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      Effective February 1, 2026, Estonia has officially adopted the EU multilateral framework agreement for social security on cross-border telework,1 bringing the total number of participating countries to 23.2

      Under this agreement, employees residing in Estonia and working for employers in other signatory countries can telework from Estonia for up to 49 percent of their working time, while maintaining social security coverage in their employer’s country—and vice versa for employees from other signatory countries working for Estonian employers. For prior coverage, see KPMG Flash Alert 2024-020 published 23 January 2024. 

      WHY THIS MATTERS

      With Estonia joining as the 23rd country, the cross-border telework framework now covers a broader range of European employees and employers.

      This agreement directly enables businesses and their international workforce to embrace remote work arrangements without risking shifts in the country responsible for social security or facing complex compliance challenges. Companies can attract and retain top talent across borders, while employees gain the flexibility to work from their home country up to 49% percent of the time—which helps ensure continuity of benefits and supporting work-life balance. 

      What the Teleworking Agreement Is About

      The multilateral framework agreement, drafted by the EU’s Administrative Commission for the Coordination of Social Security Systems, is based on Article 16(1) of Regulation (EC) No. 883/2004. It addresses the challenge of cross-border telework by allowing employees to work from their country of residence for less than 50 percent of their working time, while maintaining social security coverage in their employer’s country.

      To benefit from this arrangement, the employer and the employee must apply for an A1 certificate, which confirms the applicable social security legislation in the country of employer. Retroactive applications for the A1 certificate are limited to a maximum of three months. The certificate is typically issued for a specific duration ranging from one to three years at a time.

      Key Points

      • Eligibility: Applies only when both the employee’s country of residence and the employer’s country are signatories.

      • Scope: Covers telework arrangements, and work is done exclusively in the country of the employee’s residence and the country of the employer.

      • Social Security: Employees retain social security coverage in the employer’s country.

      • Previous Rules: Prior to this agreement, cross-border employees could only telework up to 25 percent of their time under employer-country social security coverage. Pandemic exceptions ended in June 2023.

      • Current Status: With Estonia joining as the 23rd signatory, the agreement’s provisions apply from February 1, 2026, for Estonia.

      Complex Cases

      A common complexity arises when an employee holding an A1 certificate for cross-border telework needs to undertake business travel outside the two countries covered by the agreement (the country of residence and the employer’s country). The framework is designed for telework arrangements strictly between these two countries, and regular work in other countries is not permitted.

      However, occasional, unplanned, short business trips to other countries may be tolerated under the framework. These trips should be infrequent and not part of a regular work pattern. Despite this informal acceptance, there is currently no legal clarity on how such business travel is assessed. It remains uncertain when these trips might jeopardize the validity of the A1 certificate for teleworking, lead to its cancellation or annulment, or result in the employee becoming ineligible for the framework agreement.

      KPMG INSIGHTS

      Estonia’s accession to the cross-border telework framework signals a continued shift toward flexible, international work arrangements in Europe. For businesses and employees, this agreement offers greater certainty, streamlined operations, and reduced compliance risk when managing remote teams across borders. However, it is crucial to understand the limitations and complexities, particularly regarding business travel.

      Business Travel
      While the framework is intended for telework strictly between the country of residence and the employer’s country, occasional, unplanned, short business trips to other countries may be tolerated. However, there is no legal clarity on how such travel is assessed, and frequent or regular work outside these two countries could jeopardize the validity of the A1 certificate or eligibility for the framework. Employers and employees should document any such travel carefully and seek professional advice before planning trips outside the framework countries.

      Action Steps

      • Review and update telework and business travel policies to increase compliance with the framework agreement.

      • Communicate the limitations regarding business travel to affected employees.

      • Monitor and document any business travel outside the two countries covered by the A1 certificate.

      • Secure the validity of the A1 certificate for teleworking by being transparent about business travel.

      • Consult with KPMG advisors for guidance on complex situations and to mitigate compliance risks.
      FOOTNOTES:

      1 Full text of the Framework Agreement in cases of habitual cross-border telework, “Framework Agreement on the application of Article 16 (1) of Regulation (EC) No. 883/2004 in cases of habitual cross-border telework.”

      2  As indicated on the Belgian Federal Public Service for Social Security website (in English): “Cross-border telework in the EU, the EEA and Switzerland: Framework agreement on cross-border telework,” which features the list of the signatory states of the Framework Agreement, as well as the date from which the Framework Agreement applies in each of the states concerned. 

      Contacts

      Daida Hadzic
      Daida Hadzic

      Director, Washington National Tax – Global Mobility Services

      KPMG in the U.S.

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      The above information is not intended to be “written advice concerning one or more federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.

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