Situation: A company sends its employee to work for a client of the company, located in Belgium. The employee will stay with the client for a period between 8 and 12 months.
What is the procedure and what are the obligations to be fulfilled for the company that posts the employee?
Solution:
According to Article 5 paragraph (1) of Law 16/2017 on transnational posting, this law applies in the situation where the undertakings referred to in Article 3 letter a) take the decision to implement one of the following transnational measures:
a) the secondment of an employee on the Romanian territory, in the name of the enterprise and under its coordination, within a contract concluded between the seconding company and the beneficiary of the service providing its activity on the Romanian territory, if there is an employment relationship, during the secondment , between the employee and the company that makes the secondment;
b) the secondment of an employee to a unit or to an enterprise belonging to the group of enterprises, located on the Romanian territory, if there is an employment relationship, during the secondment period, between the employee and the enterprise that makes the secondment;
c) the provision of an employee, by a temporary work agent, to a user enterprise established or which carries out its activity on the Romanian territory, if there is an employment relationship, during the secondment, between the employee and the temporary work agent.
(2) This law shall apply in the situation where the enterprises provided for in Article 3 letter b) take the decision to implement one of the following transnational measures:
a) the secondment of an employee from the territory of Romania, on behalf of the enterprise and under its coordination, within a contract concluded between the undertaking making the secondment and the beneficiary of the service operating on the territory of a Member State other than Romania, or on the territory The Swiss Confederation, if there is an employment relationship, during the secondment, between the employee and the company making the secondment;
b) the secondment of an employee from the territory of Romania to a unit or to an enterprise belonging to the group of enterprises, located on the territory of a Member State other than Romania, or on the territory of the Swiss Confederation, if there is an employment relationship, during the secondment, between the employee and the company that makes the secondment;
c) the provision of an employee, by a temporary work agent, to a user enterprise established or operating in the territory of a Member State other than Romania, or in the territory of the Swiss Confederation, if there is an employment relationship, during the secondment, between the employee and the temporary work agent.
Therefore, according to Article 2 letter b) of the same normative act, an employee posted on the territory of Romania is the employee of an employer established on the territory of a Member State other than Romania, or on the territory of the Swiss Confederation, who normally works in a state other than Romania, but who is sent to work for a limited period of time on the territory of Romania, when the employer takes one of the measures provided for in Article 5 paragraph (1);
The employee from the data provided above is in the transnational secondment situation mentioned in point a) mentioned above because he travels to provide services, and the provision of services is the subject of a contract concluded by the Romanian company with an entity from another EU member state (Belgium). At the same time, the employee during the trip is paid by the Romanian company.
Considering that the employee is in the situation of transnational secondment, his movement can be done by concluding an additional act of secondment which will include:
- the constituent elements of the remuneration to which the employee is entitled, in accordance with the legislation applicable in the host Member State, and their level;
- the total amount of the remuneration granted to the employee during the secondment, with the distinct highlighting of the specific secondment allowance, when it is granted;
- the expenses actually generated by the secondment, such as transport, accommodation and meals, as well as the manner of granting or reimbursing them, respectively the way of ensuring the transport, accommodation or meals, as the case may be;
- the link to the single official national website created by the host Member State in accordance with Article 5 (2) of Directive 2014/67 / EU of the European Parliament and of the Council of 15 May 2014 on ensuring compliance with Directive 96/71 / EC on secondment of workers in the provision of services and amendment of Regulation (EU) no. 1,024 / 2012.
The elements provided for in paragraph (1) (a) and (d) shall not apply if the duration of the secondment is less than or equal to 7 consecutive days.
In addition, the additional act must also include the elements provided for in Article 18 paragraph (1) of the respective Labor Code:
- the duration of the work period to be performed abroad;
- the currency in which the salary rights will be paid, as well as the payment methods;
- cash and / or in-kind benefits related to the activity abroad;
- climatic conditions;
- the main regulations of the labor legislation of that country;
- the customs of the place whose non-observance would endanger his life, freedom or personal safety;
- the conditions of repatriation of the worker, as the case may be.
