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What is a secondment?
A guide to the social security arrangements for cross-border assignments
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Why the territoriality principle forms the basis for compulsory insurance in Germany.
What conditions must be met for a posting within the EU in accordance with Article 12 of Regulation (EC) No 883/2004.
How the regulations for third countries according to § 5 SGB IV differ from the European regulations.
Why the A1 certificate is essential as formal proof for remaining in the foreign system.
1. The territoriality principle as a cornerstone
2. Postings within the EU, the EEA and Switzerland
3. Special features for third countries and Section 5 of the German Social Code, Book IV (SGB IV)
4. Formal requirements and exception agreements
5. FAQ
6. Conclusion
1. The territoriality principle as a cornerstone
In our consulting practice, the first step is always to examine the place of employment . According to the territoriality principle enshrined in Section 3 No. 1 of the German Social Code, Book IV (SGB IV), foreign employees are generally subject to German law as soon as they perform their work in Germany. For this classification, it is initially irrelevant whether the remuneration is paid by a domestic or a foreign employer; the decisive factor is solely that the physical place of work – whether at the company premises or in a home office – is within the Federal Republic of Germany.
This fundamental legal principle generally triggers compulsory insurance in all five branches of the German social security system: pension, unemployment, health, long-term care, and accident insurance. Since this would often lead to significant administrative burdens and disadvantageous changes in insurance systems for temporary assignments, the law provides for complex exceptions . However, it is important to understand that, in addition to this social security dimension, tax law , labor law , and especially visa law also represent independent areas of review, which we consider simultaneously for our clients.
2. Postings within the EU, the EEA and Switzerland
For assignments within the European Union, Regulation (EC) No. 883/2004 provides the relevant legal framework. A posting within the meaning of Article 12(1) of this Regulation occurs when an employee is temporarily sent to Germany by their employer, who is usually based abroad, for a maximum of 24 months . A key characteristic is the maintenance of the direct employment relationship with the sending company, which requires, among other things, that the employee's entitlement to remuneration continues to exist against that company and that the company determines the nature of the work performed.
For the exemption to apply, the employer must conduct significant business activity in the home country, which is assessed based on criteria such as revenue (often around 25% as an indicator) or the number of employees remaining there. Interestingly, this regulation now also covers cross-border teleworking arrangements, provided that the work from a home office for a foreign employer is only temporary. We support companies in documenting these criteria in a legally compliant manner to ensure comprehensive insurance coverage in their home country.
3. Special features for third countries and Section 5 of the German Social Code, Book IV (SGB IV)
As soon as employees are seconded from countries outside the EU or the EEA (so-called third countries), the legal basis shifts primarily to bilateral social security agreements or national law pursuant to Section 5 of Book IV of the German Social Code (SGB IV). If Germany has concluded an agreement with the respective country, its provisions must be examined first, whereby the time limits can vary depending on the agreement – often periods of 12 to 60 months are stipulated. If such an agreement is lacking or not applicable, the provisions of Section 5 Paragraph 1 of Book IV of the German Social Code (SGB IV) apply.
The requirements of Section 5 of the German Social Code, Book IV (SGB IV) differ significantly in detail from EU law. For example, the German law prohibits passing on salary costs to the German company, as this could preclude the posting of workers in the national sense. Furthermore, German law under Section 5 SGB IV does not stipulate a fixed maximum time limit, but requires a time limit that is contractually agreed upon in advance or determined by the nature of the work. We often find that clients underestimate these differences, which can lead to substantial back payments of social security contributions.
4. Formal requirements and exception agreements
Legally compliant deployment requires not only the fulfillment of substantive criteria but also proper formal processing. Within the EU context, applying for an A1 certificate from the competent foreign insurance institution is mandatory to prove exemption from German insurance obligations. This certificate is binding on German authorities and courts. For third countries, a corresponding posting certificate is issued instead, based on bilateral agreements, but this often has less binding effect.
If the standard requirements for a posting – such as the 24-month period – are not met, Article 16(1) of Regulation (EC) No 883/2004 provides for the possibility of an exception agreement . This is particularly relevant for modern mobile working , as a framework agreement has stipulated since 2023 that up to 49.99% of teleworking in the country of residence can fall under the law of the employer's country. This requires a corresponding application, which must be in the employee's interest, for example, to maintain a consistent insurance record .
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5. FAQ
What is the maximum duration of a posting within the EU?
A regular posting under Article 12 of Regulation (EC) No 883/2004 is limited to a projected duration of 24 months. However, longer periods can be achieved through derogations under Article 16 of the same Regulation.
What happens if I don't apply for an A1 certificate?
Although there is no strict legal requirement to carry this certificate in Germany, it serves as necessary proof. Without this certificate, German social security coverage will be assumed during an inspection, due to the territoriality principle.
Can third-country nationals also be posted under EU law?
Yes, the regulations of European Community law generally also apply to third-country nationals, provided they have their legal residence in an EU member state, with the exception of postings from Denmark.
Am I allowed to work from home during an international assignment?
Yes, a posting can also exist if the work is carried out exclusively from home or a holiday home in Germany for an employer in another EU country, provided that this is limited in time.
6. Conclusion
Sending employees to Germany offers companies great flexibility, but it's a legal minefield caught between the principle of territoriality and complex exceptions. Whether it's an EU regulation, a bilateral agreement, or national law according to Section 5 of the German Social Code, Book IV (SGB IV) – the details determine the cost burden and the legal certainty of the assignment. We strongly recommend having the social security implications reviewed before every international assignment and applying for the necessary certificates well in advance. As your experts in visa and employment law, we are ready to help you navigate the complexities of these different legal areas.