1 General facts on postings abroad and social security 2 Posting to EU or EEA countries or other agreement countries

Transcription

1 Posting abroad 2010

2 Introduction This booklet is intended as a guide for employers and employees when planning a posting abroad. The booklet answers the following questions: Which country are the social security contributions payable to during the employment abroad? What contributions do the employer and the employee have to pay? Which social security benefits are the employee and his or her family entitled to during the posting abroad? When and where is continued coverage by Finnish social security applied for? The booklet begins with a description of the contents and contributions of Finnish social security. It continues with the rules that affect the determination of social security when the receiving country is an EU or EEA country, or a country with which Finland has concluded a social security agreement. The booklet ends with matters relating to employment in non-agreement countries. Unless otherwise stated, the facts in this booklet which relate to EU countries also apply to EEA countries (Iceland, Liechtenstein and Norway) and Switzerland. Information about social security for returning migrants to Finland is listed at the end of the booklet. The booklet has been compiled by the Finnish Centre for Pensions, the Social Insurance Institution of Finland, the Finnish Tax Administration and the Federation of Accident Insurance Institutions. The information in the booklet is based on the stipulations in force in May 2010.

3 Contents 1 General facts on postings abroad and social security Roles of the Finnish Centre for Pensions and the Social Insurance Institution regarding postings abroad 6 The Finnish Centre for Pensions 6 The Social Insurance Institution of Finland (Kela) What does coverage by Finnish social security entail? 8 Employment-based social security 8 Residence-based social security 8 Family members Social security contributions in Finland 12 Earnings-related pension insurance and salary for insurance purposes 12 Accident and unemployment insurance and employees group life insurance 14 Other social insurance contributions Work abroad and taxation 15 The employer sends the employee abroad for less than six months or the six-month rule does not apply 15 The employer sends the employee abroad for at least six months 15 A Finnish body governed by public law as employer 18 The Finnish company as sending employer when the salary is paid fully or partially by the foreign company 18 Work abroad of a posted worker who is restrictedly liable to pay taxes 19 2 Posting to EU or EEA countries or other agreement countries The EU Regulation and social security agreements/ international social security regulations General principles of the EU Regulation and the social security agreements 21 Who is covered by the EU Regulation and the agreements 21 What the EU Regulation and the agreements cover 22 Fields of social security that are covered by the EU Regulation 22 Insurance Certificates and decisions pertaining to insurance and medical treatment 25 Why 25 How 25

4 When 26 Certificates of medical treatment 27 Certificates relating to accidents Posting to EU/EEA countries and Switzerland 29 Posted workers 29 Exemption 31 Persons working in two or more countries 32 Other employee groups and self-employed persons 33 Family members Posting to an agreement country 34 Certificate of posted employee 34 Israel 35 Canada 36 Quebec 37 Usa 38 Australia 39 Chile 39 Switzerland Posting outside the EU and agreement countries Earnings-related pension insurance 41 Criteria for insurance 41 Exemption from the liability to take out insurance 42 Voluntary insurance 42 Earnings-related pension contribution Workers compensation insurance 43 Criteria for insurance 43 Exemption from the liability to take out insurance 44 Voluntary workers compensation insurance Residence-based social security 45 Coverage by social security 45 Applying for insurance 46 Family members 48 Where are matters dealt with? 49 4 Insurance in the country of work 50 5 Returning to Finland 52 6 Additional information 53 7 Checklist for persons posted abroad 56 8 Checklist for the returning migrant 58

5 1 General facts on postings abroad and social security In Finland, statutory social security is based on either residence or gainful employment. The entitlement to health insurance benefits, for instance sickness allowance and parents allowances (cash benefits) may, on the other hand, be based on either residence or employment. In themselves, Finnish citizenship or the liability to pay taxes to Finland do not entitle to social security in Finland. 1.1 Roles of the Finnish Centre for Pensions and the Social Insurance Institution regarding postings abroad Posting to an EU or EEA country, Switzerland or a country with which Finland has a social security agreement The Finnish Centre for Pensions The Finnish Centre for Pensions determines whether an employee is covered by Finnish social security. It is necessary to apply for a certificate for the employee from the Finnish Centre for Pensions, stating that the employee is covered by Finnish social security during the posting. Social insurance contributions are then paid to Finland, and social security benefits are determined based on Finnish legislation. According to EU rules, the certificate covers the following benefits: sickness benefits maternity benefits and corresponding paternity benefits old-age, disability and survivors pensions benefits in respect of accidents at work and occupational diseases benefits granted in the event of a death unemployment benefits (e.g. unemployment allowance) early retirement benefits family benefits (family allowance and child day-care allowance). 6