Moreover, the additional act must include provisions regarding the expenses of per diem, meals (if granted separately from the per diem), transport and accommodation.
The manner in which the transport and accommodation is settled is established by the parties through this additional act. The employee must present supporting documents for the transportation and accommodation expenses made according to the additional act. In the absence of the supporting document, they will be fully taxed with income tax and social contributions.
Regarding the daily allowance, according to article 76 paragraph (4) letter h) of the Fiscal Code, allowances and any other amounts of the same nature, received by employees, according to law, during the delegation / secondment, as the case may be, in another locality, in the country and abroad, in the interest of the service, within the following limits:
- in the country, 2.5 times the legal level established for the allowance, by a decision of the Government for the staff of public authorities and institutions;
- abroad, 2.5 times the legal level established for the daily allowance by Government decision for the Romanian personnel sent abroad for the accomplishment of some temporary missions.
With regard to social contributions, Article 139 paragraph (1) letter j) of the Fiscal Code provides that the calculation of social security contributions includes allowances and any other amounts of the same nature, other than those granted to cover transport costs. and accommodation, received by employees, according to the law, during the delegation / secondment, as the case may be, in another locality, in terraces abroad, in the interest of the service, for the part that exceeds the non-taxable ceiling established as follows:
- in the country, 2.5 times the legal level established for the indemnity, by a decision of the Government for the personnel of the public authorities and institutions;
- abroad, 2.5 times the legal level established for the daily allowance by decision of the Government for the Romanian personnel sent abroad for the accomplishment of some temporary missions;
The part that does not exceed these ceilings does not enter into the basis for calculating social contributions.
Therefore, the daily allowance abroad is not taxable and is not taxable if it is granted within the limit of 2.5% the level established for public institutions and if it is granted during the secondment / delegation.
We mention that the level for public institutions is established in the Annex to GD no. 518/1995 regarding some rights and obligations of the Romanian personnel sent abroad for the accomplishment of some temporary missions.
In the Annex to the Government Decision no. 518/1995 stipulates that the daily allowance for Belgium is 35 Euro.
Thus, in case of a secondment in Belgium, the amount of 87.5 Euro / day (35×2.5) will not be included in the calculation base of the obligatory social contributions and of the income tax. For what exceeds 87.5 Euro / day, social contributions and income tax will be due.
This is the maximum non-taxable limit, but the employer and the employee can negotiate a daily allowance in a smaller or larger amount.
What exceeds the amount of 87.5 Euro per day is taxed and taxed with social contributions.
In Revisal it is registered at the latest the day before the first day of detachment.
According to Article 2 letter y) of Law 16/2017, the remuneration applicable on the territory of a Member State of the European Union, other than Romania or on the territory of the Swiss Confederation, the amount of money established by national law and / or national practices of the Member State posted the worker, representing all the constituent elements of remuneration that are mandatory under domestic law, laws and regulations or collective agreements or arbitral awards, which have been declared of general application or which apply in accordance with Article 3 (8) ) of Directive 96/71 / EC in that Member State.
From this text it results that the employers who second employees from the Romanian territory have the obligation to pay them the minimum remuneration from the state in which they are going to perform activity as secondees (Belgium).
This remuneration is not established by the Romanian legislation, so the Romanian employer must be interested in Belgium regarding the amount and components of the minimum remuneration.
Member States are required to set up a website to provide information on the minimum wage and its components.
The official websites of the Member States can be found by following the link below:
https://europa.eu/youreurope/citizens/work/work-abroad/posted-workers/index_ro.htm#national-websites. After accessing the link, click on the right arrow in the Select country section
According to Article 11 (3) (a) of Regulation (EC) No 883/2004, subject to Articles 12 to 16: (a) a person pursuing an employed or self-employed activity in a Member State is subject to the legislation of that Member State.
Thus, the Regulation establishes the rule according to which the social contributions are due in the state in which the employee performs activity. Two exceptions to this rule are regulated: transnational secondment and pluriactivity.
These exceptions are established on the basis of portable document A1 and in the period mentioned in this document, the social contributions are paid in Romania.
Thus there can be two situations:
- The employer does not obtain the portable document A1
If the portable document A1 cannot be obtained, the social contributions shall be due in Belgium, on the basis of Article 11 (3) (a) cited above. The employer has the obligation to register in Belgium and to pay the social contributions in this state according to the legislation of this state. The conditions for the payment of social contributions are those established by the legislation of Belgium.
If he does not obtain the A1 portable document, the Romanian employer must inquire in Belgium under what conditions he can send employees to this state without the A1 portable document. Belgium may impose certain conditions that the Romanian employer must meet, such as forcing him to complete certain formalities or prohibiting him from sending employees in the absence of the A1 portable document.
According to Article 21 of Regulation 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (Text with SEE relevance and Switzerland):
“Article 21 Obligations of the employer
(1). An employer who has his registered office or representative office outside the competent Member State shall be obliged to comply with all the obligations laid down by the legislation applicable to his employees, in particular the obligation to pay the contributions provided for in that legislation. would be in the competent Member State.
(2) An employer who does not have a representative office in the Member State whose legislation is applicable may agree with the employee that the latter may fulfill the employer’s obligations on his behalf or in respect of the payment of contributions, without prejudice to the basic obligations of the employer. the employer. The employer shall make such an agreement known to the competent institution of that Member State.
Thus, according to paragraph (1) above, the employer has the obligation to register in Belgium and to pay the social contributions in this state according to the legislation of this state.
The conditions for the payment of social contributions are those established by the legislation of Belgium.
There is also the possibility provided in paragraph (2) that the employee takes over the obligation of the employer to pay the social contributions and to pay and declare he (the employee) the social contributions in the respective state by concluding an agreement. In order for the employee to take over the obligations to pay social security contributions, the documents regulated by the Belgian legislation must be concluded. A simple agreement is not enough.
Therefore, the employer must be interested in Belgium in the tax authorities of this state regarding the documents that must be prepared/submitted for the employee to take over the obligations to pay social security contributions.
Following the conclusion of this agreement, the employee will proceed according to the legislation of Belgium regarding the declaration and payment of social contributions.
If the agreement of the two parties (employer and employee) is not for the employee to take over the payment and declaration of social contributions, the employer must inquire with the Belgian tax authorities about the documents they must prepare/submit to pay and declare social contributions in this state. “
- The employer obtains the portable document A1
If the Romanian employer obtains the portable document A1, the social contributions are paid in Romania for a period of maximum 24 months. The portable document A1 is issued by the National House of Public Pensions.
The term provided by the Convention between the Government of Romania and the Kingdom of Belgium regarding the avoidance of double taxation regarding income and wealth taxes is 183 days in any period of 12 months, starting or ending in the fiscal year concerned.
Therefore, if the employee is present in Belgium for a period exceeding 183 days, the income tax is due in Belgium, and the Romanian employer who pays the income from salaries has no obligation to calculate, withhold and transfer income tax from wages, as the right to tax rests with Belgium.
The tax is due in Romania if the employee is present in Belgium for a period of less than 183 days. In this case, the condition is that the salary is not borne by a possible office in Belgium.
Legal basisa:
- https://static.anaf.ro/static/10/Anaf/AsistentaContribuabili_r/Conventii/Belgia2.htm;
- Law 16/2017 on the secondment of employees within the provision of transnational services, with subsequent amendments and completions;
- HG 518/1995 regarding some rights and obligations of the Romanian personnel sent abroad for the accomplishment of some temporary missions;
- https://europa.eu ;
- Regulation 883/29-Apr-2004 on the coordination of social security systems.