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      On 11 December 2025, the Court of Justice of the European Union (CJEU) delivered a landmark ruling1 clarifying the assessment of applicable social security legislation for workers who pursue employment activities in multiple countries. The court held that, when determining whether a “substantial part” of a worker’s activity is carried out in their member state of residence, all employment activities must be considered, including those performed in third countries outside the European Economic Area (EEA) and Switzerland. Before the court issued its ruling, the general understanding was that European social security rules only considered activities taking place within the EEA and Switzerland.

      This ruling means that the calculation of working time or remuneration for the purposes of social security coverage is no longer limited to activities within the EEA and Switzerland but must also include time spent working in other countries. As a result, this change can directly affect which country’s social security system is responsible for internationally mobile workers. The outcome of the ruling will also affect the application process, which currently does not necessarily provide an option to select any country of work when applying for certificates of coverage.

      WHY THIS MATTERS

      This landmark ruling is highly significant for situations where employers and employees are based in different countries and work is performed across multiple jurisdictions, including outside the EEA and Switzerland.

      Including working time outside the EEA countries and Switzerland in the calculation of the 25 percent threshold, which determines whether the country responsible for social security is the worker’s country of residence or the employer’s country, can lead to a different outcome than if only work within the EEA and Switzerland were considered.

      Although this is a significant change that affects the calculation of working time and/or remuneration for the purpose of determining the country responsible for social security coverage, the European Regulation on social security coordination,2 as well as the European A1 certificate, do not create obligations or rights for work performed in third countries. It will not be possible to use the A1 certificate to seek exemption from social security contributions in countries outside the EEA and Switzerland, nor will it be possible to claim social security rights based on work carried out in third countries as a result of this ruling.

      It is too early to determine how member states will enforce this change, and whether it will affect, for example, documentation requirements, at least in cases where including working time in third countries would lead to a different outcome.

      It is important for businesses and cross-border workers to monitor how these changes are implemented in member states and whether they affect their social security positions.

      Context

      Article 14 (5) of the Implementing Regulation for coordination of social security systems3 specifies that the rules for work in two or more countries apply to a person “who normally pursues an activity as an employed person in two or more Member States.” The general understanding of this provision has thus far been that the rules apply to working activities carried out within the geographical scope of the regulation for social security, which does not include non-EEA countries and Switzerland.

      About the Case C-743/23 GKV-Spitzenverband

      The case arose from a dispute concerning the social security coverage of an employee who resided in Germany and was employed full-time by a company established in Switzerland, during the period from 1 December 2015 to 31 December 2020. The employee worked regularly in Switzerland, Germany, and third countries outside the EEA and Switzerland.

      The German social security institution determined that the employee was subject to German social security legislation and issued him an A1 certificate for the relevant period. This decision was based on the calculation that, when considering only work performed in Germany and Switzerland, the employee spent 50 percent of his working time in Germany, his country of residence, which exceeded the 25 percent threshold for “substantial part” under the EU rules.

      The employee objected to this decision, arguing that the calculation should also include time worked in third countries. If all working time (including third countries) was considered, only 16 percent of his time was spent in Germany, which would not meet the “substantial part” threshold. The employee also claimed he was already covered by the Swiss social security scheme.

      The German Social Court sided with the employee, but the German institution appealed, and the Higher Social Court referred the matter to the CJEU, asking whether the calculation of the “substantial part” of activity for social security purposes should include work performed in third countries, or only work performed within the geographical scope of the EU social security rules. 

      Court Analysis

      The court began by examining the wording of the relevant provisions in EU regulations for social security and noted that the wording does not expressly limit the calculation to activities performed only in member states. Multiple language versions of the regulations support a broad interpretation, referring to “all activities” of the employee. Further, the court remarked that the purpose of the regulation is to coordinate social security systems to facilitate free movement, and the rules should reflect the employee’s actual situation, not a legal fiction.

      Therefore, the assessment must be based on the worker’s real working situation, including all activities performed, regardless of location. Excluding work in third countries would distort the calculation and not reflect the true proportion of work performed in the member state of residence.