6 General facts on postings abroad and social security If Finnish legislation cannot be applied to a person being posted abroad, the Finnish Centre for Pensions will issue an appealable decision in the matter. If an employee is being posted to a country that has a social security agreement with Finland, the Finnish Centre for Pensions determines the employee s coverage by Finnish social security as regards the benefits covered by the agreement. Also in that case, it is necessary to apply for a certificate from the Finnish Centre for Pensions, stating that the person in question is covered by Finnish social security. If the request is denied, the Finnish Centre for Pensions issues an appealable decision. The Social Insurance Institution of Finland (Kela) The Finnish Centre for Pensions informs the Social Insurance Institution of certificates and denials issued. On the basis of this, the Social Insurance Institution gives a separate decision on the right to residence-based social security. To the extent that the issue concerns social security benefits covered by the EU Regulation or social security agreements, the decision of the Social Insurance Institution is based on the decision of the Finnish Centre for Pensions. The Social Insurance Institution also determines whether family members accompanying the posted employee are covered by Finnish residence-based social security. In addition, the Social Insurance Institution also issues the European Health Insurance Card or health insurance forms. Further information about applying for a certificate is provided in sections 2.3 and 2.5 and about the scope of the agreements in sections 2.2 and 2.5. Posting to a country with which Finland does not have a social security agreement Coverage by Finnish social security is determined only on the basis of our own national legislation. This means that the role of the Finnish Centre for Pensions regarding these assignments is restricted to matters related to the application of earnings-related pension acts. If it is unclear whether pension contributions have to be paid during the posting, the employer or the employee can ask the Finnish Centre for Pensions for a decision or statement on the matter. 7

7 General facts on postings abroad and social security The Social Insurance Institution determines whether the posted employee can be covered by Finnish residence-based social security. The Social Insurance Institution issues a decision on the matter also for the accompanying family members. Further information is provided in section What does coverage by Finnish social security entail? During the posting abroad, the employee can be covered by Finnish social security either wholly or partly. This depends primarily on whether or not the country of employment is an EU, EEA or agreement country. Second, the scope of application of the social security agreement should be taken into account. If there is no social security agreement, employment-based social security and residence-based social security are determined solely according to Finnish national legislation. (For more details, see section 3.) As a rule, if the employee, or the employee s family member, is covered by Finnish social security during the posting abroad, he or she is entitled to the same benefits as if living in Finland. The employee is liable to pay the same contributions for social security as a person who lives and works in Finland. The same applies to the Finnish employer who has sent an employee abroad. More details on social security contributions can be found in section 1.3. Employment-based social security If the employee remains covered by Finnish social security during the posting abroad, he or she accrues a Finnish earnings-related pension also for the work abroad. If the employee has an accident, or if an occupational disease breaks out during the work abroad, he or she receives compensation from Finland and is also insured for unemployment benefits. Residence-based social security If a posted employee and his or her accompanying family members are covered by Finnish residence-based social security, they usually also receive the benefits that can be granted only to persons resident in Finland. Such 8

8 General facts on postings abroad and social security benefits are family allowance, maternity grant, maternity allowance, special maternity allowance, paternity and parent s allowance, sickness allowance, special care allowance, compensations for medical treatment, rehabilitation allowance, rehabilitation, national pension, survivors pension, and income security for the unemployed. However, some benefits are not paid abroad, including unemployment security and the general housing allowance. If some other social security benefit than pensions is paid from Finland during the posting abroad, it is usually reduced by a corresponding benefit paid from abroad. The benefits of the Social Insurance Institution are to be applied for separately. Many of the benefits of the Social Insurance Institution, such as family benefits, can be applied for eletronically from the website of the Social Insurance Institution ( Online banking codes, or an electronic ID card, are necessary in order to use the service. It is also possible to fill out the forms and print them directly from the Social Insurance Institution s web site. Maternity, paternity and parent s allowance and child-care allowance The requirement of 180 days of residence in Finland for the maternity, paternity and parent s allowance is also met if the applicant has been covered by Finnish residence-based social security while abroad. A person can thus be entitled to daily allowance although the child is born abroad or shortly (within 180 days) after the return to Finland. Under certain circumstances, child-care allowance may be paid for a child residing in another EU country. Support for children residing in other countries is not paid out. National pension and benefits for the disabled The amount of the national pension and of the surviving spouse s pension under the National Pensions Act depends on the applicant s or the deceased person s time of residence in Finland. When the posted worker and his or her family members are covered by Finnish residence-based social security, the period of stay abroad also accrues pensionable time of residence on a par with residence in Finland. Thus staying abroad does not reduce the future pension. 9

