Schalast | Mobile working from abroad
Mobile working is on the advance, not least accelerated by the corona pandemic. The desire for mobile work abroad is becoming more and more common.
The following constellation is examined in more detail here: An employee of a German company who expresses the wish to continue mobile work from abroad after his vacation.
Anyone toying with the idea of enabling employees to work remotely from abroad must take various legal and tax aspects into account. This article informs you about the essential framework conditions and gives you an initial overview. Information about individual aspects is summarized, which is why this cannot replace basic advice on specific individual cases, particularly with regard to the respective country-specific regulations.
Mobile working from abroad in terms of labor law:
The question of which labor law applies to the employee in this case is very important. This is followed by entitlement to vacation, applicable working hours and right to parental leave. The answer to this can be found in the Rome I Regulation. Accordingly, an agreement on the choice of law has priority. It can be established between employer and employee that German labor law always remains applicable even in the case of mobile work from abroad. If there is no agreement, the applicable law is based on the usual place of work. For an employee who only works from abroad for a few weeks and otherwise works in a German company, German law should continue to apply.
It may be advisable to conclude an individual supplementary agreement on mobile working abroad in order to determine the conditions for the activity. Furthermore, data protection regulations must not be disregarded. The employer must ensure that personal data in particular is protected when working from abroad. A corresponding agreement can serve for this purpose.
If there is a company works council and the employer would like to grant larger parts of the workforce mobile working from abroad, a possible mandatory right of co-determination must be observed. According to the government draft for the Works Council Modernization Act passed by the cabinet on March 31, 2021, such a mandatory right of co-determination can be expected.
For mobile work outside the EU, it must be checked whether a work permit must be obtained.
Mobile working from abroad in terms of social security law:
One of the important questions in this context is whether an employee remains insured in the German statutory health, long-term care, unemployment and pension insurance during his mobile work abroad. The applicable social security law is determined within the EU, the EEA and Switzerland in accordance with the Regulation on Coordinating Social Security Systems, Regulation (EC) No. 883/2004. The principle is that people who are employed in a Member State are subject to its social security legislation (place of work principle). If the employee is therefore working in Germany, German social security law applies. The idea behind this is to assign each employee to only one social security system. Regarding the constellation of irregular and short-term activities abroad, there is (still) no clear legal regulation.
An exception to this principle applies to employees who are posted abroad by their employer for a temporary period. According to the regulation, German social security law should nevertheless remain applicable. However, this presupposes an activity at the request and in the interest of the employer, which does not apply to the present case constellation.
Furthermore, the employee should remain in the German social security system with a regular activity in Germany and abroad if he carries out the major part of his activity in Germany and is still resident in Germany for tax purposes. This exception does not apply due to the lack of regular activity abroad.
It is therefore recommended that an exception be made with the relevant umbrella association, the Bund der Krankenkasse, in Germany, which allows the employee to remain in the German social security system.
In addition, the employer should apply for a so-called A1 certificate for the respective time abroad.
Mobile working from abroad in terms of tax law:
From a tax point of view, it is relevant whether the employer has to withhold wage tax only in Germany or also in another country or whether mobile working may create a permanent production site in the country of activity.
According to treaty law principles, the right to tax wages is generally assigned to the country of residence (Germany) if the employee works in the German company. Mobile working abroad does not fundamentally change that. The prerequisite is that the employee does not stay abroad for more than 183 days and does not establish a permanent production site there. Short-term stays abroad do not usually create a risk that the employee will establish a permanent production site.
Details on establishing a permanent production site must be checked separately, taking into account foreign tax law.