22 December 2016

As of next year, Chinese companies with expats in the Netherlands (and vice versa) will have a decrease in costs. If the Social Security Treaty between the Netherlands and China ('the Treaty') enters into force, no double social security premiums have to be paid for these expats. Chinese companies only have to pay social security premiums for basic old age and unemployment for expats in the Netherlands. Conversely, only Dutch social security premiums for old-age, pension (AOW), survivors (ANW) and unemployment (WW) are due for expats in China.

Important items within the Treaty

A Social Security Treaty generally applies on all social insurances. This Treaty between the Netherlands and China however, is limited to pension and unemployment.

Main rule within the Treaty is that the employee is only subject to the social security of the country in which the employee physically works.

An exemption to the main rule applies to expats. Under circumstances, expats remain subject to the social security of their home country (from which they were seconded). This exemption applies for a maximum period of 5 years. Should the secondment exceed this 5 year period, an extension of this exemption is possible within the Treaty, only if both competent authorities agree. Family members who accompany the expat to the Netherlands, too, will reamin partially insured for social security in China.

The Treaty furthermore indicates that a certificate of coverage shall be issued by the competent authority within 6 months from the start of the secondment.

Transitioning rule expats

If an employer already has expats seconded to China or the Netherlands - prior to the Treaty taking effect - the Treaty can still be invoked once entered into force and for a maximum period of 5 years.

Impact of the Treaty

The impact for Chinese employers with expats in the Netherlands is that employees remain subject to Chinese social security for basic old age and unemployment. No Dutch social security premiums are due for old-age, survivors and unemployment. As such, premiums could still be due for medical care and accidents on site, as these are not covered by the Treaty. The Chinese expat therefore always has to have a Dutch health insurance. In addition, he could also be entitled to Dutch child support, if the conditions are met.

The impact for Dutch employers having expats in China is that only Dutch social security premiums relating to old-age, survivors and unemployment are due. This however does not apply to disability (WAO/WIA) and health insurance (Zvw). Premiums could be due for medical care and accidents on site, as these are not covered by the Treaty.

Contact

Should you have further questions on the above or otherwise please contact us via e-mail or call us at our office in Amsterdam at +31 20 570 9440 or our office in Rotterdam at + 31 10 201 0466.