9 General facts on postings abroad and social security Under certain circumstances, care allowance for a pensioner, disabled person s allowance for someone who has turned 16 years of age and disabled person s allowance for those under 16 can be paid to a person residing in another EU country. Unemployment security Unemployment security benefits (unemployment allowance, labour market support) are not paid abroad, as being available to the Finnish labour market is a prerequisite for receiving them. An accompanying family member s right to receive unemployment allowance and labour market support ends if he or she moves away from Finland. For those seeking work in an EU country, unemployment allowance may be paid for three months. Labour market support, on the other hand, is not paid in these cases. Unemployment allowance (basic unemployment allowance and earnings-related unemployment allowance) can be paid to an employee who has worked for at least 34 weeks during the last 28 months. The employment condition also includes work abroad, for instance, as a posted worker or a state employee, for whom mandatory insurance contributions have been paid. See section 5 for more details on income security for the unemployed when returning to Finland. Medical treatment Workers and civil servants posted abroad from Finland remain covered by Finnish health insurance during the posting abroad. Finnish health insurance covers the costs of all necessary medical treatment provided abroad. Compensations are granted on doctors and dentists fees, the cost of medical examinations and care, as well as on prescription medication. The right to medical treatment in Finland and in the country of work depends on, among other things, what the destination country is and whether or not the place of residence continues to be in Finland. For more details, see sections 2 and 3. Family members The Social Insurance Institution always decides whether an employee s accompanying family members are covered by Finnish social security. Family members who have reached the age of 18 should apply for a separate decision 10

10 General facts on postings abroad and social security on whether they are covered by Finnish residence-based social security, while children aged 18 or under can be included in their parent s application. However, each family member receives a separate decision from the Social Insurance Institution. The family member s coverage by Finnish legislation is based on either a stipulation in the agreement (the United States, Canada, Quebec, Israel, Chile and Australia) or the Act concerning the application of residence-based social security legislation. Family members coverage by Finnish social security when going to another EU country is also determined on the basis of the Act concerning the application of residence-based social security legislation. According to the Act concerning the application of residence-based social security legislation, family members include the married spouse and common-law spouse, a party to a registered partnership (Act on Registered Partnerships) and children under the age of 18. The children include the worker s own children, the spouse s children as well as adoptive and foster children. Finnish residence-based social security covers the worker s accompanying family members per application, if the family member was covered by residence-based social security before moving abroad. However, the family member will not be covered by Finnish residence-based social security, if he or she is covered by social security in the country of stay on the basis of his or her own gainful employment, or if he or she otherwise has stronger ties to the foreign state than to Finland. If the family member s work abroad is temporary, the family member can become covered by Finnish social security legislation upon application on the basis of the role as a family member when the employment ends. The Social Insurance Institution must be informed about work starting and ending, since these factors may also affect the benefits paid from Finland. The right to medical treatment of a family member of the posted worker moving abroad is registered separately in the country of work and in Finland. As a rule, the family member s right to receive medical treatment is the same as that of the posted worker. 11

11 General facts on postings abroad and social security 1.3 Social security contributions in Finland When the employee is covered by Finnish social security during the posting abroad, the employer has to pay to Finland: the earnings-related pension contribution the accident insurance contribution (accidents at work and occupational diseases) the unemployment insurance contribution the employees group life insurance contribution the employer s social security contribution. The employer must withhold from the employee s wage: the employee s share of the pension contribution, the employee s share of the unemployment insurance contribution, and the preliminary withholding of the health insurance contribution, or alternatively withhold from a person with a limited tax-paying obligation the health insurance contribution in the same manner as tax at source. The obligation to pay contributions is not dependent on where the employee is taxed. Earnings-related pension insurance and salary for insurance purposes The amount of the earnings-related pension contribution for work performed in Finland is calculated on the real gross salary. However, for the duration of the posting abroad, the contribution is levied from the gross salary that would be paid to the employee for a corresponding job if it had been performed in Finland. This so-called salary for insurance purposes is the basis for both the employer s and the employee s earnings-related pension contributions, and the employee s pension is accrued on the basis of the salary for insurance purposes. Since the beginning of 2006, parent s allowances, sickness allowance and the rehabilitation allowance are also determined on the basis of the salary for insurance purposes. 12

