As business becomes ever more international, tax advisory work increasingly concerns cross-border situations involving multiple jurisdictions. Clients not only require in-depth tax advice about cross-border employment, but also advice on labour law and social security matters. All these aspects are indeed closely related.
As goods and services, employees, managers, and directors cross borders, this movement sometimes leads to complex legal challenges for the employers and companies involved.
Typically, companies faced with cross border employment are aware of the basic tax rules applying to these cross-border situations, as laid down in the respective double tax treaties.
However, social security implications must also be considered. The key instrument for determining which state is competent for applying its social security regime in a cross-border employment situation is EU Regulation 883/2004. Whereas for tax purposes, bilateral treaties apply, the rules on social security are set out in this Regulation.
A topic that is among the most technically complicated concerns determining the social security regime applying to company directors who are operating internationally. The reason for this complexity is that the qualification issues regarding the social security position of a company director entrusted with a corporate mandate are dealt with in different ways in different jurisdictions.
Some countries, like Belgium, qualify a company director with a corporate mandate as a self-employed person. Other countries, like Switzerland, qualify a director as an employee. Since, under the rules of the Regulation “employee” status normally overrules “self-employed” status, a company director’s qualification as an employee in one country can lead to the situation where the self-employed director must undergo a switch in social security regime.
The impact of such different domestic qualifications of corporate mandates is often an issue about which companies and their directors are unaware. Its impact can, however, be substantial. If, for instance, the number of mandates exercised by an individual in different countries is changed, then this situation could result in the individual being subject to the social security regime in another jurisdiction.
We have covered this specific issue of the social security status for company directors in a brochure concerning a number of countries that are bound by EU Regulation 883/2004. This brochure also covers a number of jurisdictions falling outside the scope of this Regulation.
Given the complex situations that we encounter in our advisory work, this subject was chosen as one of the topics for discussion during the annual WSG Labour Law Meeting in Brussels in February 2016.
If you are interested, you can read the entire brochure by clicking this link. If you would like to receive a hard copy, then please send an e-mail with your name and address to anne.devos@tiberghien.com. We will distribute 20 hard copies to the first 20 persons e-mailing us.
