Workingfromhome in Spain: points of attention

W orking fr om home in Spain: poin ts of a tt en tio n

19 May 2021

A GEND A

1. WEL C OM E & INTR ODUC TIO N

2. LE A VIN G BEL GIUM – SOC IAL SE CUR ITY AND

EMPL O YMENT C ONSE QUENCE S

3. W OR KING IN SP AIN – EMPL O YMENT

C ONSE QUENCE S

4. C OR POR A TE T AX C ONSE QU ENCE S

5. IND IVID U AL TAK S C ONSE QUENCE S

6. Q & A SE SSION

1. WEL C OM E AN D IN TR OD UCTION

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LE A VING BEL GIU M SO C IAL SE C UR IT Y AND EMPL O YME NT C ONSE QUENCE S

1.Applicable social security and relatedformalities

2.Social security coverage and relatedformalities

3.Mandatory employment law obligati

1. Appl ic able social security and rela ted formalities

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1.1 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES – Gen er al principles

Soci al Se cur ity Co n tri but ions:

whi ch c ou n tr y i s c ompe ten t t o levy the so ci al secur ity con tri buti ons?

Employ e r contr ib u tion s de termi ne the c os t for t he compa n y

Employ e e c ontr ib u tions de termi ne the ne t sal ar y Soci al securi ty Bene fit s:

whi ch soci al secur ity bene fi ts ar e concerne d?

Medi cal c ar e

In abi lity t o w ork

R eti reme n t Fami ly/ chi ld be ne fi ts

Unemp lo yme n t al lo w ances

1.1 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES – Gen er al principles

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Princip le : pl ac e of wo rk emp loyee cont ri butes to sys tem of co untry where he wor ks

Exce p tio n s: temp orar y (posti ng /as si gnm en t) or parti al (si mul taneou s) emp loyme nt abroad

Eu ropean con te xt R egul ati o n 883 /2 0 04

Bi la ter al tr ea ti es

No tr ea ty

1.2 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORM ALITIE S How t o de termine the appli cabl e social security

Employeecontributes incountry where (s)he works

P rin cip le

Ex ce p tio ns

Posting Simultaneous employment Cross-border employment

1.2 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES - How t o de termine the appli cabl e social security

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Ge n e ral p rinc iple to de termi ne compe tent EU Memb er State (ar ti cle 11 Reg .883 /2004 )

“a pers on pursu ing an a ct ivi ty as an em pl o yed or sel f-em pl o yed pers on in a Me mbe r St at e sh al l be su bject to the legi slati on of that Membe r St at e”

C O VID -19 in gen er al has en abl ed us to w ork fr om home mor e . H ow ev er ,the ab o ve pri n cipl e w oul d mea n th at if an emp lo yee who us ual ly w ork s in Be lgi um, but temp or ari ly w ork s in Spai n, for ex ampl e: • As a “w ork ati on ”: emp lo yee go es on hol ida y to Spa in for 2 week s and st ay s 2 mor e w ee ks to w ork ther e • Fami ly vi si t: Spa ni sh emp lo yee who us ual ly w or ks in Be lgi um, go es to Spa in for 1 mon th and w ork s ther e temp or ari ly • Etc …

The em pl o yee w oul d be su bje ct to Sp anis h soci al se curi ty be caus e he w ork s ther e . No ,de rog ati ons app ly for temp or ar y as si gnm en ts abr oad !

1.3 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES Ex cep tion of pos ting

Sp e cial rule for te mp orary p os tin g (ar ti cle 12 reg. 883/2004)

“A per so n wh o p ur su es an a cti vi ty as an empl o yed per so n in a M ember St at e on behal f of an em pl o yer w hi ch nor mal ly ca rr ies out its a cti vi ties ther e an d who is po st ed by that em pl o yer to an other Membe r St at e to perf or m work on tha t em pl o yer ’s behal f shal l con ti nue to be su bject to the legi slati on of th e fi rs t Membe r St at e, pr o vi d ed that the an ti ci pat ed dur a ti on of suc h work does not ex cee d 24 mon ths an d that he/ sh e is not sen t to repl ac e anoth er pos ted pers on .”

1.3 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES – Ex cep tion of pos ting

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Pos ting b y em pl o yer who norm al ly pur sues act ivi ties in sendi ng c oun tr y

Li mi ted in t ime : 24 mon ths – 5 y ear s

Em pl o yee doe s not repl ace other pos ted e m pl o yee in sam e fu ncti on

Li nk o f subor di na tion be tw ee n em pl o yer an d empl o yee

Mi ni mum per iod of 1 mo n th of c on tr ibut ions t o th e soc ial sec uri ty sy st em of t he pos ting c oun tr y

Appl ic at ion A1 -for m (obl ig at or y) , w hi ch c on fir ms the app lic ab le soci al sec uri ty la w

1.3 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES Ex cep tion of pos ting

Employe es who usu ally work in Belgium, bu t go to work temp orar ily in Spain , can remain su b jec t to Be lgian so cial se cu rity co n tributi ons in case of te mp orary p os tin g to Sp ain

