How to export workforce in Europe legally? What are the benefits?
We can advise you free of charge for the opportunities offered by Regulation No 883/2004 and what the benefits for your company will be, by phone: (+359) 878 633825 and (+359) 893 665770.
Free movement within the Community is a right guaranteed to the working people by the Treaty establishing the European Community. For the free movement of workforce, rules that prevent the simultaneous application of security laws of more than one Member State to the labour force moving within the Community have been established.
Provisions of Regulation No 883/2004 provide continuing to be subject to the applicable legislation of the posting State and it is applicable to employees who are subject to this legislation by the virtue of the fact that they have been normally and continuously working at the company, which posts them.
For this purpose, two conditions shall be satisfied:
1. Achieved volume of sales in the posting State shall not be less than 25% of the total volume realised in the posting State, and in the other Member State where the posted people pursue activities.
2. The number of employed persons in the posting State, the employer shall maintain no less than 50% of the total number of employed persons /not to consider administrative staff/ in the posting State and the other Member State.
As the results of the work of the posted persons are reported and paid at the posting company, then all taxes are paid by the employer in the posting State. When the posting State is Bulgaria, taxes are paid under the Bulgarian tax legislation, and as it features the lowest tax rates among all Member States of the European Union, this will obviously raise the interest of all Member States to attract workers posted by Bulgarian companies.
According to Art. 12/1/ of Regulation No 883/2004, a person who pursues an activity as an employed person in a Member State on behalf of an employer which normally carries out its activities there and who is posted by that employer to another Member State to perform work there on behalf of that same employer shall continue to be subject to the legislation of the first Member State, provided that the anticipated duration of such work does not exceed twenty-four months and that she/he is not sent to replace another person.
As an exception to the general rule, this provision sets the following mandatory requirements whose implementation is an absolute condition for continuing to apply the legislation of the posting State to employees who work on a temporary basis on the territory of another Member State:
the posted person shall be subject to the legislation of the posting State as performing work as an employee of the employer who posts him;
the posting employer shall normally carry out its activities on the territory of the posting State;
maintaining a direct relationship between the employer and the posted person;
anticipated duration of the work shall not exceed 24 months;
the person shall not be sent to replace another person.
Regarding the satisfaction of the second condition, it should be kept in mind that carrying out some of the activities in the posting State does not always mean that the company usually carries out activities on the territory of that State. In order to satisfy this requirement, the posting undertaking shall normally carry out a substantial part of its activities on the territory of the Member State concerned /art. 14/2 / of Regulation /EC / No 987/2009/.
To determine whether an employer normally carries out its activities in Bulgaria all relevant criteria characterizing the activities carried out shall be considered, some of which are:
the place where the registered office and the administration of the employer are located;
the number of persons employed by the employer /excluding administrative staff/, the place where the contracts with the posted workers were concluded, and the labour legislation applicable to them;
the place where the contracts with the clients of the company were concluded and the legislation applicable to them;
the turnover achieved by the company in Bulgaria relative to the total turnover in the preceding 12 months;
the economic activity of the employer carried out on the territory of the posting State;
the number of contracts executed in the posting State;
the length of time during which the employer has carried out activities in the posting State.
Criteria for substantial part of activity shall be seen in its entirety and shall be adapted to the nature of the work performed by the company, and depending on the specifics of each case, other criteria can be further applied.
The absence of turnover achieved by the employer on the territory of the posting State excludes the normal carrying out of substantial part of its activities on its territory. When examining individually the criterion, turnover, achieved by the employer on the territory of the posting State in the amount of 25% of the total achieved turnover in the previous 12 months may be regarded as a sufficient indicator. However, in certain cases, when the turnover is less than 25% (e.g. 20%) it can also be assumed that the employer carries out substantial part of its activities on the territory of the posting State after examining /and compliance with/ all of the criteria in their entirety. In addition, the criterion in question can be examined for a longer period than the previous 12 months.
Correlation between the economic activity of the employer carried out on the territory of the posting State and the State of employment is mandatory for applying Art. 12/1/ of Regulation /EC/ No 883/2004. The provision itself does not provide additional enforcement and compliance with such a requirement. However, the presence of such discrepancy could be seen as an indicator suggesting to perform a thorough check on satisfying the conditions under which the posted employees may continue to be subject to the legislation of the posting State.
In the cases under Art. 12/1/ of Regulation /EC/ No 883/2004 and pursuant to Art. 88-90 of the Tax and Social-Insurance Procedure Code, acting on a request by an established form /ОКд-236/ certificate A1 for applicable legislation shall be issued. The request may be submitted by the employee and/or his employer. The certificate issued certifies that for the period specified in it, which may not be longer than 24 months and may not be extended for a further period, the employee continues to be subject to the Bulgarian legislation.
Upon receipt of the request at the competent territorial directorate of the National Revenue Agency, the revenue authority designated to issue this certificate shall check the data presented in the request and shall analyze the attached evidence. In the case of non-conformities found or in the case of insufficient information and/or evidence, such may be required additionally. Based on the findings in the analysis, the revenue authority shall issue certificate A1 or shall pronounce a reasoned refusal. Clear from the foregoing, the fact whether the conditions mandatory for the issuance of certificate A1 are satisfied or not is judged only by the specific facts and independently by the revenue authority, which has been assigned to issue the document. Based on the declared principles of autonomy, independence and objectivity, solely the relevant revenue authority is empowered to issue the requested document or to refuse to issue it.
Certificate A1 is not a license to work in the EU, and the refusal to issue it does not mean that the employer cannot send the respective employee to perform work for him on the territory of another Member State, and that such person cannot remain subject to the Bulgarian legislation. In accordance with the general rule of Art. 11/3//a of Regulation /EC/ No 883/2004, the period during which a person pursues an activity as an employed person in another Member State, shall be subject to the legislation of that Member State; In this regard, please pay attention to the provision of Art. 21 of Regulation /EC/ No 987/2009, which introduced the following obligations on employers:
Employer, whose registered office or place of business is situated outside the competent Member State shall fulfill all obligations laid down by the legislations applicable to his employees, in particular, the obligation to pay the contributions provided for by that legislation, as if he had his registered office or place of business in the competent Member State;
An employer who does not have a place of business in the Member State whose legislation is applicable and the employee may agree that the latter may fulfill the obligations of the employer on its behalf as regards the payment of contributions without prejudice to the employer’s underlying obligations. The employer shall send notice of such an arrangement to the competent institution of that Member State.
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