters. For foreign employees who worked exclusively at the employer's headquarters before the pandemic, but who now perform at least 25% of their work in their home office due to the pandemic, this would have resulted in a change of the applicable social security system.
Therefore, the EU Administrative Commission has created a special regulation according to which exclusively corona-related home office should not change the applicable social security system. Employees shall continue to be covered by the social security system they would have been covered by if the Covid 19 pandemic had not occurred. This special rule is to apply only until June 30, 2022. Employees who continue to perform at least 25% of their work in the Member State of residence (in the home office) after June 30, 2022, are subject to social security system in the Member State of residence in accordance with the general provisions of Regulation (EC) 883/2004.
A1 certificate
If an employee regularly works in several member states (multi-state worker) or is posted to another state by the employer, the so-called portable document (PD) A 1 (A1 certificate) must be applied. The A1 certificate can be used abroad to prove that the employee is subject to the social security legislation of a Member State. A posting is generally understood to be the taking up of an activity in another Member State for a domestic company in the context of an employment relationship under the Austrian General Social Security Act (ASVG). Even a posting of a few hours is a posting within the meaning of Regulation (EC) 883/2004. It should be noted that any business trip to another Member State also constitutes a posting within the meaning of Regulation (EC) 883/2004, even if it lasts only one day or a few hours. It is therefore necessary to apply for an A1 certificate even for short business trips. It should be noted that, in addition to the A1 certificate, further documents or notifications might be required in some countries for cross-border work assignments. The application should be submitted electronically via ELDA before the start of the cross-border assignment. The following types of A1 certificates are available:
- E1 - Posting of an employee to another member state
- E2 - Employment for one employer in several member states
- E3 - Employment for several employers in several member states
- E4 - Self-employment and employment in different Member States
Since April 1, 2022, a new software of the Austrian Social Security Carrier (ÖGK) is available. With this new tool, applications for the issuance of A1 certificates are now processed fully electronically. In addition to a shorter processing time, the fully electronic processing has the advantage that, according to information provided by the Austrian Social Security Carrier, applications can even be processed outside regular business hours, i.e. even on weekends.
At present, however, it is only possible to process applications for the issuance of an A1 certificate for postings to a member state and the United Kingdom (E1) and applications for the issuance of a posting certificate for postings to states with which a bilateral agreement has been concluded via the new tool. For applications E2, E3 and E4, a changeover to the new system is not planned until the beginning of 2023.
Conclusion
After a Covid 19-related exceptional situation lasting more than two years, the return to the pre-pandemic regulations under social security and tax law is to take place. Since many companies would like to continue to allow their employees to work (partially) in the home office, a review of the applicable social security system should be conducted. The new tool of the Austrian Social Security Carrier (ÖGK) provides for a fully electronic application and issuance of A1 certificates for postings and thus increases flexibility in the cross-border deployment of employees.
Authors:
Cornelia Stangl
cornelia.stangl@bdo.at
+43 5 70 375 - 1194
Philipp Sabukoschek
philipp.sabukoschek@bdo.at
+43 5 70 375 - 1526
Contact:
Talk to our BDO expert for global mobility Katja Reichl
katja.reichl@bdo.at
+43 5 70 375 - 1463
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