12 General facts on postings abroad and social security When agreeing on the posting abroad, the employer and the employee should thus agree on a salary for insurance purposes, and the employer should report this salary to the pension provider. However, the salary for insurance purposes cannot be agreed on freely but has to be based on the Employees Pensions Act (TyEL). The salary for insurance purposes does not have to be determined if the assignment lasts for less than six months, no separate salary has been agreed for the assignment, the salary is paid normally from Finland, and the employee s assignments abroad correspond to the work carried out in Finland. The salary for insurance purposes is determined in euros ( /month). It is worthwhile stating the salary for insurance purposes in the agreement of posting abroad. The salary for insurance purposes should be determined as follows: 1. Determine the pay for work in Finland which corresponds to the work abroad. The determination takes into account all amounts comparable to salary, for instance bonuses and benefits in kind, which are part of the remuneration for corresponding work in Finland. 2. Ascertain whether the work abroad is more demanding than corresponding work in Finland or whether it involves other special requirements (including more responsibility and longer working hours). Such factors may increase the amount of the salary for insurance purposes. Likewise, it should be ascertained whether some factor has a decreasing effect on the salary for insurance purposes. 3. The employer and the employee together determine the salary for insurance purposes for this specific job. Example: A company hires an employee to work as a sales representative in Germany. The employee has a car at his disposal and the employer also arranges housing for him. The company has sales representatives who work in corresponding jobs in Finland and they also have company cars. However, the employer has not offered them housing. Thus, the company car should be taken into account in the salary for insurance purposes but not the company housing. 13

13 General facts on postings abroad and social security The rule on the salary for insurance purposes concerns work performed abroad as a posted worker who is insured according to Finnish legislation on earnings-related pension, regardless of in which country the work is performed. Further information about the salary for insurance purposes can be obtained from the pension provider, the Finnish Centre for Pensions and Työeläkelakipalvelu (in Finnish): Accident and unemployment insurance and employees group life insurance The same concept of salary for insurance purposes is used in industrial accident insurance as in earnings-related pension insurance. The employer reports the salary for insurance purposes, alongside the salary, to the accident insurance provider. Compensation for accidents at work and occupational diseases, on the other hand, are determined based on actual earnings. The unemployment insurance contributions and the employees group life insurance are processed as insurance supplementary to the accident insurance. These insurance contributions are also determined based on the salary for insurance purposes where work abroad is concerned. Following the death of the employee, a lump sum based on the employees group life insurance policy is paid to the family members on certain conditions. Compensation in the event of death is paid from the Employees Group Life Insurance Pool, in connection with Retro Life Insurance Company Ltd. Other social insurance contributions As a rule, the employer s social security contribution and the health insurance contribution of the insured (medical treatment contribution and daily allowance contribution) are calculated for the work abroad on the basis of the salary for insurance purposes. Both contributions have to be paid even if the wage is not taxable in Finland. The obligation to pay the employer s social security contribution and the insured s health insurance contribution concerns employees who are covered by Finnish health insurance while working abroad. If the employee is taxed in Finland, but he or she is not insured under the Health Insurance Act, the employee may apply to the tax 14

14 General facts on postings abroad and social security authorities for an exemption from the obligation to pay the health insurance contribution. Correspondingly, the Finnish employer is exempted from paying social security contributions when the employee is not covered by health insurance in Finland. Currently, a foreign employer is not liable to pay the employer s social security contribution to Finland, if the wage is not paid in Finland and if the company has no permanent place of business in Finland, even if the employee is covered by Finnish health insurance. If the Finnish company has posted the employee to work for the foreign parent company, subsidiary or affiliated company or for a foreign company where the Finnish employer exercises power of decision, the Finnish company is liable to pay the employer s social security contribution on behalf of the foreign employer, who pays the salary. 1.4 Work abroad and taxation The employer sends the employee abroad for less than six months or the six-month rule does not apply If an employee from Finland works abroad for a Finnish employer for less than six months, or if the so-called six-month rule cannot be applied, the wage is taxed in Finland. The employer withholds preliminary taxes on the wage according to the Finnish tax withholding card, pays the social security contributions and gives the usual annual notification to the tax authorities. Usually, if the stay in the country of work lasts for 183 days at the most, the country of work does not have the right to levy taxes. If the country of work has the right to levy taxes, the double taxation is corrected in Finland. If the employee is posted to another Nordic country, the employer should fill in a form that is only used within the Nordic countries and give it to the tax administration, namely form NT1 (see Publication 276 by the Finnish Tax Administration Pohjoismaihin lähetettävät työntekijät ). The employer sends the employee abroad for at least six months If the Finnish company sends the employee from Finland to another country for at least six months, the so-called six-month rule may be applicable to the wage. If the employer assesses that the rule becomes applicable, preliminary 15