      The court rejected arguments (including those from the Belgian and German governments) that including third-country activities would increase the risk of abuse or create administrative difficulties. The court found that the necessary information could be obtained through cooperation between institutions and employers.

      Additionally, the court clarified that including third-country activities in the calculation does not undermine the principle that only one member state’s legislation applies. If the employee does not perform a substantial part of their activity in their country of residence, the legislation of the employer’s country applies.

      Finally, the court concluded that for the purpose of determining whether an employee pursues a substantial part of their activity in their member state of residence, all activities must be considered, including those performed in third countries. This approach allows the calculation to reflect the worker’s actual situation and supports the objectives of the regulation.

      KPMG INSIGHTS

      This ruling primarily affects situations where an employee works across several jurisdictions—including the EEA, Switzerland, and third countries—and resides in an EEA country or Switzerland that is different from where their employer is established. It is not generally relevant to all multi-state workers, but specifically to those with work patterns similar to those in the ruling.

      At this time, the ruling raises several important questions for cross-border social security coordination, including:

      • Impact on the Framework Agreement for Teleworking4

      The Framework Agreement for cross-border teleworking does not currently consider work performed in third countries. It is unclear whether and how this ruling will influence the application of the Framework Agreement, and whether regular activity in third countries could affect eligibility for social security coverage under the agreement.

      • Potential Effect on the EU-UK Protocol5

      The ruling could also have implications for the EU-UK protocol on social security coordination, at least on the EU side. The UK may not have visibility into how an EU Member State calculates the 25 percent threshold, which also applies under the EU-UK Protocol. EU countries might apply the outcome of this ruling by analogy to the UK to simplify the rules, but it is uncertain what this would mean for EU-UK cross-border workers.

      • A1 Certificate Application Process

      Currently, applications for the A1 certificate generally do not provide an option to include all countries of work, particularly third countries. This is not about the formal status of territories, but it does present practical challenges for both administrations and applicants. The ruling raises questions about how authorities will adapt the application process—whether forms will be updated, or if applicants will need to provide additional information about work in third countries.

      • Verification of Working Time in Third Countries

      Another open question is how countries will enforce compliance with this ruling. Will authorities develop practical methods for verifying working time spent in third countries, and will this require more documentation for A1 certificate processing? How will authorities track if someone is not reporting work in third countries, especially if that information could influence the outcome?

      • Retroactive Application of the Ruling

      This ruling could also prompt a review of previously determined applicable social security legislation in cases where work in third countries was not considered. Since the judgment is a new interpretation of existing rules (not a change in the rules themselves), it is reasonable to assume that the interpretation applies retroactively. Employers and employees may find it worthwhile to revisit past cases to assess whether the applicable law should be revised in light of this decision.

      It is important to note that, although this ruling affects how working time is calculated for determining the applicable social security legislation within the EEA and Switzerland, the European Regulation and the A1 certificate do not create obligations or rights for work performed in third countries. The A1 certificate cannot be used to seek exemption from social security contributions in countries outside the EEA and Switzerland, nor can social security rights be claimed based on work carried out in third countries. The certificate remains relevant only within the scope of the regulation, which is limited to the EEA, Switzerland, and in some cases, the UK.

      KPMG closely monitors these developments and provides insights on international social security coordination, including the implications of this recent ruling. If you have questions about how this case may affect your organization, or if you would like a second opinion on your existing A1 certificates and social security policies, please reach out to your KPMG advisor. Our team can help you assess your current position, review your compliance, and guide you through any necessary adjustments in light of new interpretations and regulatory changes.

      FOOTNOTES:

      1  Court of Justice for European Union, Case C-743/23 GKV-Spitzenverband, 11 December 2025.

      2  European Union, Regulation 883/2004/EC for coordination of social security systems, 29 April 2004.

      3  European Union, Regulation 987/2009/EC for implementing of Regulation 883/2004/EC for coordination of social security systems, 16 September 2009.

      4  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” (2023).  

      5  European Union, Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, 30 April 2021. 

      Contacts

      Daida Hadzic
      Daida Hadzic

      Director, Washington National Tax – Global Mobility Services

      KPMG in the U.S.

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