Employers may risk costly impacts under new EU social security rules
Michael Rooney, tax partner with EY Ireland.
Employers need to be aware of new changes to EU social security rules if they want to avoid inadvertently triggering increased levels of social security for any of their workers based in other EU countries.
EU ambassadors representing the member states recently approved a provisional agreement about the new rules on social security coordination. If passed, adoption will commence from October 2026 leading to changes in how social security is managed for business travellers, commuters and assignees in the EU.
In this Q&A interview, Michael Rooney, tax partner with EY Ireland, outlines the key implications which the new rules will bring for employers and for their employees working abroad within the EU.
Negotiations have been ongoing to modernise the EU social security rules since 2016 and a provisional agreement was finally reached in April 2026. It is clear that the traditional overseas workplace assignment for two years is being gradually replaced by shorter business trips commonly undertaken on a flexible and ad hoc basis. Working from overseas in, say, a holiday home or even a co-working space has also become more prevalent. The EU has therefore proposed new rules determining where social security is payable to deal with this change in work patterns.
An Irish employee who lives and works in Ireland will pay Irish social security. However, if that employee works overseas within the EU the situation becomes more complex. The free movement of workers is a key facet of the EU and the rules ensure that an employee can only pay social security in one EU country at a time. In practice this requires coordination between Member States.
Currently, an Irish employee who is temporarily posted to another EU country can be retained on the Irish social security system for a limited period. Regulations are also in place to allow an Irish resident employee to continue paying Irish social security when they work in Ireland and other EU countries on an ongoing basis.
It is important that employers are aware of the rules to avoid inadvertently triggering increased levels of social security in other EU countries.
The changes introduce a requirement for an Irish employer to notify the authorities in advance of any employees going on a business trip that will last over three days. Failure to notify the authorities will result in social security being due in the host location for the duration of the business trip. These measures will be administratively burdensome for employers and non-compliance will prove costly especially in locations like France and Belgium where social security can be 30-40% of the employees remuneration.
Further changes are proposed to ensure workers must have greater ties to Ireland before they can be retained on the Irish social security system. Employees must contribute to the Irish social security system for at least three months prior to a posting and return to Ireland for at least two months between postings.
A further tightening of the rules is being introduced for employees who work in more than one EU country on a regular basis. This is to avoid situations where an employer can establish a minimal presence in a country in order to benefit from the lower social security rates in that location.
It is expected that these changes will come into effect later this year or in early 202, which does not give employers a lot of time to prepare.
A simple example would be an employee based in Dublin who is asked to travel to another EU country for a short business trip involving a few days of meetings.
Today, that trip can usually take place with relatively limited administration . Under the proposed rules, however, the employer would need to notify the relevant authorities in advance of the trip if it lasts more than three days.
If this step is missed, the employee could become liable for social security in the host country for the duration of the trip, even though they remain employed and paid in Ireland.
Unless employers can show compliance with the new rules, employees may refuse to go on business trips.
It is expected that these new rules will be implemented in the next few months. As such, it is essential that employers take steps now to deal with these changes. Employers must be able to identify in advance those employees undertaking business trips and ensure those being posted overseas have the necessary ties to the Irish social security system. Failure to do so will lead to social security charges in the host country at rates that can be significantly higher than in Ireland.
Our experience is that changes to EU rules are often not fully understood by Irish employers in particular during the initial phases and this can lead to unwitting non-compliance that can have significant impact There can often be a lack of ownership too and we would recommend that a specific person / team in the organisation is appointed to take responsibility for ensuring compliance with these new rules.
As these changes will apply across the EU, they are not expected to place Ireland at a direct disadvantage relative to other Member States. However, they will add an extra layer of administrative complexity for employers managing international mobility, which may make cross-border working arrangements more challenging to operate in practice.
In that context, Ireland’s ability to attract and retain international talent will increasingly depend on the broader competitiveness of its offering, including the attractiveness of its tax regime and incentives. Ensuring that these remain competitive will be important as businesses weigh up the overall cost and complexity of moving talent across borders.
Overall, these changes mark a significant shift in how cross-border working within the EU is managed, and employers will need to adapt quickly to avoid increased costs, administrative oversights and compliance risks.
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