China and the Netherlands signed the China–Netherlands Social Security Treaty on September 12, 2016. Although the full text of the treaty is not yet publicly available, the treaty addresses social insurance issues encountered by employees working outside their home country, in particular the issue of having to make double contributions in both the host country and the home country for the same employment.
According to published reports on the treaty, an employee who is employed by a Chinese employer and seconded to work in the Netherlands can be exempted from social insurance contributions (e.g., pension and unemployment insurance) in the Netherlands. Likewise, an employee who is employed by a Dutch employer and seconded to work in China can also be exempted from social insurance contributions in China. Without the full text of the treaty available, it is not yet clear whether the employee will be exempted from all five types of social insurance contributions in China or just the pension and unemployment insurance.
The China–Netherlands Social Security Treaty is the seventh social security treaty signed by China. The previous six treaties were with Germany, South Korea, Denmark, Finland, Canada and Switzerland.
Key Take-Away Points:
In China, the new treaty will slightly alleviate the cost burden on employees (who are seconded from the Netherlands to China) and on the China host companies. Every eligible company should consider applying for the exemption treatment under the treaty for expats seconded between these two countries.