Work abroad: Don’t forget your A1 form

Many of our clients and their employees are flexible – they live in one country and work in another, or work in two or more countries at the same time. This does not only apply to certain professions, such as truck drivers, shipping professionals or sales representatives. Today’s opportunities are wide-ranging and the workforce’s mobility is reflected in payroll accounting as well. However, this flexibility needs to be analysed in more detail if we want to pay insurance premiums and income tax correctly.

To put it very simply, every employee must “belong” somewhere when it comes to income tax and social and health insurance levies.

A careful assessment needs to be made as to where his levies and taxes will go. Although our colleagues from the tax department are always helpful, we know that it all stands on the place of work – that’s where the taxes are paid in principle (with a few exceptions, of course).
It may sound simple, but only until you start keeping payrolls in both countries and split income and benefits between them so that you pay the income taxes where they belong. More than one country may be involved, and you may be confused by the different approaches to calculations in different countries.

Levies (for social security and health insurance) are different.

They are always linked to a single country as determined by the responsible authority through the A1 form determining the applicable legislation. In our country, this institution is the Social Insurance Agency. The employee, often with the help of the employer or a payroll accountant, applies to the relevant branch for a determination of the applicable legislation using the A1 form plus attachments. Based on the submitted documents, the social insurance agency determines the country in which the social insurance is to be paid. It may not always be the country anticipated by the applicant, and the application may even be rejected.

If your employees have successfully completed the whole process and the Social Insurance Agency has made a decision, the employee must carry the approved A1 form when working abroad. Do not delay the submission of your application. It is advisable to bear in mind the possible rejection as well as the length of the process, which usually exceeds the declared 45 days.