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New EU social security rules for flight and cabin crew working in two or more member states come into force today.
Regulation 465/2012 introduces a home-base tenet to regulation 883/2004 for determining to which member state aircrew and their employers pay contributions.
It will apply when a worker moves within the European Economic Area (EEA) or Switzerland to live or work. The rules have direct effect in the UK and determine when National Insurance (NI) contributions have to be paid.
Aircrew previously paid contributions to the member state in which they lived, if they performed a substantial part – 25% or more – of their activities there; otherwise, they paid to the state in which their employer was based.
Under the new home-base rule, aircrew and their employers will pay contributions to the member state in which the home base is situated: where the crew member normally starts and ends his or her periods of duty.
In most cases, this will be in the state in which the taxpayer lives, meaning a crew member with a UK home base who is normally employed in the EEA member states or Switzerland will pay UK Class 1 NI contributions and be exempt from paying in other states.
Some transitional arrangements apply. If a crew member was paying contributions to a state under the current rules but the circumstances change when the new rule is applied, he or she can continue to pay to that state for a period of up to ten years, or until there is a change in the taxpayer’s material circumstances, if that occurs first.
Such an amendment could be a change of employer, home base, or member state of residence. A crew member can also ask that the new rule be applied immediately.
Under Article 16 of regulation 883/2004, member states can make special agreements to vary the normal rules.
If a very strict application of the new regulation would harm a crew member's situation because his or her home base changes often, and it would mean the taxpayer would frequently move between the social security legislation of different states, the crew member or the employer can apply for a special agreement to keep the taxpayer subject to the legislation of a single state.
For most aircrew, there will be no immediate impact on liability to pay NI contributions.
Employers operating in EEA member states and Switzerland will need to be aware of the latest rule for new employees and also for current crew members who change their material circumstance or choose to be subject to the new regulation.