15 General facts on postings abroad and social security tax is not withheld in Finland. However, preliminary withholding of the health insurance contribution has to be carried out if the employee is covered by health insurance in Finland. In that case, the employer s social security contribution also has to be paid. The responsibility for the correct application of the rule on the withholding of taxes lies with the employer. The six-month rule is applied if both the following criteria are met: a taxation agreement does not hinder the country of employment from taxing the wage (or there is no taxation agreement), and it is a case of uninterrupted work abroad for at least six months, during which time the employee does not stay in Finland more than six days per month on average. If the work is carried out for an employer from Finland, a taxation agreement does not hinder taxation in the country of employment, if the employee stays there for more than 183 days. Depending on the taxation agreement, the period of observation varies from one calendar year to consecutive 12 months. Example: The employer sends K abroad for 9 months. K works for 2 months in Belgium, 3 months in Germany and 4 months in Italy. For the employment abroad, K has received certificate E 101 on coverage by Finnish social security. The employer does not have a permanent place of business in any of these countries. As the stays in the countries of work are short, the time limit of 183 days in the taxation agreements prevents each country of employment from levying taxes. The six-month rule is not applicable. Preliminary tax is withheld from the salary in Finland in the regular way and the employer s social security contribution is paid on the basis of the salary subject to withholding tax. If the employer assesses that the six-month rule will become applicable, he should first assess whether, in the relevant case, a taxation agreement allows the country of employment to levy taxes on the wage that the employee has earned in that country. If the country of employment has the right to levy 16

16 General facts on postings abroad and social security taxes, the taxation obligations should be handled according to the legislation of the country of employment. In order to get more information on the obligations in the country in question, the employer should contact the local tax authorities in the country of employment. Example: The employer sends C to Belgium from 1 February to 31 August (=212 days). During this period, C will stay in Finland for a total of only 10 days. As C thus stays in Belgium for more than 183 days during the calendar year, Belgium has the right to levy taxes on the wage, according to the taxation agreement. Neither does C stay in Finland for more than 6 days per month, on average. The six-month rule is thus applicable in Finland. The employer carries out preliminary withholding for the health insurance contribution in Finland and reports this in Finland to the tax administration on form NT2 within one month of the first time that only preliminary withholding for the health insurance contribution was carried out. The employee contacts the local tax office in Belgium at the place of work, and asks for instructions for the payment of possible withholding taxes. When the six-month rules is applicable, the basis for the employer s social security contribution and the preliminary withholding for the health insurance contribution is the salary for insurance purposes in earningsrelated pension insurance, if pension provision for the employee has been arranged either compulsorily or voluntarily according to the Employees Pensions Act. If the six-month rule is applicable but pension provision has not been arranged in the manner described, the basis for the employer s social security contribution and the preliminary withholding for the health insurance contribution is the cash salary. This does not include benefits in kind, nor compensations for expenses under the decision of the Finnish Tax Administration, nor other compensations that are exempted from tax under the Income Tax Act. However, it does include, for instance, the part of the daily compensations during stays abroad which exceeds the amount in the aforementioned expenses decision of the Finnish Tax Administration. Likewise, it includes daily compensations which are considered as being paid for work on the actual jobsite. 17

17 General facts on postings abroad and social security When the six-month rule is applicable, the annual notification indicates either the salary for insurance purposes or the cash salary as the income covered by the six-month rule, depending on which one is the basis for the contributions. The tax office of the employee s municipality of residence receives an employers monthly tax return. A Finnish body governed by public law as employer If the employer is the Finnish State or a Finnish body governed by public law, taxes are usually withheld to Finland in the usual manner on the wage of the employee posted from Finland, and the employer s social security contribution is paid on the basis of the salary. The six-month rule is not applicable in these cases, and usually the country of employment does not have the right to levy taxes. The Finnish company as sending employer when the salary is paid fully or partially by the foreign company The Finnish company may send the employee abroad to work in a company that belongs to the same company group. Often the employee also has an employment contract with this foreign company, and the employment relationship to the Finnish sending company is then maintained but suspended during the employment abroad. From a taxation viewpoint, if the work is performed for the foreign company and the wage is paid from its profits, the foreign company is viewed as the employer regarding the work abroad. (From a social security viewpoint, the employer under labour legislation may be in Finland). However, the foreign company does not have any of the employer s obligations towards the Finnish tax authorities. If the employee is insured in Finland under the Health Insurance Act, the sending employer has to pay the employer s social security contribution on behalf of the foreign employer who pays the salary. In addition, the sending employer has to indicate on the annual notification the amount that the insured s health insurance contribution is based on, i.e. either the salary for insurance purposes or the cash salary as explained in section 1.3. In this case, since preliminary withholding for the health insurance contribution has not been carried out, the employee pays the health insurance contribution of the insured as back taxes. 18

