Social security treaty between China and the Netherlands
31 oktober 2016
On 24 October 2016 the wording of the Social security treaty between China and the Netherlands was published. This treaty effects both Chinese and Dutch employers with seconded employees in the Netherlands and China respectively with respect to social security.
Social security treaty
With the Social security treaty Chinese and Dutch employers can prevent paying twice for social security allowances on seconded employees. The treaty allows these employers to request a Certificate of Coverage (hereinafter: “CoC”) with the Social Insurance Bank for employees who are seconded to the Netherlands or China for no longer than five (5) years. Based on the CoC those employees can stay partially insured for social security in the country from which they are seconded. Family members who accompany the employees to China or the Netherlands will be partially insured as well.
The treaty does only apply to the social security allowances based on the:
- General Old Age Pensions Act (in Dutch: “AOW”);
- Surviving Dependants Act (in Dutch: “Anw”); and
- Unemployment Insurance Act (in Dutch: “WW”).
Therefore, the treaty is not applicable to allowances based on other parts of the Dutch social security system such as the Work and Income (Capacity for Work) Act (in Dutch: “WIA”) and Sickness Benefits Act (in Dutch: “Zw”).
Consequences for employers
Dutch employer in China
If the CoC is received by the Dutch employer with seconded employees in China the consequences of the treaty are as follows:
- seconded employees remain insured in the Netherlands for state pension, survivor’s pension and unemployment;
- seconded employees are no longer insured in the Netherlands for other social security, including but not limited to: incapacity for work, child benefit and health insurance;
- seconded employees are exempt to national insurance contributions to the Chinese basic pension and unemployment;
- depending on the different regions in China, the employer and/or employee may owe an allowance for medical care or industrial accidents.
Chinese employer in the Netherlands
If the CoC is received by the Chinese employer with seconded employees in the Netherlands the consequences of the treaty are as follows:
- seconded employees remain insured in China for the basic pension and unemployment;
- seconded employees are exempt to national insurance contributions to the Dutch state pension, survivor’s pension and unemployment;
- based on the Dutch social security legislation it must be determined if these employees are insured for the other parts of the social security system.
Impact on situations with exscinding seconded employees
Employees who already work for a Dutch employer in China or Chinese employer in the Netherlands will be able to invoke the treaty once it becomes effective. As from the effective date of the treaty they can be partially insured for social security in China or the Netherlands for the term of five (5) years.
Tips and tricks
Please be advised to request the CoC within a period of six (6) month after the start of the secondment. Also note that special provisions apply to some groups of employees, such as sailors, aircrew and civil servants.
It is still unknown when the Social security treaty will become effective.
If you have any questions regarding to abovementioned, please feel free to contact our Employment law practice group.