If work is carried out abroad, there is the fundamental question for both the employee and the employer, and for self-employed persons, of the social security implications involved in this situation.
In principle, the territoriality principle is to be applied.
In specific terms, this means that the national social security law of the state in whose territory the work is actually carried out must always be followed.
The domicile of the employee or the registered office of the company and the nationality of the person in question are not relevant for the territoriality principle.
The territoriality principle is also called the territorial principle or the country of employment principle.
Exceptions: the territoriality principle is or can be circumvented by European Community law and bilateral agreements.
This applies insofar as the above-mentioned legal matters contain certain special provisions for specific persons or circumstances (such as in the case of a posting). National provisions may further stipulate that a person working in another state remains insured domestically.
The insurance that might come into effect in the state of activity is not affected by this in principle, which means dual insurance may exist in these cases.
Before subjecting a person to the national legislation of the country of employment in accordance with the territoriality principle, the employer or self-employed person must always check whether special provisions exist for the respective situation.
The first step here is to determine whether the activity is carried out
- in the EU/EEA,
- in Switzerland,
- in the United Kingdom (as of 01/01/2021),
- in contracting states,
- in third countries or
- for certain international organisations.
The duration of employment – with the exception of postings (here different time limits are provided for) – is not significant.
Compliance with social security regulations
In the case of salaried employment relationships, the employer is always responsible for compliance with the regulations of registration and contribution. This means that the correct calculation of the contributions and their payment and proper registration is the responsibility of the employer in question.
Self-employed persons must personally ensure that they are complying with the legal provisions in question.
European Community Law coordinates the different social security systems across the individual Member States.
The principle applies that persons who work, live or take a holiday in the EU on the basis of their right of free movement and residence must not suffer any disadvantage with regard to the benefits to which they are entitled. Detailed information on benefit entitlements can be obtained from the respective relevant social insurance institution.
The relevant provisions include, for example, benefits in the event of
- age/early retirement,
- occupational accident/occupational disease and
A differentiation must be made here between cash benefits and benefits in kind. Cash benefits are generally paid out according to the law of the state that is responsible for the insurance. Granting benefits in kind, on the other hand, is regulated by the provisions of the country in which they are actually received.
The prerequisite is that there is also an entitlement to it on the basis of the existing insurance. If, for example, only partial accident insurance exists on the basis of Austrian legislation, this may mean that no health insurance benefits can be claimed in Germany at the expense of the Austrian insurance institution.
In the case of bilateral agreements, attention must be paid to which insurance branches the respective agreement covers (for example, there is only an agreement regarding pension insurance with the USA).
Tax and employment law
In the area of employment law and tax law, there are separate regulations for employment relationships with foreign contacts. These may, but do not have to, comply with the social security provisions applicable to the respective employment relationship. It may therefore be the case that, for example, Austrian social security law applies, along with German tax law and German employment law.
Information about this can be obtained from the Federal Ministry of Finance or the relevant interest groups such as the Chamber of Labour or the Chamber of Commerce.