18 General facts on postings abroad and social security If the Finnish company pays the employee s salary partly or fully on behalf of the foreign company group, it is liable to both pay the employer s social security contribution and to carry out, as regards the salary it has paid to Finland, either preliminary withholding for the health insurance contribution or preliminary tax withholding, if the six-month rule is not applicable. Preliminary withholding for the health insurance contribution is carried out on the part of the salary for insurance purposes, or the cash salary, which corresponds to the salary paid. The salary paid or the share of the salary for insurance purposes or the cash salary which corresponds to the preliminary withholding for the health insurance contribution, as well as the preliminary withholding for the health insurance contribution or preliminary tax withholding carried out are indicated on the annual notification to Finland as the proxy payer. Work abroad of a posted worker who is restrictedly liable to pay taxes If more than three years have gone by since the end of the year when the employee left the country, he or she is usually considered restrictedly liable to pay taxes. The person who is restrictedly liable to pay taxes does not pay taxes to Finland for the wage earned abroad, unless the payer of the wage is the Finnish State or a Finnish body governed by public law. The salary paid by a body governed by public law is usually taxed in Finland. If the employee is insured in Finland under the Health Insurance Act, the employer s social security contribution and usually also the health insurance contribution of the insured have to be paid to Finland, despite the restricted liability to pay taxes, and it is insignificant whether the employee is taxed in Finland. The basis for the employer s social security contribution and the health insurance contribution of the insured for longer postings is usually the salary for insurance purposes. The Finnish employer, who pays salary to an employee who is restrictedly liable to pay taxes, has to both pay the employer s social security contribution and withhold the insured s health insurance contribution from the salary in the same way as tax at source, if the insured s health insurance contribution is payable. In addition, an annual notification is given on the amounts of 19

19 Posting to EU or EEA countries or other agreement countries the salary paid, the possibly withheld tax at source and health insurance contribution. Even if the salary is paid by the foreign company, the Finnish company which sends the employee abroad to work for a foreign parent company, subsidiary or affiliated company, which belongs to the same financial entity, or for a foreign company, where the Finnish employer exercises power of decision, has to pay the employer s social security contribution on behalf of the foreign employer. Since the foreign employer does not withhold health insurance contribution from the salary, the Finnish sending employer has to file an annual notification of the amount of the salary for insurance purposes. The employee pays the health insurance contribution as back taxes. The information on taxation of work abroad has been obtained from the publications of the Finnish Tax Administration. Further information can be obtained from the tax offices or online at 2 Posting to EU or EEA countries or other agreement countries 2.1 The EU Regulation and social security agreements/international social security regulations The European Union has no harmonised social security system, but common coordination rules to facilitate the mobility of people between the Member States have been created. These coordination rules are given in Regulation (EEC) No 883/2004 on the harmonizing of social security schemes (henceforth EU Regulation). Regulation 883/2004, valid since 1 May 2010, replaces Regulation (EEC) No 1408/71 on the application of social security schemes to employees and self-employed persons and their families moving within the Community. 1 1 In the initial stages, the new Regulation 883/2004 does not apply to EEA countries, Switzerland or third country citizens moving between EU countries. The rules of Regulation 1408/71 are applied until further notice. 20

20 Posting to EU or EEA countries or other agreement countries The EU countries are Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Poland, Romania, Slovakia, Slovenia, Spain and Sweden. The EEA countries are Iceland, Liechtenstein and Norway. Specific mention will be made later when referring to regulations for EEA countries and Switzerland that differ from regulations for EU countries. In addition, Finland has concluded bilateral social security agreements with the following countries: Canada (as of 1 February 1988) Quebec (as of 1 April 1988) The United States (as of 1 November 1992) Israel (as of 1 September 1999) Chile (as of 1 January 2008) Australia (as of 1 July 2009). Finland has concluded separate agreements on medical treatment with Australia and Quebec in Canada. The Nordic social security agreements also include regulations regarding medical treatment. The Social Insurance Institution provides more detailed information on medical treatment regulations regarding these countries. Other social security agreements do not have regulations on medical treatment. 2.2 General principles of the EU Regulation and the social security agreements Who is covered by the EU Regulation and the agreements The EU Regulation is applied to citizens of the EU and EEA countries and Switzerland, who, as employees, self-employed persons or persons who are not themselves working (e.g. family members, students, pension recipients) are or have been covered by the legislation of one or several Member States. Regulation 1408/71 will be applied to the EEA countries and Switzerland until Regulation 883/2004 becomes applicable also to these countries. 21

