A1 certificate: legal basis

For a long time now, it has not only been common for employees or self-employed people to work in their own country. They often work for employers abroad or are sent abroad by their companies for a certain period of time. 

The A1 certificate is very important here, as it is a document that provides legal certainty for all parties involved and, above all, ensures that social security entitlements are clearly regulated.

Estimated reading time: 8 minutes

What is the A1 certificate?

The A1 certificate is often also referred to as a posting certificate. It is an official, legally valid document that proves that an employee or self-employed person continues to pay social security contributions in their home country for the duration of their temporary posting to another country. 

The A1 certificate is used in the European Union, the European Economic Area (EEA) and Switzerland. The A1 certificate avoids the need to switch social security responsibilities between countries. This streamlines administration and prevents the financial duplication of contributions across different countries.

The A1 certificate is issued by the social insurance institution in the home country. This enables the employee or employer to prove to the authorities in the host country that all social security contributions continue to be paid in the home country.

What is the purpose of the A1 certificate?

First of all, the A1 certificate is intended to make cross-border work easier for employees and the self-employed. It protects both the employee and the employer from financial and legal consequences within the different social security systems. The employee remains covered by pension, health and unemployment insurance in their home country for the duration of their posting.

Employers also benefit from the A1 certificate. They have a clear legal basis and can deploy their employees across borders. In this case, the employer does not need to deal with the social security systems of the countries in which the employees work. The certificate fulfils all legal requirements and the employer need not fear any legal problems or fines. Companies that regularly have to send their employees to another country for a certain period of time or have to carry out projects in other countries benefit considerably from this certificate.

The same also applies to the self-employed. For them, it is proof that they continue to pay their contributions in their home country and they do not need to worry about their activities abroad.

What is the legal basis for the A1 certificate?

There is a framework for the coordination of EU, EEA and Swiss social security through the A1 certificate. Regulation (EC) No. 883/2004 and Implementing Regulation No. 987/2009 should be mentioned here.

Regulation (EC) No 883/2004 determines which national social security system is responsible for a person who works in several countries. Of course, the principle of territoriality applies. According to this principle, there is a social security obligation in the country in which the employee carries out their work. However, the A1 certificate provides an exception to this, provided that the relevant requirements are met. 

This is exactly where Implementing Regulation No. 987/2009 comes into play. It specifies how to apply for the certificate and the deadlines to be met. It also specifies how disputes between different countries can be resolved. There are even landmark judgements by the European Court of Justice in which the A1 certificate was considered binding if it was validly issued. This was also the case in situations where the authorities of the host country questioned the underlying posting.

What challenges and misunderstandings are there with the A1 certificate?

Unfortunately, problems still arise in practice, despite the clear legal basis for the A1 certificate. One example of this is that many employers do not realise that the certificate must be applied for before the employee starts work abroad. 

Another example that occurs again and again in practice is the fact that many employers think that the A1 certificate only needs to be applied for if an employee is working abroad for a longer period of time. However, this is not the case, as an A1 certificate must also be applied for in advance for short stays and especially for regular border crossings. This also applies to business trips. 

There is another problem with the different member states themselves. Some countries have already implemented simple digital procedures, while others still rely on paper-based applications. Unfortunately, this often leads to delays. This is of course annoying for companies that frequently have to send their employees abroad. 

Another problem is the varying approaches among member states. In some countries, employees must carry their A1 certificate at all times and risk immediate fines or legal consequences if they fail to present it when requested. In contrast, other countries take a more flexible approach, where it is sufficient for the A1 certificate to be registered under the employee’s name and available when requested.

A common criticism of certification is its association with social dumping—the practice of employing foreign workers who pay lower social security contributions in countries with higher standards. This leads to unfair competition and, more importantly, the potential undermining of working conditions in the affected countries.

Which sectors are most frequently affected by the use of the A1 certificate?

There are of course many industries in which the A1 certificate is required. The construction industry in particular is very much affected by this, as there are many foreign employees who are deployed in German construction projects.

The A1 certificate is also required in the transport industry. Just think of all the lorry drivers who regularly transport goods throughout the EU. They must also provide proof of the country where they are covered by social insurance. 

With advancing technology, many IT companies frequently send employees abroad. Management consultancies are also regularly impacted by this.

Another area that has seen major growth in recent years is the increase in remote working and digital nomads. A completely new world has opened up here. It is completely natural for digital nomads to work in several countries, even though they remain formally registered in their home country. This often creates a gray area that requires clarification. The key question is whether the individual has a fixed employment contract with an employer or is engaged in self-employed work in their home country. The A1 certificate is particularly crucial for digital nomads, as without it, they risk double taxation, meaning they may have to pay social security contributions in multiple countries.

What does the future hold for the A1 certificate?

As the number of A1 certificates issued has risen dramatically in recent years, the digitalisation of certificates will become much more important in the future. However, there are already many EU member states that have introduced electronic application procedures. This naturally simplifies the application process for employers and the self-employed.

Over the next few years, the aim is to further reduce the administrative burden within the countries. For this reason, a standardised electronic system is currently being developed across Europe. The aim is not only to make the A1 certificate available more quickly, but also to enable the various member states to exchange data directly with each other via the electronic system. For the member states, this means that abuse can be prevented. The various authorities will be able to exchange information on employment relationships and social security contributions in real time.

This will be especially welcomed by smaller companies and the self-employed, who frequently criticize the A1 certificate. Many find the current procedure too time-consuming and overly bureaucratic.