Understanding Split Payroll for International Workers: How Social Security Agreements Can Benefit You

Overview of Split Payroll Processing for International Workers

In general, there are two different ways of processing split payroll for any international worker, and both are based on the SSA (Social Security Agreement) signed between the countries.

Social Security Agreements with India

The Government of India has entered into agreements on Social Security with the Governments of Belgium, Germany, Switzerland, Luxembourg, France, Denmark, Korea, and the Netherlands. These agreements aim to achieve equality on the principles of reciprocity and benefit the employees and employers of both India and the other countries.

Salient Features of the Agreements

- Employees of the home country deputed by their employers, on short-term assignments for a predetermined period of up to 60 months, to the host country need not remit social security contributions in that country.
- Export of pension due under the legislations of one country to the other country, where the member might choose to live, is possible.
- Totalization of the contribution periods earned while in service in both countries for the purpose of deciding eligibility for benefits is possible under certain circumstances.
- Employers are saved from making double social security contributions for the same set of employees, thereby enhancing the competitiveness of their products and services.

Overall, if both countries have undergone an SSA, the employer does not need to remit the social contributions for the employee in either country. Where there is no SSA, the employer will have to remit all Social Security dues in both countries. In both cases, tax has to be deducted in both countries where the employee is based.

Regards,
Kumar Anand

Dear Kumar ji, Good piece of information. I have a doubt about your last two paragraphs, i.e.,

1. Where there is no Social Security Agreement (SSA), the employer will have to remit all Social Security dues in both countries.

2. In both cases, tax has to be deducted in both countries where the employee is based.

According to me, if there is no SSA, the employer has to remit the Social Security dues in the country where the person is employed. Members of the forum/experts are requested to share their views.

Thanks and regards,

Keshav Korgaonkar

Regards

Dear Kumar ji, Good piece of information. I have a doubt regarding your last two paragraphs:
1. Where there is no SSA, the employer will have to remit all Social Security dues in both countries.
2. In both cases, tax has to be deducted in the countries where the employee is based.

In my opinion, if there is no SSA, the employer has to remit the Social Security dues in the country where the person is employed. I kindly request members of the Forum / experts to share their views.

Thanks and regards,
Keshav Korgaonkar
Shantadurgaent.com, Insurance Advisors, Corporate Advisors, Legal Advice, Wage and salary, Labour Compliance Audit, SSI registration, NOC from

Dear Keshav, To clarify, let me explain with an example. We are a Korea-based company, and both India and Korea have had an SSA since Nov 11. Before Nov 11, for all our expats (employees who are on the parent company's rolls in Korea and are deputed in India with the subsidiary), we were remitting PF in India and contributing to the National Pension Scheme in Korea.

Since the SSA was signed, we no longer need to remit the PF contribution, and only contributions to the National Pension Scheme in Korea are made. To stop PF remittance, we have to submit a COC (Certificate of Coverage) to RPFC.

Regards,
Kumar Anand