21 Posting to EU or EEA countries or other agreement countries EU Regulation 1408/71 was extended on 1 June 2003 to cover citizens of other countries outside the EU and EEA (so-called third countries), and their family members, who move within the EU. However, the prerequisite is that the third-country citizens are legally resident in the EU. This regulation concerning the citizens of third countries is not applied in Denmark, the EEA countries and Switzerland. The contents of each social security agreement will be explained per country. Social security agreements are normally applied to persons who are or have been covered by social security in the agreement country. Both the EU Regulation and the social security agreements are applied also to refugees and stateless persons, who are or have been subject to legislation in one or several Member States. What the EU Regulation and the agreements cover The legislation which is covered by the agreements varies. Usually, the agreement includes both employment-based benefits (earnings-related pensions and accident insurance) and residence-based benefits, which are administered by the Social Insurance Institution (e.g. national pensions and health insurance). Sometimes medical treatment is also included in the agreement. If the social security agreement does not include all benefits, this is mentioned separately in the section concerning the country in question. To the extent that the agreement does not cover certain benefits or categories of persons, these benefits are determined according to Finnish national legislation. The EU Regulation and social security agreements only cover statutory social security. They do not, for instance, include benefits agreed on through labour market agreements. Fields of social security that are covered by the EU Regulation There is quite a large variety in the social security benefits of the EU and EEA countries, and systems sometimes differ considerably. However, the social security schemes of the EU countries cover all central areas of social security. The EU Regulation covers the social security benefits listed below, including information on the Finnish social security benefits that form part of each area: 22

22 Posting to EU or EEA countries or other agreement countries sickness and maternity benefits and corresponding paternity benefits In Finland, sickness and maternity benefits include benefits of the health insurance system (e.g. sickness allowance, parents allowance), rehabilitation (rehabilitation allowance, rehabilitation) and disability benefits (excluding dietary compensations), as well as the whole public healthcare system. disability benefits These include benefits for which the purpose is to maintain or improve working capacity. Disability benefits include, for instance, disability pensions from the national pension scheme and the earnings-related pension scheme. benefits for old age Benefits for old age include old-age pensions and unemployment pension from the national pension scheme and the earnings-related pension scheme, and part-time pension from the earnings-related pension scheme. survivors benefits Survivors benefits include survivors pensions from the earnings-related pension scheme and the national pension scheme. benefits in respect of accidents at work and compensations for occupational diseases Compensations according to the legislation on accidents at work and occupational diseases as well as rehabilitation come under this legislation. grants issued in the event of death Such grants include, for instance, funeral grants paid on the basis of the Accident Insurance Act. unemployment benefits Unemployment benefits mean unemployment benefits according to both basic provision (basic allowance and labour market support) under the Unemployment Security Act and earnings-related unemployment benefits. family benefits Family benefits include family allowance, child home care allowance and pensioners increase for a child. Areas of social security that fall under social security agreements are discussed in greater, country-specific detail in section 2.5. Benefits and medical treatment for an employee posted to an EU country and his or her family members: 23

23 Posting to EU or EEA countries or other agreement countries The principle of the EU Regulation is that benefits are exported, i.e., paid out to persons entitled to benefits who reside in another EU country, even in cases where said persons do not live in the region of the state paying the benefits. Based on this, an employee posted to another EU country and his or her family members can be paid e.g. support for caring for a child at home from Finland, even if the child does not reside in Finland. A posted employee is also entitled to medical treatment in the country of work. The same applies to the family members if they are not themselves working. Insurance Insurance in the country of employment as the starting point The main principle in the EU Regulation and in social security agreements is that insurance and social security for the employee are determined according to the legislation of the country of employment. Thus, the employee immediately transfers to being covered by the social security system of the country of employment, and the insurance contributions have to be paid to that country. In such cases, other benefits are primarily received only from this country of work. Posted worker The EU Regulation and social security agreements contain rules on insurance. The central issue is that insurance is managed in a single country, in other words, benefits are also paid out by a single country. Posted workers form the most important exception to the principle of insurance in the country of work. The legislation of the sending country may be applied to them for the duration of a temporary posting. The EU Regulation and social security agreements stipulate for how long a person being posted abroad can be considered a posted worker. The worker and accompanying family members may be kept under Finnish social security for 2 to 5 years at the most. Until EU Regulation 883/2004 and the maximum posting period of two years become applicable, the period of posting to EEA countries and Switzerland is one year at the most. More information on posted workers in sections 2.4 and

24 Posting to EU or EEA countries or other agreement countries 2.3 Certificates and decisions pertaining to insurance and medical treatment Why The posted worker needs a certificate stating that he or she is covered by Finnish social security. This certificate is issued by the Finnish Centre for Pensions, which determines a person s coverage by Finnish social security on the basis of the EU Regulation or the social security agreement. Through the certificate, both employer and employee are exempted from having to pay insurance contributions in the country of employment, and can thus avoid paying double insurance contributions. The certificate covers the benefits included in the EU Regulation and relevant social security agreements. The Finnish Centre for Pensions notifies the Social Insurance Institution of certificates issued and requests denied. Based on this information, the Social Insurance Institution issues a separate decision on the right to residence-based social security. To the degree that the issue concerns areas of social security covered by the EU Regulation or social security agreements, the decision of the Social Insurance Institution is always based on the decision of the Finnish Centre for Pensions. The Social Insurance Institution also settles the residence-based social security of family members accompanying the posted worker. How Per application, the Finnish Centre for Pensions grants a certificate of Finnish social security being applied to the worker while he or she works in another EU/EEA country, Switzerland or a social security agreement country. This A1 certificate for those going to EU countries is issued in Finnish or Swedish, depending on the language in which the certificate has been applied for. The A1 certificate replaces the previously used E 101 certificate. The person who moves to work in some other agreement country receives a certificate on the basis of the bilateral social security agreement. These certificates are bilingual, i.e. the information is given in the languages of both agreement countries (e.g. FI/USA 1A). Certificate E101 will be issued for those going to EEA countries and Switzerland for as long as EU Regulation 1408/71 is applied in these countries. The employer may submit an electronic application for an employee to be covered by Finnish social security. The employer may log in to complete the 25

25 Posting to EU or EEA countries or other agreement countries electronic application at the website of the Finnish Centre for Pensions: www. etk.fiàlomakkeetàtöihin ulkomaille. The electronic application service requires company identification using the Katso ID, in shared usage by the Finnish Tax Administration and the Social Insurance Institution of Finland. Instructions on using Katso are available at The application for an employee to be covered by Finnish social security can also be directed at the Finnish Centre for Pensions, using form ETK The form can be filled in and printed from the address Form ETK 2132 is also available from the offices of the Finnish Centre for Pensions or the Social Insurance Institution (also in English and Swedish). If the application is made using form ETK 2132 and the posted worker is going to one of the social security agreement countries Australia, Chile, Canada, Quebec or Israel, the employer also needs to fill out a bilateral certificate form. In case an electronic application service is used when applying for the certificate, there is no need to fill out a separate certificate form for the country in question. The Finnish Centre for Pensions relays the information on certificate applications and subsequent decisions to the Social Insurance Institution. Based on this information, the Social Insurance Institution will issue a separate decision on the right to residence-based social security. To the degree that the area of social security in question is covered by the EU Regulation or social security agreements, the decision of the Social Insurance Instution will be based on the decision of the Finnish Centre for Pensions. The Social Insurance Institution also settles the residence-based social security of family members accompanying the posted worker. Family members have to apply for a separate decision (on form Y 38) from the Office for International Affairs of the Social Insurance Institution. When The certificate of posting should be applied for well in advance of the posting. The certificate can be obtained from the Finnish Centre for Pensions in about two weeks, if the application contains all the necessary data and no further clarifications are needed. For short business trips of less than a month, no certificate is usually needed unless required by the authorities in the country of work. However, 26

26 Posting to EU or EEA countries or other agreement countries if social insurance contributions are levied in the country of employment, the certificate can be obtained from the Finnish Centre for Pensions retroactively. The certificate has to be forwarded to the authorities that levied the contributions. For instance, the Norwegian authorities often require a certificate for short assignments of just a few days. Certificates of medical treatment The EU countries The posted employee working in an EU or EEA country or Switzerland and and his or her family members, all covered by Finnish health insurance (social security), are entitled to receive medical treatment in the posted worker s country of work. The scope of the entitlement varies depending on the length of the posting, i.e. on the time of residence in the country. During a temporary stay/period of residence abroad that lasts for less than a year, medical treatment is provided in the country of work based on the European Health Insurance Card (known as the EHIC card). The card entitles to necessary healthcare from a medical viewpoint, during which time the healthcare provider must take into account the duration of stay in the country and the nature of the healthcare provided. The longer the time/residence in the country of work, the more extensive is the right to healthcare. The European Health Insurance Card, granted by the Social Insurance Institution, can be used in public healthcare abroad, as well as at private medical clinics where doctors have signed a health insurance agreement, and also at hospitals that have signed the same agreement. The card is personal and free of charge and can be ordered through the electronic services of the Social Insurance Institution ( Having received information pertaining to a posted employee from the Finnish Centre for Pensions, the Social Insurance Institution will deliver the European Health Insurance Card free of charge to persons insured in Finland for the duration of their time spent in another EU or EEA country. During periods of residence/stay abroad lasting for more than a year, the posted worker and family members who do not themselves work, are to register with the local health insurance provider in order to receive healthcare in the country of work. The Social Insurance Institution grants certificate E 106 or S1 for the purpose of registration. Additional information on the 27