Vikas Chaturvedi Director, Europe India Chamber of Commerce Netherlands Chapter Topics to be discussed Social Security system in India Social security system in the Netherlands Comparison between Indian and Dutch system Comparison between Indian and Dutch system Social Security Treaty Contact us Provident fund (EPF) Employee (member) -on leaving employment on pensionable age on leaving employment on pensionable age -when becoming disabled Survivors, if the employee is not alive Payment: lump sum payment Pension fund (EPS) Employee (member) -on leaving employment on pensionable age on leaving employment on pensionable age -when becoming disabled Widow/widower and eligible children: if the employee is not alive Nominee/Parents: if the employee dies without leaving any family Payment: monthly cash benefit Insurance benefit (EDLI) To the survivors on death of the employee Condition: The death should have occurred during employment Payment: lump sum cash benefit
What are the costs of Indian social security? Social security premiums for International Workers are uncapped. Empl t ibution: 12% Employer contribution: 12% Employee contribution: 12% Both percentages are calculated at total employment income (with only a few exceptions) Additional employer contribution to EDLI of 1.1% What are the costs of Dutch social security? Social security premiums in the Netherlands are capped. M imum l t ibution: 7,873 EURO Maximum employer contribution: 7,873 EURO Maximum employee contribution: 7,127 EURO The maximum amounts are reached at an income of 33,436 EURO Difference in premiums Income Employer part Employee part NL > 33,436 7,843 7,127 IND: 50,000 6,535 5,986 IND: 60,000 7,842 7,183 IND: 100,000 13,070 11,972 IND: 150,000 19,605 17,958 *Above numbers are based on indicative calculations What is not covered in India (compared to the Netherlands)? In India there is no mandatory coverage for: Unemployment Medical care (regular and special medical costs) al ( gul and ial di al costs) di Child benefits What are the rules of the social security treaty? Main rule: an employee is subject to social security in the country where he works. Exception:Exception: an employee who is seconded from India to thean employee who is seconded from India to the Netherlands shall remain covered by social security in India.
The same applies the other way around when an employee from the Netherlands is seconded to India. Accompanying family members shall also remain covered in their home country as long as they do not work. Conditions of a secondment Example India Netherlands 1. The employee from India remains employed by his employer in India (organic link). 2. He is subj t t social it in Indi ior t his dme t He is subject to social security in India prior to his secondment. 3. The secondment has an intended period of less than 5 years. 4. Social security premiums continue to be paid in India. If the employee meets the above conditions he should apply for a Certificate of Coverage in India. Conditions of a secondment Organic/direct link with employer (example India NL) The employee should have an organic link with his employer in India: The employment contract with his employer in India should continue. The terms and conditions of his activities in the Netherlands should be included in a secondment letter, not a local employment contract. The final authority (the right of hire and fire) should be with his employer in India Certificate of Coverage Secondment from India to the Netherlands Confirms coverage of the employee by Indian social security Proof of exemption from Dutch social security Maximum duration 5 years Application needs to be filed with the jurisdictional Regionaljur g App Commissioner of EPFO (Employees Provident Fund Organisation) www.epfindia.com Joint application of employer and employee Specific application form for the India NL treaty The application should be filed within 6 months after the start of the secondment Conditions of a secondment / Certificate of Coverage Secondment from the Netherlands to India The conditions are identical to the example of a secondment from India to the Netherlands but reversed (country wise)
India to the Netherlands but reversed (country wise) Application should be filed with the SVB (Insurance Office) in Amstelveen within 6 months after the start of the secondment General form for all applications based on social security treaties or the EC-Regulation Online application will be possible soon www.svb.nl Application of the treaty The treaty will be applicable as of 1 December 2011 For all new secondments (start date 1 December 2011 or later) For all secondments which have already started before 1 December 20111 -no retroactive effect application as of 1 December 2011 -for a maximum period of 5 years as of 1 December 2011 -apply for a Certificate of Coverage before 1 June 2012 to obtain a retroactive effect to 1 December 2011 What are the changes after receipt of a Certificate of Coverage? Secondment from India to the Netherlands Start paying Indian social security premiums as of 1 December 2011 Turn off Dutch social security in Dutch (shadow) payroll Terminate Dutch child benefits (if applicable) Terminate the current regular Dutch health insurance for employee and accompanying family members Conclude an expat health insurance in the Netherlands or any other country (a health insurance is required for the Dutch residence permit) What are the changes after receipt of a Certificate of Coverage? Secondment from the Netherlands to India Start paying Dutch social security premiums as of 1 December 2011 via Dutch (shadow payroll) Stop paying social security premiums in India (Re-)apply for Dutch child benefits for children who are in the Netherlands Conclude a regular Dutch health insurance for the employee and the accompanying family members Adjust the expat health insurance from full coverage to additional coverage (top-up on the regular insurance)
Social Security Treaty Social Security Treaty Different amount of premiums payableincome < 60,000 EURO Indian premiums are lower Income > 60,000 EURO Dutch premiums are lower Lost or renewed entitlement to Dutch child benefits 2 children appr. 1,900 EURO per year Change from regular to private / expat health insurancedepending on insurance company and package the costs can be double or cut in half Home country coverage What are the benefits of staying in your home country social security system? Full entitlement to benefits in 1 country You have coverage according to the system you are familiar to No need to apply for state old age benefits in your former country of d l f ld b fi i f f secondment Dutch employees: Employee can continue his Dutch health insurance for himself and family Upon return, no risk that they are not accepted by the health insurance company (for additional insurances) Seminar Social Security Treaty India -Netherlands November 2011 Changes for short term secondments Secondment from India to NL for less than 6 months If an employee is a resident of India, employed by an employer in India and works in the Netherlands for less than 6 months: UUp to 1 December 2011: exempted from Dutch employees 1 De mb 2011: t d f Dut h l t insurances, only Dutch National Insurance and Health insurance payable As of 1 December 2011: main rule of the treaty applies full coverage by Dutch employer (including employees insurances) if you do not obtain a Certificate of Coverage Contact us info@eiccnetherlands.com Justien Hendriks Social Security treaty expert Email : justien.hendriks@nl.pwc.com