With effect from 1 October 2019, a Social Security Agreement (the Agreement) between Switzerland and Brazil has entered into force, allowing applicable employees to fall under only one country’s social security law (Switzerland or Brazil).
Under the Agreement, individuals may remain in their home country scheme for up to 60 months when seconded between the two countries. The Agreement does not provide for totalization of insurance periods for determination of eligibility for social security retirement benefits.
In both countries only old-age, survivors and disability insurance is covered, and other social security elements are not. A liability to those other elements needs to be determined according to local regulations.
In Switzerland, the Agreement applies to the following benefits:
- Old-age and survivor’s insurance, disability insurance
In Brazil, the Agreement applies to the following benefits:
- Old-age, survivor’s and disability insurance
Assignments and Certificates of Coverage
Both Swiss and Brazilian employers will now be able to obtain Certificates of Coverage (CoC) for employees who are or will be sent on an assignment between the two countries (article 7 of the Agreement). Article 7 is applicable for all employees regardless of nationality.
A CoC will ensure the employer and employee are exempt from social security contributions in the host country as covered by the scope of the Agreement.
A CoC can be applied for under the Agreement for 60 months of an assignment and an extension may be granted in specific circumstances with mutual consent of competent authorities of both countries (article 12 of the Agreement).
Accompanying Family Members
Where an individual is entitled to remain on home social security, whilst working in the host state, in accordance with the provisions of the Agreement, their accompanying spouse and children are also entitled to benefit from this exemption (Article 13 of the Agreement) as long as they are unemployed in the host country.
Where an accompanying spouse or children are employed in the host country, they would be entitled to a CoC on their own.
Totalization of periods of insurance
The Agreement does not allow individuals to aggregate periods of coverage in Switzerland and Brazil in order to determine entitlement to benefits in either country.
However Brazilian nationals who depart Switzerland can potentially claim for a contribution refund in accordance with the provisions of the Agreement, in lieu of receiving a Swiss state pension (article 20 of the Agreement).
Any insurance period performed by employees in one of the two countries prior to the Agreement came into force will not be taken into consideration for determining the eligibility for a CoC (article 34 of the Agreement).
It is still unclear if the agreement allows the possibility to file retroactively for CoC’s for employees being currently “seconded” to Brazil or Switzerland and wishing to be exempted from the host social security. Swiss federal authorities are currently clarifying if there will be a transition period of three months, which would allow the employers to apply for a CoC in cases where a voluntary application is already in place.
Employers who currently have employees seconded between Switzerland and Brazil, or who intend to assign employees between these countries, should review how this Agreement might affect current and future social security liabilities, costs and employee risk coverage.
EYG no. 004307-19Gbl
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