REGARDING THE INSURANCES OF POSTED A1 WORKERS IN THE EU
As we have repeatedly written on the topic, there are strict requirements regarding the long-term posting of staff in the EU and EEA. The legal framework can be found in detail in Regulation 883/2004, Regulation 987/2009, and the guidelines issued by the NRA on the subject.
Here, I will pay strict attention to the matter of insurance. We are often asked whether it is possible for workers and employees not to be insured at the maximum insurance threshold for Bulgaria but at a lower rate when they will be posted to EU and EEA Member States. For everyone who has such questions, please pay attention to the considerations outlined below.
Mandatory requirement concerning staff: a minimum of 25% of the appointed workers and employees must be appointed in Bulgaria, and these 25% must be the executive staff through which the company actually carries out its activities (i.e., excluding a secretary, cleaner, director, accountant, and other management, administrative and auxiliary personnel). For more details on the topic, you can seek letter with outgoing number 20-00-200 dated 23.06.2010 to the TD of the NRA - Dondukov Blvd No. 52 from the Ministry of Finance. This letter relates to determining the applicable law under Title 2 of Regulation 883/2004.
In addition to Regulation 883/2004, the conditions for the posting of individuals abroad must comply with the Labor Code, currently in force, and the Regulation on postings within the country and abroad. This means that it is not sufficient for a person to be insured at 2,600 leva, which is the maximum insurance threshold for Bulgaria. The requirement of Art. 121 of the Labor Code is that the person should receive a salary (hourly rate) like local workers in the host country (the host country is the country in whose territory the person is posted).
The fact that this requirement is adhered to by the Bulgarian employer is easily traceable as every EU member state has a special website where the minimum hourly rates for specific professions are announced. Competent authorities from the NRA already verify this. Of course, verification is not carried out immediately, but after a sufficiently long period, such as a year or two, and this is the major problem. When they find that posted workers are not paid an hourly rate similar to local persons, and Art. 121 of the Labor Code is not adhered to, the NRA authorities recalculate insurance contributions and taxes under the PITLL for the past period. Some employers allow not insuring the workers posted abroad at the maximum threshold, which is currently 2,600 leva, and during later audits, the tax authorities issue large acts with liabilities for these employers.
Vesta Consult's recommendation is to insure long-term posted A1 individuals in EU and EEA member states at least at the country's maximum insurance threshold. We also hope to have addressed the questions of those employers who insist on insuring their workers at lower thresholds.
I hope this article's information has been useful to you!
The article is written by Valentina Petrova and published by Marina Muchakova
