The fifth of the publications in series “12 Rules of the Cross-Border Secondment of Employees” concerns the rules of social and health insurance obligations for seconded employees. In this series we will present the most important issues related to the process of seconding employees to Poland and from Poland. Each publication will present an individual issue in details. The entire series of articles will be a compendium of general knowledge on the cross-border seconding of employees.

Applicable legislation

European Union regulations constitutes that persons who perform work in more than one EU Member State, EEA or Switzerland can be subject to the legislation of only one Member State. Therefore, it is necessary to determine the applicable legislation in order to define an employee’s insurance obligations. Thus, as a rule, there shouldn’t be a situation where a taxpayer would pay social security contributions in two or more countries.

The rules of determining the applicable legislation have been defined in the Regulation of the European Parliament and of the Council (EC) No. 883/2004 on the coordination of social security systems. Those rules can differ depending on the form of professional activity and the personal conditions of the taxpayer.

In case of an employee seconded by a Polish employer to perform work abroad, as a rule he is a subject to Polish legislation, if the secondment period does not exceed 24 months, and an employee has not been seconded in order to replace another person.

In case of performing work outside the EU and the EEA, a social security contract applies, concluded between Poland and the country to which the employee was seconded. These agreements are based on:

  • the equal treatment principle,
  • the one applicable legislation principle,
  • the summing up all of the insurance periods principle,
  • the export of benefits principle.

Currently, Poland has concluded international social security agreements with:

  • Yugoslavia (Currently applicable to: Montenegro, Serbia, Bosnia and Herzegovina),
  • Macedonia,
  • USA,
  • Canada,
  • Quebec,
  • South Korea,
  • Australia,
  • Ukraine,
  • Moldova,
  • Israel,
  • Belarus,
  • Mongolia,
  • Turkey

The confirmation of the jurisdiction of the legislation is an A1 certificate, which is issued on the request of the seconded employee or the employer (in EU/EEA countries), and a special document issued by the social security authorities of the country from which the employee has been seconded (in countries with which Poland has concluded the social security agreement).

The regulations of the Polish act that regulates the issues of health insurance constitutes that meeting the conditions for being covered by social insurance is unequivocal with coverage that person with the obligation of health insurance. In consequence of the above, being a subject to social security insurance in Poland means also being subject to health insurance contributions.

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Polish legislation

The insurance conditions of employees, who are subject to Polish social security legislation and who were seconded by a Polish employer to perform specific work abroad, meets the insurance conditions of employees working in Poland. On the other hand, the way of calculating the amount of contributions changes.

The obligation to pay social security contributions of the employee seconded to work abroad, rests on his employer. On the other hand, in case of an employee seconded to perform work on the territory of Poland, if he is a subject to Polish social security insurance, his employer should register in Poland for the social security purposes. However, there is a possibility for the employee to take over duties of the payer, and it will result with a lack of obligation to register in Poland for the foreign employer.

To summarize, determining the appropriate legislation is fundamental to meet the social and health insurance obligations.

In turn, the method of taxing the income of an employee seconded to work abroad will depend on the employee’s tax residence and the provisions of the double taxation agreement.

The series of “12 Rules of the Cross-Border Secondment of Employees” consists of the following articles:

  1. Cross-border secondment of employees
  2. Secondment and delegation
  3. Employee seconded to work in Poland
  4. Employee abroad – taxes in Poland
  5. Secondment – social and health insurance
  6. Secondment – documentation
  7. Secondment – double taxation agreements
  8. Secondment – income taxation in different countries
  9. Secondment – annual tax return
  10. Cross-border secondment of workers Directive
  11. Secondment – tax advisor assistance
  12. Secondment – additional questions

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Małgorzata Samborska

Partner, Tax Advisor

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Partner, Tax Advisor

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