Switzerland: New Social Security Agreement with Japan Enters into Force
The Social Security Agreement (“SSA”) between Switzerland and Japan came into force on 1 March 2012.1
The SSA covers seconded employees, self-employed persons, public employees, employees on board a sea-going vessel, and members of diplomatic missions. Seconded employees covered under the SSA are exempt from social security contributions in the host country for a period of 60 months. An extension for an additional year may be granted unilaterally by the social security authority of the home country. Further extensions may be agreed by the competent Swiss and Japanese authorities. While working abroad, these individuals will only be subject to the social security regulations of their home country.
The SSA covers the following benefits:
• Switzerland – old-age and survivors’ insurance, invalidity insurance, and sickness insurance;
• Japan – national pension, employees pension insurance, mutual aid pension, and health insurance.2
KPMG Note
The SSA will help preclude cross-border workers being subject to double social security taxation and provide mechanisms for the entitlement to the acquisition of totalized benefits.
Individuals who are currently on assignment in Japan can apply for a certificate of coverage (“CoC”) to be exempt from Japanese social security.
A CoC must be filed with the applicable social security administration of the Swiss employer and can be applied for retroactively for a period not starting before 1 March 2012.3
Example: A Swiss employee started a secondment in Japan on 1 September 2011. The Swiss employer can obtain a CoC with effect from 1 March 2012, for a maximum of 60 months so that the seconded employee may be exempt from Japanese social security from 1 March 2012 onwards. Please note that the Swiss employee must have been insured in the Swiss social security system prior to 1 March 2012, in order to obtain a CoC.
Totalization of Benefits
Where a person does not have sufficient periods of coverage in Japan to receive Japanese benefits, Japan will take into account the periods of coverage in Switzerland and vice versa (however, Switzerland only takes into account Japanese periods of coverage for the invalidity insurance).
Accompanying Spouse and Children
Accompanying spouse or children of a person who is seconded to Switzerland are exempt from Swiss social security provided that they are not gainfully employed in Switzerland.
Third Country Nationals
Some of the provisions concerning the applicable legislation4 (i.e., article 6 on the place-of-work principle or article 7 on the seconded employee’s rule) are also valid for non-Swiss or non-Japanese citizens. The other provisions are generally in relation to mutual assistance between the authorities.
Source: KPMG