Social Security Treaty between China and the Netherlands

On 1 September 2017 the Social Security Treaty (“SST”) between the People’s Republic of China and the Kingdom of the Netherlands (the European part) entered into force.

After legislative changes in 2011 in China on the area of social security legislation, Dutch businesses are generally obliged to pay social contributions for expatriate workers in China. Some notable exceptions do however apply following regional Chinese social security legislation (e.g. Shanghai has not adopted the national standards and therefore employers are not obliged to make social insurance contributions for their foreign employees). Many Dutch businesses or expatriate workers that do need to pay social contributions in China, however, often choose to keep their (private) social insurances in the Netherlands, which causes double premium payment obligations. One of the reasons is that, until 1 September 2017, no treaty relation between the People’s Republic of China and the Kingdom of the Netherlands existed on level of social securities.

The SST aims to avoid double premium payment for Dutch expatriate workers who are seconded in China and vice versa. The SST contains general allocation rules and specific allocation rules pertaining to e.g. seafarers, cabin crews, civil servants and diplomats. The SST does not aim on any exports of social security benefits or the composition of periods and solely contains allocation rules for employees.

The scope of the treaty is rather small, but it does include the most important social insurances. For the Netherlands it concerns retirement pension, unemployment insurance and the surviving dependants pension. This means that Dutch employees seconded to China can stay insured for the aforementioned insurances in the Netherlands and they will be exempted from paying premiums for these insurances in China, if certain conditions are met and up to a maximum secondment period of five years. The SST does not apply to, for example, medical insurance and invalidity insurance. Therefore, additional international or local insurances will still be necessary. For Chinese employees seconded to the Netherlands, the SST only applies to retirement pension and unemployment insurance. Please find below some more significant rules of the treaty;

• In principle according to the general allocation rule the social security laws of a contracting state in which the employee is employed or seconded are applicable. Exceptions could apply to this general allocation rule if certain conditions are met e.g. the secondment provision.
• The treaty contains specific allocation rules in relation to seafarers, cabin crews, civil servants and members of diplomatic missions and consular posts.
• To apply the allocation rules of the treaty one must request with the competent authorities a posting of workers certificate as referred to article 12 of the treaty.
• This certificate has to be issued by the competent authorities within six months after of the starting date of the secondment.
• Included in the treaty is a so-called deemed place of residence provision.
• A dispute resolution procedure is included on the basis of reciprocal negotiations.
• A transitional arrangement for ongoing secondments prior to 1 September 2017 applies.

The SST shall, within ten years from the date of ratification, be evaluated by both contracting parties.

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