On 1 September 2017, the social security convention between the Netherlands and China will take effect. This convention stipulates that employees who are seconded to China, and their dependent family members, will continue to be covered to some extent by social security legislation in the Netherlands. One of the requirements is that the secondment lasts no longer than five years. Employees who have been seconded to the Netherlands from China may also continue to be covered to some extent by social security legislation in China.
Certificate of Coverage
To invoke the new social security convention, a Certificate of Coverage (hereafter: CoC) will be mandatory. The CoC will have to be applied for at the Social Insurance Bank. The certificate must then be sent to the company in China where the seconded employee is working. This company must submit the certificate to the Chinese Ministry of Social Security within six months of the start of the secondment. In the case of secondment from within China, the CoC must be applied for at the Chinese Ministry of Social Security. The Chinese ministry sends a copy to the Social Insurance Bank in the Netherlands. In the case of pre-existing secondments, the convention may be invoked from 1 September 2017 for a period of five years, providing that all formalities have been met.
The convention applies only to state pension (AOW), the surviving dependants’ pension (ANW) and unemployment benefit (WW) legislation. This is in contrast to other social security conventions concluded by the Netherlands. For employees seconded to the Netherlands from China, the convention applies only to the Chinese basic old-age insurance and unemployment benefit. For other parts of the Dutch social security system, such as legislation relating to healthcare insurance, occupational disability or child benefit, Dutch seconded employees are not insured on the basis of the convention. Consequently, international healthcare insurance remains important.
In most cases, Chinese seconded employees are covered by the Dutch Healthcare Insurance Act (Zorgverzekeringswet), the Long-term Care Act (Wlz) and the Work and Income (Capacity for Work) Act (WIA).
The restricted operation of the convention means that the payroll accounting is processed differently. If you have questions about the social security procedure in the case of secondments to and from China, contact your tax consultant or one of our international tax withholding specialists at Employment Advisory.