On 7 July 2026, the European Parliament adopted the long-awaited reform of the rules governing the coordination of social security systems within the European Union. The changes are the result of many years of work on amendments to Regulation (EC) No 883/2004 and Regulation (EC) No 987/2009 and include, among other things, rules affecting employees who work in more than one Member State.
At the time of publication, the legislative process has not yet been completed, as the changes still require formal adoption by the Council of the European Union. Consequently, the measures described below are not yet in force. However, they already indicate the direction of future regulations affecting internationally mobile employees, posted workers, and employers managing cross-border working arrangements.
Key proposed changes
1. A1 Certificates Valid for up to 24 Months
One of the most anticipated changes concerns the duration of applicable social security legislation determinations for individuals working in two or more Member States under Article 13 of Regulation (EC) No 883/2004. Currently, an assessment is made based on the employee’s anticipated working pattern over the following 12 months. The proposed rules expressly confirm that the applicable legislation may be determined for a period of up to 24 months, which would allow A1 certificates to be issued for up to two years.
For employers, this may provide greater certainty and reduce part of the administrative burden associated with renewing documentation.
2. Unemployment Benefits and Work Performed in Another EU Member State
The proposed amendments extend Article 13 of Regulation (EC) No 883/2004 by introducing a new rule for individuals who receive unemployment benefits in one Member State while simultaneously carrying out work in another EU country. Under the revised framework, the applicable social security legislation will be determined by reference to the Member State that pays the unemployment benefits. While this approach already reflects the practice adopted in many cases, the reform would explicitly incorporate it into the legislation.
3. Individuals Residing Outside the EU and Working in Multiple Member States
The changes also address situations involving individuals who reside outside the European Union but perform work in two or more EU Member States. In such cases, the Member State in which the individual carries out the largest share of their professional activities will be deemed to be their “country of residence” for the purpose of determining the applicable social security legislation. Although the proposed solution clarifies certain areas of uncertainty, practical questions remain. In particular, challenges may arise where work activities are performed to a similar extent in multiple Member States or where working patterns change frequently over time.
4. Clarification of the Concepts of “Employer” and “Place of Business”
Another significant development is the clarification of concepts that are essential when determining the applicable social security legislation. Under the proposed rules, a company’s place of business should be understood as the location where key business decisions are taken and where central management functions are carried out. The purpose of this change is to limit the use of entities with only a formal presence in a particular jurisdiction (so-called “letter-box companies”) when determining the competent social security system. In practice, the new rules may have implications for multinational groups operating through branches, holding companies, or entities with limited genuine operational substance.
What does this mean for employers?
Although most of the proposed amendments are of a clarifying nature, they may significantly affect organisations employing individuals engaged in cross-border work arrangements. Employers should consider reviewing:
- existing A1 certificates,
- cases involving work performed in multiple Member States,
- cross-border remote working arrangements,
- methods used to track working time and employee activities,
- international group structures and operating models.
PwC Commentary
In our view, the most significant consequence of the proposed changes is not the extension of A1 certificate validity to 24 months. While this measure will undoubtedly reduce part of the administrative burden, the most significant challenges lie elsewhere. The correct classification of cross-border situations and the determination of the Member State whose social security legislation applies are becoming increasingly important. In practice, the key distinction is often between a posted worker arrangement and work performed in two or more Member States. The growing popularity of flexible working models, including work performed from another country, means that correctly determining the applicable social security legislation is no longer merely an administrative exercise. Increasingly, it forms part of a broader process of managing regulatory, tax and employment-related risks. From an employer's perspective, now is the right time to review existing populations of internationally mobile employees and assess whether current assumptions regarding A1 certificates, place of business, and the classification of cross-border working arrangements remain appropriate in light of the proposed changes.
Autorzy:
