Social security agreement between India and the Netherlands

1 December onwards

As of 1 December 2011, Indian employees on secondment will be covered exclusively under Indian social security legislation. To show they are insured in India, they will need a secondment certificate. They will no longer be insured under Dutch insurance schemes. The same applies to their family members living in the Netherlands, unless they work in the Netherlands, in which case they will be insured in the Netherlands.

As of 1 December 2011, employers will therefore no longer have to deduct and pay Dutch social insurance contributions for employees with a secondment certificate.

National insurance schemes

Consequences for employees;

• AOW pension
  Employees stop building up rights to an AOW old age pension as of 1 December 2011. For example, an employee who has already been working in the Netherlands for 4 years as of 1 December 2011 will have built up rights to 8% of the full amount of AOW pension. Each year of insurance entitles a person to 2% of the full AOW pension. The SVB will pay the AOW pension as from an employee’s 65th birthday, regardless of where he or she is living at the time – in the Netherlands, India or anywhere else. Employees requiring information about their AOW pension rights before they leave the Netherlands can visit www.svb.nl and request an SVB pension statement (pensioenoverzicht). They will need a DigiD code for this.

• Survivor benefit
  If an employee dies on or after 1 December 2011, a surviving partner will not be entitled to a Dutch survivor benefit, unless the employee had taken out voluntary insurance to continue the insurance under the survivor benefit scheme. More information is available at www.svb.nl.

• Child benefit
  An employee’s entitlement to child benefit will end on 1 January 2012. The employee will receive any child benefit payable for the 4th quarter of 2011 in January 2012.

Employee insurance schemes

• Unemployment
  As from 1 December 2011, the employee will no longer be insured against the risk of unemployment. If the employee becomes unemployed on or after that date, no Dutch unemployment benefit will be payable.

• Sickness
  As from 1 December 2011, the employee will no longer be insured against the risk of sickness. An employee who becomes sick on or after that date will not be entitled to a Dutch sickness benefit.

•  Incapacity for work (WIA benefit)
  As from 1 December 2011, an employee will no longer be insured under the WIA scheme. If an employee becomes incapacitated for work before 1 December 2011, a Dutch incapacity benefit will be paid. Under the agreement, it may be possible for the benefit to be paid in India after the employee returns to India. If an employee becomes incapacitated for work after 1 December 2011, India will pay the incapacity benefit because your employee will be insured under Indian legislation.

Health insurance

As from 1 December 2011, costs incurred for medical care will no longer be reimbursed. Employers can, however, take out private health insurance to cover these costs.

Secondment certificates

For employees already working in the Netherlands on 1 December 2011, companies can apply for a secondment certificate with a commencement date of 1 December 2011. On that date, the secondment term (five years maximum) begins.

It is advised that companies apply for secondment certificates as soon as possible so that employees will not have to repay any child benefit or reimbursements for medical costs after 1 December 2011. Indian company employees are advised to apply for the secondment certificate as soon as possible from The Employees’ Provident Fund Organisation; please visit www.epfindia.com.

Employees must keep an original copy of the secondment certificate. Employers must also keep a copy, so that in the event of an inspection, they can show that no contributions are due in the Netherlands.

Further information

The Sociale Verzekeringsbank (SVB), amsterdam inbusiness and Europe India Chamber of Commerce have organised a seminar before the agreement comes into effect. The seminar will take place on 22 November 2011. Please click here to find out more about the seminar.