In terms of general social security principles, social security contributions should be due in the country in which one carries out their employment activity. In those instances where it is difficult to establish where the employment activity is being carried out, one may need to refer to European Union (EU) regulations to determine the country in which social security contributions are due.
The regulation governing social security for persons in the EU is Regulation 883/2004 (hereinafter 'the Regulation') and Malta, as a member state of the EU, falls under such a Regulation. The Regulation applies to nationals of the EU/EEA or Switzerland, stateless persons and refugees residing in an EU/EEA country or Switzerland who are or have been subject to the legislation of one or more Member States, as well as to the members of their families and to their survivors.
Instances where it is difficult to establish where the employment activity is carried out include, but are not limited to, employment in two or more member states. Article 13 of the Regulation governs this scenario.
When employed persons are working in two or more member states, social security contributions should be due in their country of residence if they carry out at least 25% of their working time in their country of residence.
If the said individuals do not carry out 25% of their working time in their country of residence, then, social security contributions are due in the country where the registered office or place of business of the undertaking or employer employing them is situated.
In the case of self-employment, Article 13 goes on to specify that self-employed persons carrying out self-employment activities in two or more member states should be liable to pay social security contributions, in:
the country of residence if more than 25% of their activities are carried out in their country of residence;
in the Member State in which they have their centre of interests if they do not reside in one of the Member States in which they carry out their self-employment.
Apart from the scenarios outlined above, there are other instances where it would be difficult to assess where social security contributions should be due. These include considerations for seafarers and air crew.
Seafarers
In the case of seafarers, Article 11(4) of the Regulation states that social security contributions should be due in the country where the vessel is registered (i.e. the flag state). This is because an activity performed on such a vessel represents an activity pursued in the flag state.
However, there is an exception to this rule, whereby persons employed on board a vessel flying the flag of a Member State and remunerated for such activity by an undertaking or a person whose registered office or place of business is in another Member State shall be subject to the legislation of the latter Member State if the employed person resides in that State.
Air crew
Historically, social security contributions payable by air crew used to follow the rules set out in Article 13 of the Regulation. However, the said rules were overridden by a new provision set out in EU Regulation 465/2012 whereby air crew should be liable to pay social security contributions in the Member State where their ‘home base’ is located. For ease of reference, home base is defined as “the country nominated by the operator where the air crew normally starts and ends a duty period and where the operator is not normally responsible for the accommodation of the said air crew.”
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If you have any queries or would like to know more about social security or how PwC can support you, please contact our local social security team.
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