Employees must be in possession of an A1 certificate each time they engage in a cross-border activity abroad. Controls by the Swiss and foreign authorities have been significantly stepped up since the beginning of 2019, with contraventions being subject to some prohibitive fines.
The Agreement on the Free Movement of Persons between Switzerland and the EU Member States has been in force since 1 June 2002. It gives Swiss and EU nationals the right to work and live in the place of their choice in the territory of the contracting parties. This simplification of cross-border activity packs a punch. A lot of employers and their mobile workforces are not entirely sure of who has to do what and what they have to show. We provide a short overview of what you need to observe.
The social security systems of all contracting parties are coordinated in Annex II to the Agreement on the Free Movement of Persons between Switzerland and the EU Member States (AFMP). The aim of this coordination recommendation is to guarantee the social security cover of mobile workers. Barring very few exceptions, the coordination rules guarantee that all income of individuals engaging in cross-border activities is insured in a single EU/EFTA state. This prevents the payment of multiple social security contributions, which simplifies the processing of benefits in the case of a claim or retirement.
We refrain from going into detail about the coordination of the social security legislation an individual is subject to; we have already published information on this subject in the past. Our specialists here work day in, day out to ensure that employees pay social security contributions that are correct and duly settled in the right country, preventing employers from being exposed to considerable expense.
Since 1 January 2019, controls of affiliation to social security schemes have suddenly become a lot more rigorous and have caused major problems for a lot of cross-border workers. The reasons for this are clear: digitalisation is also making itself felt here, the exchange of data is working and controls have become simple and are being enforced. Since 2010, Ordinance (EC) 883/2004 has required employers and employees to obtain approval from their insurance carrier by means of an A1 application for every cross-border activity carried out in the EU/EFTA and Switzerland. A lot of our readers are probably already aware of the need for form A1 for postings. In the event of a posted worker, general coordination rules are "overridden" through a special agreement. It is somewhat evident that this requires the approval of the competent authority. We hereinafter look at all the other cases in which many advisors and affected persons may not be aware that they also need a Form A1.
All cross-border activities are affected. Examples from practice include:
- employees working in all types of transport business, coach travel in particular
- group employees, members of the board, supervisory board, etc.
- employees sent to attend trade fairs and conferences
- all types of advisors
- teachers, lecturers, speakers
- sportspersons, musicians, members of the art and cultural community
- reporters, journalists
- security personnel
The ten most frequently asked questions on the subject of cross-border activity
We are assuming in the questions below that the individual in question is a Swiss, EU or EFTA national and employed full-time (100%) by a Swiss employer.
Question 1: My job as an advisor involves holding a very short two-hour advisory session with a client in Germany. Do I need an A1 certificate?
JYes. Every form of cross-border activity, including a one-hour stay, needs to be evidenced by an A1 certificate. This also includes short cross-border meetings, board of director/senior management meetings, workshops and even getting petrol during a business trip in an EU/EFTA state. Failure to have an A1 certificate can, for example, result in being refused admittance to company premises, construction sites or trade fairs.
Question 2: Is there any length of time for which you don’t need an A1 certificate for a cross-border activity?
Nein. Wie bereits oben erwähnt ist für jede grenzüberschreitende Tätigkeit eine A1-Bescheinigung erforderlich.
Question 3: Do I also need an A1 certificate when I travel to Europark in Rust (DE) with my family during my holidays?
No. Although you are crossing the border, you are doing so during your free time and not on behalf of work. In these cases, we would urgently recommend taking the European Health Insurance Card (EHIC) with you for all of your family members, which proves that you are insured in Switzerland (or an EU/EFTA state). Contact your health insurer in good time if you need one. For more information, visit www.kvg.org.
Be aware that you need to have the oval CH sticker on your car when you cross the border for private purposes. If you don’t have one, you could be automatically fined on the other side of the border.
Question 4: I am being posted to France for 18 months to work on a project for my employer. I will change my place of residence to France for this period of time but will be returning to Switzerland at the end of the posting. The conditions for a temporary posting are fulfilled. Do I also need an A1 certificate in this case?
