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Social security and taxes when posted from Australia to Germany
Guidelines for posting workers from Australia to Germany.
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Which bilateral agreements regulate social security between Australia and Germany.
How to avoid double insurance in the pension insurance system through posting certificates.
What to consider regarding health and long-term care insurance in the absence of comprehensive agreements.
How the double taxation agreement legally distributes the tax liability of your employees.
1. What social security agreements exist between Australia and Germany?
2. Pension insurance for postings from Australia to Germany
3. Health and long-term care insurance for postings between Australia and Germany
4. Taxes on employee secondments from Australia to Germany
5. FAQ: Posting from Australia to Germany
6. Conclusion: Posting from Australia to Germany
1. What social security agreements exist between Australia and Germany?
When we support companies with global mobility , avoiding double taxation is our top priority. A specific social security agreement between Germany and Australia has been in place since January 1, 2003, primarily aimed at coordinating the pension systems of both countries. It is designed to ensure that employees temporarily posted from Australia to Germany are not subject to contributions in both systems simultaneously , which would often be the case without a contractual basis under Section 4 of the German Social Code, Book IV (SGB IV) (extension of social security contributions) and the respective Australian regulations.
Under this agreement, we can ensure that Australian law continues to apply to our clients for a period of up to 60 calendar months . This requires a genuine secondment , meaning the employee remains employed by their Australian employer and the assignment is limited in advance.
2. Pension insurance for postings from Australia to Germany
Pension insurance forms the core of the bilateral social security agreement with Australia. We frequently observe that the aggregation of insurance periods is a crucial factor for future pension eligibility. The agreement treats periods of employment completed in Australia (Australian Working Life Residence) as if they had been completed in Germany, provided this is necessary to fulfill the qualifying period. This secures long-term entitlements for the employees concerned in both pension systems without any loss of contribution periods.
During the assignment to Germany, the focus remains on avoiding mandatory insurance in the host country. Provided the conditions for the assignment are met, no contributions to the German pension insurance scheme are due. However, should the assignment extend beyond the intended five years, an exemption agreement pursuant to Article 8 of the agreement is required. We assist companies in submitting such applications to the German Liaison Office for Statutory Health Insurance Abroad (DVKA) to ensure continuity within the familiar Australian pension system, even for longer-term projects.
3. Health and long-term care insurance for postings between Australia and Germany
A critical point in the consultation is the fact that the social security agreement between Germany and Australia does not cover health and long-term care insurance. This differs significantly from postings within the EU . Since the agreement is silent on this matter, national regulations apply. This means that an employee posted to Germany is generally subject to German mandatory health and long-term care insurance, unless the principle of continued coverage under Section 4 of the German Social Code, Book IV (SGB IV) applies, which allows for a temporary continuation of coverage under certain conditions.
In practice, this often leads to a coverage gap or the need for private supplementary insurance. Since the Australian healthcare system (Medicare) provides very limited coverage abroad, we must ensure that the employee has adequate insurance coverage during their stay in Germany that meets the requirements of Section 11, paragraphs 1 to 3 of the German Social Code, Book V (SGB V). We individually assess for our clients whether an exemption from mandatory insurance is possible or whether voluntary continued insurance in their home country, combined with private international insurance, represents the most legally sound solution.
4. Taxes on employee secondments from Australia to Germany
The tax treatment of secondments is governed by the Double Taxation Agreement (DTA) between Germany and Australia . Generally, the country where the work is physically performed has the right to tax the income. A key exception is the so-called 183-day rule according to Article 15 of the DTA. If the employee remains in Germany for fewer than 183 days within a twelve-month period, the salary continues to be taxed only in Australia, provided the employer is not resident in Germany and the remuneration is not borne by a German permanent establishment.
Once this period is exceeded or the costs of the secondment can be economically attributed to a German permanent establishment, the employee becomes subject to limited tax liability in Germany.
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5. FAQ: Posting from Australia to Germany
Does the social security agreement also apply to unemployment insurance?
No, the agreement between Germany and Australia only covers pension insurance. Unemployment insurance must be examined separately under national law.
What is the maximum permissible duration of a posting?
The agreement stipulates a standard duration of up to 60 months. Longer periods require a special exception agreement.
Does the employee have to pay income tax in Germany?
This depends on the length of stay and who bears the financial costs. For stays exceeding 183 days, income earned there is generally subject to taxation in Germany.
What happens to the Australian superannuation during the posting?
In the case of a lawful posting with a posting certificate, the obligation to pay contributions to the Australian superannuation can often continue, while the obligation to pay contributions in Germany ceases.
6. Conclusion: Posting from Australia to Germany
The secondment of skilled workers from Australia to Germany offers tremendous opportunities but requires meticulous legal preparation . While the pension agreement provides a solid foundation for avoiding double insurance coverage, health insurance and tax classification often present complex hurdles. As a law firm, we recommend aligning the contractual arrangements for the secondment with the requirements of the double taxation agreement (DTA) and social security agreements at an early stage. Only through complete documentation and timely application submission can the risk of back payments and disadvantages under insurance law for the employees be effectively avoided.