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Tax and Social Security Contributions: The Cross-Border Impact of Telework

Schwartz, Christian LU (2026) In EC Tax Review 35(2). p.66-78
Abstract
The rapid expansion of cross-border telework has exposed structural frictions between the European Union’s (EU’s) coordination of social security and the international allocation of taxing rights. This article examines how the simultaneous application of Regulation No. 883/2004 and double tax conventions affects the financing of social security systems. It first situates Member States’ heterogeneous financing models – ranging from contribution-based to tax-funded and documents cross-country divergences. It then sets out the principles of Regulation No. 883/ 2004 (notably lex loci laboris and the single-state principle) and analyses their application to cross-border telework under Articles 12, 13 and 16, including the 2023 Framework... (More)
The rapid expansion of cross-border telework has exposed structural frictions between the European Union’s (EU’s) coordination of social security and the international allocation of taxing rights. This article examines how the simultaneous application of Regulation No. 883/2004 and double tax conventions affects the financing of social security systems. It first situates Member States’ heterogeneous financing models – ranging from contribution-based to tax-funded and documents cross-country divergences. It then sets out the principles of Regulation No. 883/ 2004 (notably lex loci laboris and the single-state principle) and analyses their application to cross-border telework under Articles 12, 13 and 16, including the 2023 Framework Agreement on Cross-border Telework. Turning to the OECD Model Tax Convention (OECD MC), the article explains the allocation of taxing rights in Article 15 and the role of frontier-worker clauses. Building on CJEU case law, it identifies two levels of conflict: the divergent definition of social security contributions and the structural mismatch between single-state affiliation for contributions and split taxing rights for income tax. Using threshold-based telework scenarios, it shows how double or zero financing of a social security system can arise. The article is concluded with a discussion on how potential problems arising from simultaneous application be overcome.


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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
OECD, UN, cross-border telework, EU, Social Security Coordination, Regulation 883/2004, Double tax conventions, OECD Model Tax Convention, Free movement of workers, social security contributions, Financing of social security, Fiscal coordination, Remote work, Telework
in
EC Tax Review
volume
35
issue
2
pages
13 pages
publisher
Kluwer Law International
ISSN
0928-2750
language
English
LU publication?
yes
id
4259db45-1f46-44e3-87d2-3416ec85c0e8
date added to LUP
2026-02-26 15:59:40
date last changed
2026-02-26 17:02:53
@article{4259db45-1f46-44e3-87d2-3416ec85c0e8,
  abstract     = {{The rapid expansion of cross-border telework has exposed structural frictions between the European Union’s (EU’s) coordination of social security and the international allocation of taxing rights. This article examines how the simultaneous application of Regulation No. 883/2004 and double tax conventions affects the financing of social security systems. It first situates Member States’ heterogeneous financing models – ranging from contribution-based to tax-funded and documents cross-country divergences. It then sets out the principles of Regulation No. 883/ 2004 (notably lex loci laboris and the single-state principle) and analyses their application to cross-border telework under Articles 12, 13 and 16, including the 2023 Framework Agreement on Cross-border Telework. Turning to the OECD Model Tax Convention (OECD MC), the article explains the allocation of taxing rights in Article 15 and the role of frontier-worker clauses. Building on CJEU case law, it identifies two levels of conflict: the divergent definition of social security contributions and the structural mismatch between single-state affiliation for contributions and split taxing rights for income tax. Using threshold-based telework scenarios, it shows how double or zero financing of a social security system can arise. The article is concluded with a discussion on how potential problems arising from simultaneous application be overcome.<br/><br/><br/>}},
  author       = {{Schwartz, Christian}},
  issn         = {{0928-2750}},
  keywords     = {{OECD; UN; cross-border telework; EU; Social Security Coordination; Regulation 883/2004; Double tax conventions; OECD Model Tax Convention; Free movement of workers; social security contributions; Financing of social security; Fiscal coordination; Remote work; Telework}},
  language     = {{eng}},
  number       = {{2}},
  pages        = {{66--78}},
  publisher    = {{Kluwer Law International}},
  series       = {{EC Tax Review}},
  title        = {{Tax and Social Security Contributions: The Cross-Border Impact of Telework}},
  volume       = {{35}},
  year         = {{2026}},
}