Yes. Experience has shown that particularly in cases like these, it makes no sense to temporarily switch your social security system. If you have an A1 certificate, you can remain insured in your country of origin for the duration of your temporary posting. This is the only exception to the otherwise customary insurance principle of being subject to the social security legislation of your actual place of employment.
A posting is only possible for a limited period of time and may not be exceed 24 months. If you possibly exceed this 24-month period, the state sending you on your posting and the country in which you are working temporarily can conclude an exceptional agreement and extend your posting by five to six years. A temporary interruption in your work due to sickness, holidays or a deployment by the company that sent you on your posting does not count as an interruption in your posting.
Employees must have been subject to the social security legislation in their country of origin immediately prior to a posting. The prior insurance period is customarily deemed to have been fulfilled if the employee was subject to the social security legislation of their country of origin for at least one month. The self-employed can also work on a temporary basis abroad as part of a posting, in which case a prior insurance period of two months in the country of origin applies.
Question 5: What is the point of an A1 certificate?
An A1 certifies which social security legislation an employee is subject to. It serves to avoid any gaps in coverage or payment of double contributions. You can compare it to a vehicle registration document – your car cannot be used on the road until your insurance company has issued confirmation of cover and the vehicle registration authority has issued a vehicle registration document. Mobility is not possible without a vehicle registration document - no engaging in cross-border activity without an A1 certificate.
Question 6: Where can I apply for an A1 certificate?
The employee in question’s country of residence is responsible for issuing an A1 certificate. You can only apply for it via the online platform (ALPS) of your employer’s AHV compensation office.
ALPS (Applicable Legislation Platform Switzerland) is an online application that enables companies, the self-employed, the compensation office and the Federal Social Insurance Office (FSIO) to handle postings abroad. The exchange of data between a company and a compensation fund or the FSIO in Switzerland is carried out only via ALPS. Data is no longer exchanged in paper form. This ALPS electronic platform ultimately ensures the important exchange of cross-border data. Other indirectly affected authorities presumably benefit from the networking and receive information such as work-permit-related data and disclosure of those with a withholding tax liability.
Question 7: Do I have to have an A1 certificate issued via the online platform or can I apply for it by hand using a form?
In Switzerland you can only apply for the A1 certificate online. Since some EU countries are not sufficiently technically advanced, the EU has approved a transitional deadline for compliance of 30 June 2019. In cases where there is good cause, an A1 certificate can continue to be applied for in paper form in the EU using the existing form until 30 June 2019.
Question 8: Do they check abroad whether employees are carrying an A1 certificate?
Yes. The initial feedback we have received from clients confirm that a number of EU/EFTA states have stepped up their controls since 1 January 2019; for example, when you cross the border by (company) car, at airports and apparently in hotels traditionally used for business purposes based on guest lists. To combat forgeries, the EU Commission has recommended that the EU member states add a serial or identification number to the A1 certificate.
Question 9: Do I have to be in possession of an A1 certificate before going on a business trip abroad? If so, in what form?
Yes, you have to be in possession of an A1 certificate before going on a business trip abroad. Austria and France in particular have stepped up their checks to ensure individuals are in possession of an A1 certificate. You can avoid paying a fine if you can prove that you had applied for an A1 certificate prior to commencing your business trip abroad or before being sent on a posting abroad.
Question 10: What penalties do I have to expect if I work abroad and am unable to show that I am in possession of an A1 certificate?
It really depends. Some countries levy penalties on employers and employees in the form of very high fines under administrative (criminal) proceedings. Others like France simply issue the employer with an estimated invoice for the social security contributions owed. We are aware of a case where an employer – in what we understand to have been a minor matter - was sent an invoice (discretionary assessment) for generously assessed, social security contributions owed of just over EUR 200,000. This came as a major blow, with the authority in question merely succeeding in ensuring that the employer in question never sends any of his workforce across the border without being in possession of an A1 certificate.
The authorities show no mercy in the field of social security when it comes to engaging in cross-border activities without an A1 certificate. Proof of insurance must be shown when crossing the border for business purposes. Being caught in a check by a foreign authority can be very tedious and extremely expensive. The issue of A1 certificates must immediately be included in all HR processes and employees must be equipped with an A1 certificate every time they cross the border for work purposes. This is the only way to avoid risks and costs.