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      On 3 July 2026, the European Free Trade Association Court (the “EFTA Court”) issued an advisory opinion in Case E-26/25 Mohr Egger1 concerning the determination of applicable social security legislation where an individual pursues a substantial self-employment activity in one European Economic Area (EEA) state and a very minor activity in another.

      The EFTA Court held that an activity generating less than 0.5 percent of a person’s overall income gives rise to a strong presumption that it is a “marginal activity”2 and must be disregarded when deciding which state is responsible for social security.3

      The ruling also confirms that a person who receives an old-age pension from one EEA state may still be subject to compulsory social insurance in another EEA state where they continue a working activity.4

      WHY THIS MATTERS

      The ruling brings welcome clarity and legal certainty on two key points.

      First, it confirms that the objective of the “marginal activity” concept is to filter out minor activities when deciding which state’s social security rules apply. This means that small, economically insignificant roles – such as local council mandates or other incidental work – will generally not be allowed to shift social security coverage away from the state where the person’s main activity is carried out, even when those roles are of a civil servant type nature.

      Whether an activity is marginal depends on an overall assessment of all relevant facts and circumstances.

      Second, it confirms that receipt of a pension benefit is not treated as a working activity in the state paying the pension benefit and cannot be taken into account when determining the applicable social security legislation. 

      Background

      The case arose from a dispute over which state’s social security rules should apply to a cross-border professional who combined work and pension income in different EEA states.

      The person at the center of the case is an Austrian national resident in Austria whose situation can be summarized as follows:  

      • She worked as a self-employed lawyer in Liechtenstein.

      • In Austria, her state of residence, she held a minor political mandate as a member of a town council, which produced less than 0.5 percent of her overall income. This mandate was categorized as civil servant.

      • She ceased practicing law in Austria on 30 November 2021 and from 1 March 2022 she began drawing an Austrian old-age pension.

      • She continued her self-employment activity in Liechtenstein.

      • Liechtenstein authorities required her to pay compulsory social security contributions for 2021-2023 in Liechtenstein.

      • She challenged the decision of the Liechtenstein authorities, arguing that Liechtenstein law should not apply in light of her Austrian political mandate and pension benefit.

      Under the EU/EEA social security rules, if a person is employed as a civil servant in one member state and also works as an employed person and/or a self-employed person in another state, they are covered by the social security legislation of the state whose public administration employs them as a civil servant.5

      Further, a person who normally works in two or more member states is considered a multi-state worker without taking into account any marginal or insignificant activities, and this applies regardless of how often or how regularly they switch between those states.6

      EFTA Court

      The Liechtenstein court referred the case to the EFTA Court, raising two central questions:

      1. How to assess whether an activity in the state of residence is “marginal” and whether civil servant type activities can be disregarded on that basis; and

      2. Whether receiving an old-age pension in one EU/EEA state prevents another state from subjecting a person to compulsory social insurance where that person continues a self-employed activity.

      Autonomous concept of marginal activity

      The court confirmed that “marginal activity” is an autonomous concept of EU/EEA legislation for social security and must be interpreted uniformly, without reference to national law. The purpose of this concept is to prevent minor, economically insignificant activities from determining which state’s social security legislation applies and to prevent manipulation of the coordination rules.

      Criteria for marginal activity

      The court endorsed a holistic assessment of whether an activity is marginal, taking into account the proportion of overall working time devoted to the activity, the proportion of overall income it generates, and its nature, conditions, and real economic and professional significance.

      Referring to the Practical Guide,7 the court noted that activities representing less than five percent of total working time and/or income are generally considered marginal. In the case at hand, the Austrian political mandate generated less than 0.5 percent of overall income.

      The court then concluded that an activity producing such a minimal share of income creates a strong presumption that it is marginal; if this presumption is not rebutted, the activity must be disregarded when determining the applicable legislation under the rules for multi-state workers.

      Civil servant type activities

      The court clarified that civil servant type functions fall within the scope of rules for multi-state workers and can themselves be marginal. The correct order of analysis is:

      1. First, determine whether the activity is marginal.
      2. Only if it is not marginal does one proceed to classify it (e.g., as a civil servant type of activity) and apply the corresponding conflict-of-law rule.

      Allowing negligible civil servant type functions to determine the applicable legislation would undermine the coordination system and encourage forum shopping; such activities must therefore be disregarded if they are marginal.

      Old-age pensions and compulsory insurance

      On the second question, the EFTA Court noted that the receipt of pensions is not treated as a continuation of an economic activity,8 and that receiving an old-age pension in one EU/EEA state does not prevent another EU/EEA state from subjecting a person to compulsory social insurance when they continue to pursue an activity in that member state. The court concluded that the Austrian pension did not affect the determination of applicable legislation to her ongoing self-employed activity in Liechtenstein.

      Conclusion

      The court ruled that Liechtenstein law applies exclusively, and Liechtenstein may levy social security contributions on her self‑employed activity, regardless of the marginal political mandate in Austria and the Austrian pension benefit.

      KPMG INSIGHTS

      This ruling provides a detailed analysis clarifying what is the objective and operation of the concept of “marginal activity” under the EU/EEA social security coordination rules. It confirms that the concept applies to all working activities and that civil servant type mandates are not a safe harbor for determining applicable law.

      Public authorities’ widespread use of the five percent indication for marginal activity that stems from the Practical Guide – often treated as a rigid rule in fact sheets and A1 procedures – should be seen in light of this clarification that marginal activity is an autonomous legal concept determined through a holistic, evidence-based assessment of all relevant criteria: working time, income allocation, the nature and conditions of the work, and its real economic and professional significance.

      The fact that the civil servant mandate generated less than 0.5% of overall income creates a strong presumption of marginality in this case, but the assessment is never purely mechanical. Companies and individuals should document the above elements carefully to support the classification of marginal activities in audits or disputes.

      Ideally, this decision will prompt a revision of internal administrative practices of public authorities, so that marginal activity is used for its intended purpose—preventing unreasonable results on applicable law—rather than as a blunt compliance filter in A1 certificate processes.

      Implications for employers

      Employers should closely review A1 decisions for multi‑state workers and be prepared to object if “marginal activity” is used, for example, to exclude certain countries altogether from the assessment. The concept of marginal activity is not designed to limit which states are listed in an A1 application for multi-state workers; it serves to confirm that a person is genuinely a multi‑state worker and to prevent very minor activities from producing unreasonable results on applicable law (such as a negligible activity shifting coverage to another state).

      When authorities treat marginality as a ground not to acknowledge work in a country at all, employers should contest this and insist on a holistic, evidence‑based evaluation in line with the guidance in this ruling.

      ENDNOTES:

      1  EFTA Court, Case E-26/25  Request for an Advisory Opinion from the Administrative Court of the Principality of Liechtenstein in the case between Sabine Mohr‑Egger and the Liechtenstein Invalidity Insurance, the Old‑Age and Survivors' Insurance and the Family Compensation Fund, 3 July 2026.

      2  Regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems, 16 September 2009, Article 14(5)(b).

      3  Regulation (EC) No 883/2004 on the coordination of social security systems, 29 April 2004, Article 13(4).

      4  Ibid., Article 11(2).

      5  See note 3.

      6  See note 2.

      7  Administrative Commission: Practical guide – The applicable legislation in the EU, EEA and in Switzerland, 2013.

      8  Regulation (EC) No 883/2004 on the coordination of social security systems, 29 April 2004, Article 11(2).

      Contacts

      Daida Hadzic
      Daida Hadzic

      Director, Washington National Tax – Global Mobility Services

      KPMG in the U.S.

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