Our article will help to solve the problem of choosing a right place for social and health insurance for the citizens of the European Union (EU), when working not only in the country of permanent residence. Each citizen, who lives in one of the EU country has to be socially protected and has to get the right on free health care, compensations, benefits and pension in future. There are rules in the EU that regulate the social insurance system and are governed by the Regulation of the European Parliament and of the Council of the European Union No.883/2004.
We would like to propose you to choose the optimal option for yourself out of the following principles, which help to determine the correct decision about the place of insurance payments:
Basic principles of determining the place of insurance payments:
- The single insurance principle.
The single insurance principle is applied in the EU, EEA (European Economic Area) and Switzerland. When you move between these member states, i.s. you live in one country, but work in the other, you always have to be insured only in one country. This principle allows not carrying out the insurance payments in two or more countries at the same time. - The insurance principle of the country of employment/ entrepreneurial activity (lex loci labouris- the law of working place , means that the law of the country, where the work is carrying out, applies.
In the other words, it means, that if you are employed only in one country, so you have to be insured also in the same country. And it is of no importance absolutely what country you live in, or where your employer is registered, or under the law of what country is the labour agreement concluded. The only important point is -the country you are working in or carrying out your entrepreneural activity .
The exceptions are desribed in the article 12 of Regulation no. 883/2004:
• If the company sends the employee for a temporary work to another state : in this case the rules of the country, from where the employee is sent, continue to be applied to the worker, under condition when the period of staying in the other EU state does not exceed 24 months. Such movement has to be confirmed by the special certificate A1. But such rule can‘t be applied if the employee moved to the other country for living there.
• If an entrepreneur, who does his business activity in the country where he lives, starts the same activity in the other state and this activity will not last more than 24 months,
the entrepreneur remains to be registered as individual in the first country and pays taxes there, the rules of the first country are applied to that individual. It is possible under the condition of certificate A1 issuing.
What is certificate A1 issued for:
A1 certificate is a statutory application, which confirms that social insurance payments for the employee are being paid in the country of certificate issuing.
When the employee is working or doing business in the other state temporary, this certificate helps to confirm that the employee is not obliged to pay social insurance in that state. The employer applies for A1 certificate for the posted employee by himself as a rule.
Such certificate A1 has to be issued even for the self –employed persons in case of their business trip. This document can be requested at the social insurance Authorities at the place of the employee’s registration or at its central office.
- Insurance principle of unemployed persons in the country of residence
If you are not employed and do not carry out business activity, as well as do not receive cash benefits (sickness benefits, unemployment benefits, pension), you always fall under the health and social insurance rules of the country where you live.
It has to be taken into account that the legal regulations of only one EU member state can be applied at the same time.
How to determine the right country for insurance if you work in several counrtries simultaneously?
Special rules for choosing an insurance place are described in the article 13 of Regulation No. 883/2004:
• If you work or do business in two or more EU countries and live in one of these countries at the same time, the rules of the country of residence have to be applied to you. The condition that you carry out at least 25% of your work or business activities there has to be observed, 25% is calculated from the total hours worked or the total income earned from employment. The entrepreneur takes into consideration 25% of the total turnover or profit.
• If you work or do business in two or more countries at the same time and do not live in any of these countries, then the rules of the country, where your employer is registered, are applied to you. If you have more than one employer registered in two or more different EU member states, different from your country of residence, then the place of insurance is your country of residence.
• If you do business in two or more EU member states and do not carry out a significant part of your business activity in the country of your residence (more than 25%), then you are subject to the rules of the country, where your center of business activity is situated.
There may be exceptions to the rules, described above. In case when there is an agreement between two involved EU countries, it means that for the specific person that agreed rules would be applied, but not the norms, described in the Regulation. In case of such exception, the principle of one country social and health insurance continues to be applied to.
When the countries agreed that the pension insurance has to be paid exclusively in the country A, it means that the health insurance has also to be paid in this country A.
This exception is possible to be used only under the certain conditions, you could consult with DoMyTax Company to learn more about these conditions.
Additional rules:
• If you work or carry out business activity in more than one country, you are subject to insurance only in one country, and you have to pay insurance premiums from the whole income. You have to pay insurance from the income, got in other EU countries, personally or through your employer.
• Your dependent members of family, regardless of country of their residence, are subject to the law of that country where you are insured. In that state system, where you are insured, they usually have the right not only to get health care, but also they can get family benefits, for example.
Health insurance:
A similar rule is in effect to the sphere of health insurance. You cannot be simultaneously insured in two or more EU countries. Medical insurance should be paid only in one state, where you actually work or carry out entrepreneurial activity.
Medical insurance is compulsory in the Czech Republic. If you plan to leave the Czech Republic for a long time, you have to inform the health insurance authorities and suspend your insurance.
As only you come back, you need to resume the insurance again, and you have to attach a document, confirming that during the period of absence you were covered by foreign health insurance. If you cannot provide such a document, then you will be required to pay contributions to the Czech treasury for the entire period. Any changes have to be reported within 8 days.
Difficult cases
If you are in a difficult situation and cannot understand the social and health insurance of which country applies to you at this period of your life, we advise you to contact DoMyTax company. Our experts will help you to determine correctly the place of your insurance. In the most difficult cases, we can make a formal request to the social and health insurance authorities. As a result, you will receive a document containing a decision on your situation in a specific period.
