Do I need to obtain form A1 for a business trip or training abroad?
Posting is not only a case of an employee working on a specific project abroad, but also when attending a few-day business meeting, conference or seminar. Even in these cases, the A1 certificate must be obtained as failure to do so may result in severe penalties.
Although the design of social security and health insurance systems is a domestic matter for all EU Member States, the coordination of national systems and the elimination of conflicts between different regulations are necessary to protect and guarantee the social security rights of workers moving between Member States. The common rules apply not only to EU citizens working in the 28 EU Member States, but also to EU citizens working in Switzerland, Liechtenstein, Norway and Iceland, covering, among others, health-, pension-, sickness-insurances and cases of accident and unemployment, plus benefits for maternity and death.
Under the Community Regulation currently in force, a worker may be insured in one State only during a period of employment abroad. In this Member State, he is obliged to pay contributions and other fees and may also claim social security benefits in accordance with the internal rules of that country. He will be entitled for the same benefits and rights as nationals of that State.
Several factors influence which Member State, how and at what level the contributions are to be paid. One of these is whether the worker is employed or self-employed abroad in a company or is studying at an educational institution in that country. Another important aspect if a Hungarian employee is posted as expatriate by a Hungarian company to work abroad, or he works in more than one country at the same time parallel, or potentially commutes daily or weekly between two Member States.
Postings to the European Economic Area
As a general rule, the worker is insured in the Member State where he / she physically carries out his / her work, but different rules apply to postings in the sense of social security. In this case, the worker may remain insured in the State of posting - that is, an employee posted by a Hungarian company in Hungary - if the conditions justifying the posting are fulfilled. To determine the nature of working abroad, all the relevant criteria shall be examined by the supervisory authorities assessing the situation as a whole.
Posting - that is to say, the special rule above - applies when an employer established in the territory of one Member State sends a worker to the territory of another Member State in order to work there on his behalf. It is also a condition that the expected duration of work should not exceed 24 months.
Both the current Community and Hungarian regulations in harmony impose further conditions on the duration of the posting of an employee in the home country. If a Hungarian worker is considered to be a posted worker on the basis of the above, he or she will not be subject to the obligation to pay contributions in the foreign Member State by virtue of the certificate of A1 issued by NEAK.
Short-term assignment for business, educational or training purposes
In practice, the question arises as to whether it is necessary to apply for an A1 form if persons are sent for a short-term job (e.g. a few days or 1-2 weeks) or even without work for education or training purposes only.
The current EU Regulation does not distinguish between this type of business trip and longterm posting, and according to the current Hungarian and EU practice, the posting rules apply to short-term business trips as well. So a short-term business trip is actually equivalent to a posting of less than 24 months.
In our experience, this includes cases where the employer sends the worker to different Member States on a daily basis. In such cases, postings to each country will have to be assessed separately and the A1 form will also be required separately. It is strongly recommended; therefore, to obtain the A1 certificate before starting a business trip to avoid any legal consequences.
However, it is important to mention that the European Commission has in the meantime launched a review of the EU Coordination Regulation. The amendments aim, among other things, to settle the practical problems discussed in this article in a reassuring and clear manner, so the concept of business travel would be included specifically in the EU rules. This would resolve the problems of interpretation of the law on very short periods of residence abroad. This would include temporary activities related to the employer's business interests, which do not include the provision of services or the supply of goods, such as attending internal and external business meetings, conferences and seminars, negotiating business transactions, conducting sales or marketing activities, auditing clients, exploring business opportunities or attending training. Although the European Parliament's draft legislative resolution has been finalized following the approval of the European Council, no final agreement has yet been reached between the three institutions so that the content of the report may be amended, but good news is that simplification is imminent!
Consequences of the lack of A1 certification
However, under the current rules, if the system of criteria for posting is not fulfilled, the Hungarian authority may not issue the certificate required for exemption in the host state or it will withdraw the certificate previously issued, thus the obligation may be retrospectively transferred to the State of the actual place of work abroad.
In addition, if the employer or employee fails to apply for Form A1, the employee will automatically be obliged to pay contributions in the host state. Failure to obtain A1 certification or subsequent retraining may result in severe tax and social security consequences and severe fines, the extent of which will depend on the domestic law of the Member State concerned.
