International Social Security is a field that involves the application of coordination regulations and the interpretation of international agreements in a globalized world. While, in principle, Social Security contributions are made in the country where one works (lex loci laboris), in practice, companies and employees operating internationally often turn to exceptions provided by international agreements, allowing contributions to be made in the home country.
In this context, we will address a specific situation in International Social Security: the assignment of employees to countries without bilateral agreements. To better understand this, we will divide this article into several key sections.
International Social Security presents five scenarios that require special attention:
This time, we focus on the last scenario, assignments to countries without bilateral agreements.
Historically, assignments to countries without bilateral agreements were regulated through an Order of the Ministry of Labor and Social Security dated January 27, 1982.
This order established a situation similar to registration in the General Social Security Regime for assigned workers. However, this approach has become obsolete.
With more than 40 years having passed since the entry into force of this order and the evolution of the European Union and international agreements on Social Security, as well as Spain’s accession to the Ibero-American Multilateral Agreement on Social Security, it was necessary to update the regulations.
The technical aspects of this new regulation, contained in Order ISM/835/2023 issued on July 20, 2023, are essential to understanding Social Security in assignments to countries without bilateral agreements.
The purpose of this regulation is to govern the situation similar to registration in the Social Security system when a worker is assigned to a country without a bilateral agreement or when the application of such an agreement ends.
For the purposes of this regulation, an assigned worker is someone who, as an employee in Spain by a company operating within Spanish territory, is sent to another country by that company to perform salaried work.
The situation similar to registration in the Social Security system continues for the duration of the assignment, as long as the conditions that gave rise to this situation are maintained, even if the worker changes countries.
Companies must comply with various formalities:
They also have the following obligations:
A 6-month period is granted to comply with this regulation from its effective date (November 1, 2023) for persons under Articles 3(b), 3(c), and 3(d).
This new order repeals the Order of January 27, 1982.
The new regulation comes into effect on November 1, 2023.
The aim of this regulation is clear: to ensure the social protection of workers assigned to countries without bilateral agreements or in countries where they have exceeded the maximum assignment period, addressing the following two scenarios:
The new regulation establishes the treatment of four scenarios related to the situation similar to registration in the Social Security system, according to Article 3 of the order.
These are the scenarios covered:
a) Assigned to a country where no agreement on coordinating Social Security systems applies.
b) Assigned to a country with an agreement, but not included within its subjective scope.
c) Remaining assigned in a country with an agreement, having exceeded the maximum stipulated duration (including extensions).
d) Assignment to a country in which, despite having an agreement, it does not provide for the assignment of workers by their companies to the territory of the other party.
The treatment of the first two scenarios is developed in Article 4 of the order.
In these cases, companies must notify the TGSS of the assignment of workers before it begins and consider them in a situation similar to registration in the Social Security system to which they are affiliated.
Contributions from both the company and the worker continue as long as the worker is in the destination country and maintains their employment relationship with the company.
The company must submit the notification to the TGSS using a designated form (to be published).
These situations similar to registration continue exclusively during the assignment period originating from a contract formalized in Spain.
Even if the worker changes countries, the situation continues as long as the conditions stipulated in paragraphs a), b), or d) of Article 3 are met. However, any new contract made outside of Spain terminates this situation from the day before the new hiring.
It should be noted that signing contracts in the destination country only for the purpose of meeting local legal requirements does not constitute a new hiring if the contract with the company of origin remains valid, the employment relationship with the company of origin takes precedence over the relationship with the local company, and the conditions stipulated in paragraphs a), b), c), or d) of Article 3 are maintained.
In these cases, there is no obligation to contribute to:
The treatment of the last two scenarios is addressed in Article 5 of the order. In these cases, both the company and the worker must formalize a written agreement using an official model as specified in Article 7.
This agreement establishes the application of Spanish Social Security legislation, regardless of the local legislation of the destination country.
The agreement must include the identification of the assigned worker, the company, the start date of voluntary affiliation to the Spanish Social Security system, the destination country, and the consent of both parties to apply Spanish Social Security legislation.
Once the agreement is signed, it must be communicated to the TGSS with specific effects:
These situations similar to registration only continue during the assignment period originating from a contract formalized in Spain. New contracts made outside of Spain terminate this situation from the day before the new hiring.
However, contracts signed in the destination country solely to meet local legal requirements are not considered new hirings, provided that the contract with the company of origin remains valid, the employment relationship with that company is always a priority, and the conditions stipulated in paragraphs a), b), c), or d) of Article 3 are maintained.
In addition to prior notification of the assignment for Social Security coverage, there is other information related to regulatory compliance that must be communicated to Social Security within six months after the assignment or at the end of the maximum agreement period.
Companies must provide the following information within six months after the assignment or upon the expiration of the maximum agreement period through the electronic means established by the TGSS:
When companies opt for voluntary affiliation with the Spanish Social Security system, a written agreement is required (as specified in Article 7 of the order). This document must be made available to the TGSS, and companies must provide it to the Labor and Social Security Inspection if requested.
The document must be retained throughout the entire assignment period with voluntary affiliation to the Spanish Social Security system and until December 31 of the fourth calendar year after the end of the assignment. Additionally, a copy of the agreement must be provided to the assigned worker.
In summary, International Social Security for assigned workers in countries without bilateral agreements is a complex yet essential field for labor mobility in a globalized world. At Employing In Spain, we fully understand the importance of these regulations for both international companies and their employees.
Our team of experts is ready to provide guidance and assistance in navigating these intricacies. If you have questions or need support on labor and employment matters, do not hesitate to get in touch with us. We are here to help you achieve your labor and employment goals.
Isabel la católica 8, 3º Puerta 33 46004 Valencia, Spain
__________________ 964 250 099
Calle Ruiz Zorrilla 1, 3º
12001 Castellon Spain
_________________________ Paseo de la Castellana 40, 8º
28046 Madrid Spain