Even though the empl oyee wi ll wo rk in Spai n, he wi ll remai n sub ject to Bel gi an soci al se curi ty contri bu ti ons = d erogati on of wor k state p ri nci pl e

Fo rmalitie s: app ly for an A1 -form with the Bel gian so cial se cu rity auth orities (RSZ/NSSO )

The A1 -form wi ll prove the emp loyee remai ns s ub je ct to Be lgi an s oc ial se curi ty whi le on temp orar y as si gnm en t in Spa in

The e mpl o yee must car ry the A1 -form w ith hi m

1.4 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES – Ex cep tion of simult aneo us emplo ymen t in multiple co un tries

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Spec ia l rule for p ursu it of a ctivities in two or mo re EU Mem ber States (arti cl e 13 )

“A pers on who norm ally pur su es an ac ti vi ty as an em pl o yed pers on in two or more Membe r St at es sh al lbe subject :(a) to the legi slat ion of th e Membe r St at e of res idenc e if h e/ sh e pur su es a sub st an tial par t of hi s/ her ac ti vi ty in that Membe r St at e;

Exa mp le

Si nce the pand e mi c, a Be lgi an e mpl o yee who u sua lly w or ks in Be lgi um has be en goi ng to hi s hol ida y hom e in Spa in ev er y tw o mon ths for an ext en de d pe riod of ti me .He w ork s fr o m ther e for a fe w w ee ks, but al w ay s re turns to Be lgi um . He as ks hi s emp lo yer if he can con ti nu e thi s wa y of w ork ing ind efi ni tel y

simult an eou s em pl o yme n t > po sting

1.4 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES - Ex cep tion of simult aneo us emplo ymen t in multiple co un tries

Spec ia l rule for p ursu it of a ctivities in two of more EU Memb er States (arti cl e 13 )

“A pers on who norm ally pur su es an ac ti vi ty as an em pl o yed pers on in two or more Membe r St at es sh al lbe subject : (a) to th e legi slati on of the Me m ber St ate of re sidenc e if he/ sh e pur su es a sub st an tial par t of hi s/ her ac ti vi ty in that Membe r St at e; “

Pra ctical Guide

Mult ip le activ iti es >< pos ti ng dur ati on an d na tur e of the ac ti vi ty sha ll be deci si ve (w he ther it is pe rmane n t or of a one -of f, ad hoc or temp or ar y na tur e) . Mar gin al activ iti es = act iv iti es ac coun ti ng for les s than 5 % of the w ork er's reg ul ar w ork ing ti me and /or les s than 5 % of hi s/he r o ver al lr emu ne ra ti on not tak en in to acc oun t Su b st an ti al activitie s > 25 % of w ork ing ti me and /or remu ne ra ti on

Employee works minimum 25% in country of residence? YesCountry of residence NoDoes the employee have more than one employer?

YesAre the employers all established in the same country?

YesCountry where the employers are established Novariousemployers intwo member states of which one employer is established in the country of residence?

Yes

Legislation of the country where the other employer(s) is/are established No

Legislation of the country of residence NoIs the employer established in the EEA?

YesCountry where the employer is established NoCountry of residence of the employee

1.4 APPLICABLE SOCIAL SE CURI TY AN D RELA TED FORMAL ITI ES - Ex cep tion of simult aneo us emplo ymen t in multiple co un tries

Spec ia l rule for p ursu it of a ctivities in two of more EU Memb er States (arti cl e 13 )

“A pers on who norm ally pur su es an ac ti vi ty as an em pl o yed pers on in two or more Membe r St at es sh al lbe subject :(a) to the legi slat ion of th e Membe r St at e of res idenc e if h e/ sh e pur su es a sub st an tial par t of hi s/ her ac ti vi ty in that Membe r St at e; “

Formaliti es : apply for an A1 -form with the B elgia n social sec urity authorities (RSZ/NSSO)

The A 1 -form wi ll p rov e the e mpl oyee rem ai ns subjec t to Bel gi an soci al securi ty whi le si mul taneousl y worki ng in two cou ntri es

The em pl oyee must carry the A 1 -form wi th hi m

2. So cial security co ver ag e and formali ties

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2. SOCIAL SE CURI TY C O VERA GE AN D RELA TED FORM ALITIE S

Soc ial S ecu ri ty Ben efits Medi cal c ar e

In ab ility to w or k

R et iremen t

Fam ily/ chi ld be ne fi ts

Une m p lo ym ent al lo w an ces

2. SOCIAL SE CURI TY C O VERA GE AN D RELA TED FORMAL ITI ES

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Co nsequ ence s f or Bene fit s in t he e ven t of pos ti ng

Acc rual of b e n e fits (p e n si o n , u n e mp loy men t allow ance s e tc …) co n tin u e s in po stin g co u n try (“home countr y”) no chan ge s

Med ical care S1 f orm ( when emp loyee move s resi den ce) or European H eal th In su rance Card (empl oyee keep s resi den ce in se nd ing countr y)

2. SOCIAL SE CURI TY C O VERA GE AN D RELA TED FORMAL ITI ES

W ork acc id en t in sur ance

Conti nu e to appl y Be lgi an work acc ide nt ins urance

Che ck if cove rage is su ff ic ien t for home wor k abroad.

