EU/EEA | Social Security | Italy—Framework agreement for remote work


February 20, 2024

Social Security

EU/EEA | Italy—Framework agreement for remote work

In brief
In the aftermath of Covid-19, it has become increasingly popular for employees to work from home. Italian employers that are employing foreign resident employees have been facing challenges from EU rules on social security. If the employee works 25% or more in the country of residence, the employer is obliged to pay social security contributions in this country.

On July 2023 the following countries have implemented a Framework Agreement: Austria, Belgium, Croatia, Czech Republic, Finland, France, Germany, Liechtenstein, Luxembourg, Malta, Norway, Poland, Portugal, Spain, Sweden, Switzerland, The Netherlands, Slovakia.

Slovenia have opted in on the 01 September 2023 and Italy joined on the 01 January 2024.

In detail – Italy opts into the Framework Agreement
Italy opts into the solution. This means that Italian employers who have an employee that resides in a country that has also opted into the Framework Agreement will – together with the employee – be able to choose that the employee can work up to 50% (that is 49.9%) in the country of residence.

The solution cannot be used for employees residing in Great Britain.

Only “teleworking” is included
The solution can only be used for employees who perform “telework”, i.e. distance work, in the country of residence. “Teleworking” is work, which can be carried out regardless of the place of work using IT.

The agreement therefore does not apply if:

  • the employee habitually performs work other than telework in the country of residence, or
  • the employee habitually performs work (telework and non- telework) in another EU/EEA country outside the country of residence and Italy.

It therefore important for Italian employers to inform the employees about the limits to the telework and to monitor the work pattern in a reasonable manner. Particular attention must be paid to whether the employee’s business trips, or customer meetings results in the solution not being applicable.

Individual agreement with the employee and A1 application
The employee and the employer must agree to opt into the solution. The Framework Agreement does not set formal requirements as to what such an agreement must contain.

Based on the agreement, an A1 application must be submitted. The application for Italian social security, under Italian employment must be sent to the Italian authority. This procedure is different to the procedure governing ordinary A1 applications for employees working in two or more EU/EEA countries.

Employees who are not covered by the solution
Even if Italy acceded to the solution, there will be part of the employee population that will not be covered by the solution.

This may in particularly be the case for employees who:

  • have work patterns which disqualifies the application of the Framework Agreement;
  • live in an EU/EEA country which has not opted into the solution- i.e. Denmark;
  • live in the UK;
  • are employed by a branch.

For these employees, it is important to be aware that the existing rules contain a number of mechanisms that can give the employee the flexibility to work from home more than 1 day a week. Such solutions can be:

  • Posting: Provides increased opportunity to do homework for a limited period.
  • Calculation of 25%.

What can we help you with?
Currently, Vialto Partners assist companies in:

  • Updating employee policies, including drafting specific policies for Remote Work.
  • Identify which employees will be able to use the solution.
  • Prepare agreement paradigms for use in selecting the solution.
  • Communicate with employees about the opportunities and pitfalls.
  • Investigate how the increased work-split in the country of residence affects other compliance areas, including employment law, personal income tax and fixed place of work.

Contact
Please feel free to reach out your local social security contact at Vialto Partners or to the Vialto
Partners Social Security Leadership team:

Martin Muhleder
Global Social Security Partner

Gary Chandler
UK/Ireland Social Security Director

Suzana Branilovic
Italy Social Security Partner

Further information on Vialto Partners can be found here: www.vialtopartners.com

For additional alerts, please visit www.vialtopartners.com/regional-alerts


Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

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Further information on Vialto Partners can be found here: www.vialtopartners.com

Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

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