Especially within the EU/EFTA area, business is often transacted across national borders. However, many people are not aware that for such business activities - even of a very short duration - employees require an A1 Certificate as proof of their social insurance in their home country. This primarily serves to exempt them from being subject to social security obligations in the host country. Yet, the bureaucratic effort for companies can be enormous and in many cases disproportionate, especially for very short business stays in neighbouring EU/EFTA countries. While violations of the A1 obligation have been punished with high sanctions for a long time, it appears that especially neighbouring countries choose a more pragmatic approach, due in particular to penetrating reform efforts in the EU.
General Information on the A1 Certificate
Switzerland has concluded various agreements with the EU and EFTA on the coordination of social security systems (see the blog post on social security obligations for foreign employees). The aim of these coordination agreements is to make employees working in several countries subject to a single social security system as far as possible. This is intended in particular to strengthen the freedom to provide services within the EU/EFTA.
If employees work in several EU/EFTA states, they have to present an A1 Certificate for each employment activity in another EU/EFTA state as proof of their social security cover in their home country. In principle, it must be ensured that an A1 Certificate can be presented for every business stay abroad - even for only a few hours - and that the A1 Cetificate is obtained in advance from the responsible social security institution. In Switzerland, the respective compensation office is the competent authority. Depending on the compensation office, applications can be submitted either via the platform ALPS (Applicable Legislation Platform Switzerland) or by means of a written form. It should be possible to obtain the A1 Certificate within a maximum of one week from the date of application to the respective compensation office. In contrast to temporary assignments, where an A1 Certificate must be applied for each assignment abroad, the A1 Certificate for multiple assignments can be issued for a longer period of time (maximum one year with the possibility of extension). The certificate is only of a declaratory nature, which is why it can also be issued retrospectively.
Despite the absolute obligation to present an A1 Certificate, the Swiss Federal Social Insurance Office (FSIO) considers a prior application for very short, one-off trips abroad to be disproportionate in most cases. However, this assessment is up to the authorities of the host country, which is why the FSIO also advises applying for an A1 Certificate for short stays in those countries where failure to present it is sanctioned.
Controls and Sanctions Abroad
The existence of an A1 Certificate is verified by the authorities of some countries at the place of work or at the border, particularly to avoid wage dumping (e.g. in the transport or construction sectors). Depending on the country, there may be fines (sometimes up to several thousand euros) or an obligation to pay social security contributions in the host country if the A1 Certificate cannot be presented.
In Austria, for example, failure to present an A1 Certificate by the employee may be punished by fines of between 1,000 and 20,000 euros. Alternatively, the social security contributions of the host country must be paid locally. Despite these very high sanctions, Austrian law provides for an exemption from the A1 Certificate requirement for the performance of work of a minor extent and short duration, such as, in particular, secondment for a business meeting or for participation in seminars and lectures or at congresses. However, these work assignments are only exempted if they are not followed by further work.
A similar legal situation exists in Germany, where the lack of an A1 Certificate does not lead to sanctions in the case of irregular and short-term business trips for up to one week, provided that in principle the conditions for granting it are met. However, an A1 Certificate may have to be applied for and submitted retrospectively (see the information sheet issued by the Federal Ministry of Labour and Social Affairs (BMAS)).
In contrast to these countries, in France, for example, an A1 Certificate is required for every business activity, even a minor one, and is punished with heavy fines if it cannot be presented. However, failure to present an A1 certificate is not subject to sanctions if, during an inspection, proof is provided that the application for an A1 Certificate was submitted and that the A1 Certificate can then be presented within two months.
Even if countries such as Austria or Germany handle the obligation of an A1 Certificate in a pragmatic way, especially with regard to short stays, the EU and EFTA are a minefield with regard to possible sanctions that may result from not having an A1 Certificate. In order to avoid heavy fines, it is therefore worth taking the precaution of obtaining an A1 Certificate or consulting experts before doing business abroad. Both options are linked with considerable expense. All resulting in a situation that makes cross-border cooperation disproportionately difficult, especially for smaller companies in the border region.
For this reason, various initiatives are in motion in the EU to facilitate short business trips within the EU/EFTA states. The European Council rejected a Commission proposal to abolish the A1 Certificate requirement for short stays abroad in March 2019 but this has not quashed the issue; a further proposal to abolish the A1 Certificate requirement for short business trips is already being discussed in the European Parliament (see also Document of the European Commission to identify and address barriers to the Single Market of March 10, 2020 and Analysis of the current situation by the Centre for European Consumer Protection of October 22, 2019). Thus, not only individual regulations in neighbouring countries, but also the penetrating reform efforts in the EU give reason to hope for a more pragmatic use of the A1 Certificate in the not too distant future.