If not: pay for add iti onal c ove rage

3. Manda tor y emplo ymen t la w obl ig ations

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•Working from home on a structural/regular basis = telework (CLA85)

•Voluntarybasis for employer/employee + mandatory agreement to be made

Frequency of the telework Periods when the employee needs to be reachable

Cost reimbursement (internet)

Working schedule

•If temporary assignment > 1 monthArticle20bis EmploymentContracts Actof 3 July1978

•The employee should receive a letter from the employer in accordance withconcerning:

duration of the work abroad, currency in which the salary is paid, possible benefits connected to the assignment abroadthe conditions of the employee’s return to his country.

Manda tor y emplo ymen t la w obl ig ations

W ORKIN G IN SP AIN EM PL O YME NT C O NSE QUENC ES

1.Mandatoryregistration

2.Mandatoryemploymentlawobligations

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1. Manda tor y regi str ation

•Mandatory registration of the temporary activity with the authorities at the latest before the start of the activities

Similar to Belgian Limosaobligation

•A contact person (liaison) must be appointed

•Check conditions and formalities per Autonomous Community (ComunidadAutónoma)

•Fine up to 6,250 EUR if not complied with!

2. Manda tor y emplo ymen t obl ig ations

•Principle: parties are free to choose the labourlaw applicable to the employment relationship (principle of choice of law)

•However, there are limitations to these principles, linked to the place where the employee performs his activitiesmandatoryprovisions of local law / public order may applyE.g. salaries, public holiday, working time etc..! Check from Spanish law POV

4. Te le w or kin g fr om Sp ain

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POINTS OF INTE RE ST • Fo r the em pl oy er

=> Pe rm ane nt Es tabli shme nt • Fo r the em pl oy ee

=> In ter natio nal Emplo yme nt

Pe rmanent Es tabli shmen t 4. P OI NT S OF INTE RE ST FOR TH E EMPLOYE R

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P er man en t Esta blishmen t (ar tic le 5) - D efini tion :

“A fixedplaceof business throughwhichthebusiness of anenterpriseis whollyof partlycarriedon”

• The ex istenc e of a workpl ac e • The workpl ac e has to be permanent • The compan y c arr ies out its ac tiv ity through the PE

Ac cording to the O ECD: • Us ed on a conti nued bas is? • Does the enterpris e require the empl oy ee to us e that loc ati on? • In cas e of a “home offi ce” => “r ight of us e tes t” (hav ing or not ac ces to / c ontrol ov er the hom e offi ce) • Preparatory / aux iliary

P er man en t Esta blishmen t (ar tic le 5)

- Em pl oy er EP e ffec ts :

The concept of PE is used to determine the right of a State to tax profits of a company of the other contracting State :

•

Corporate taxliabilitiesincludingtaxfilingsobligations

•

Transfer pricing obligations

•

…

DomestictaxlawTo be assessed on a case-by-case basis

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P er man en t Esta blishmen t (ar tic le 5)

- C O N S U LTA V 3794 -16

“El consultante es unapersona fisicaque trabajapara unaempresade consultaria IT con sedeen Alemania(sinestablecimientoen España) desdehace4 años. Empezóa trabajaren dichaempresaresidiendoen Alemania, y ha regresadopara residirindefinidamenteen España. La empresaalemanaleha ofrecidola posibilidadde seguirtrabajandopara ellosrealizandoteletrabajo, con la condiciónde viajara la oficinaalemanaunasemanaal mes. Residirámásde 183 díasen España a partirde 2016”

=> In thiscase theGermancompany was notconsideredtohave a PE in Spain

Int ernational Employ ment 5. P OI NT S OF INTE RE ST FOR TH E EMPLOYE E

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Inte rna tion al emp lo ymen t

SpainBelgium

(1) Living andWorkingWorking

(2) Living andWorkingWorkingart. 15 Tax Treaty

No inter na tional emp lo ymen t

SpainBelgium

Living andWorkingWorking

Declarationin Spain (IRPF modelo100)

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Inte rna tion al emp lo ymen t

SpainBelgium

Living andWorkingWorking(art. 15 Tax Treaty)

Declarationin Spain (IRPF modelo100) Declarationas a non resident in Belgium

Art. 23.1 (Tax Treatytoavoiddouble taxation)

Art. 80 LIRPF “Deducciónpor doble imposicióninternacional”

Inte rna tion al emp lo ymen t (NO EP in Spain)

BelgiumSpain

Living andWorkingWorking(art. 15 Tax Treaty)

< 183 days

Declarationin Belgium as resident

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Da ny De De cke r

Tax Partner

d.dedecker@bakertilly.be

Con ta ct

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Ba ke r Ti ll y

Office s i n Be lg iu m : Aa lst, Bruss el, Mec hele n, Melle, Lu ik , Zele

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OU R OF F IC E I N B R U SSE L S

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Emailijanssens@propay.be

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