Overview of Overview of Social Security AgreementsSocial Security Agreements

19 February 201019 February 2010

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Agenda

11Overview of Provident Fund (PF) Regime

Overview of Provident Fund (PF) Regime

22Overview of Social Security Agreements (SSA)

Overview of Social Security Agreements (SSA)

33 IssuesIssues

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Overview of PF regime

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

No mandatory PF contributions for expatriate assignees in India

Social security regime

Flashback …

Compulsory social security contributions for Indian assignees going abroad

Provident Fund regime in India for Indian nationals

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Expatriates can no longer opt out

Required to contribute @ 12%

of salary

Salary includes overseas salary

Withdrawal of PF balance possible at the

end of assignment

Present …

Matching contribution by

employer

Repatriation of balance possible

New social security regime in India from October 1, 2008

“International Workers” (IW)

covered

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Roadmap of Developments

IWs required to contribute towards PF

India – Netherlands SSA signed

22 October 2009

India – Belgium SSA comes into

effect

1 November 2008

India - Germany SSA comes into

effect

1 October 2009

1 September 2009

India – Swiss SSA signed

3 September 2009

India – Luxembourg SSA signed

30 September 2009

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Overview of SSA

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

What is a Social security agreement?

Avoidance of no/double

coverage of contributions

To protect the interest of workers in the Host country

Bilateral instrument

between two

countries

Equality of treatment with Host country nationals

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

GERMANY

BELGIUM

LUXEMBOURG

NETHERLANDS

FRANCE

SWITZERLAND

HUNGARY

SSAs signed so far…

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Status of Agreements

Not effective30 September 2009Luxembourg

1 October 20098 October 2008Germany

Not effective3 September 2009Switzerland

Not effective22 October 2009Netherlands

1 September 20093 November 2006Belgium

Entry into forceDate when signedCountry

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

General Benefits of SSA

Detachment Exportability of Pension

Benefits

Totalisation of insurance

periods

Encourages movement of cross border employees

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Detachment Certificate

For claiming exemption in the Host country

Detachment

To avoid double payment of

Social Security

Joint request by employer and employee in the Home country

Adhering to the social security system of Home country

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Exportability of pension

Export of benefits

Means

In a country where IW chooses to finally reside

Right to receive benefits/pension

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Totalisation of service periods

Home country work periodHome country work period

Host country work periodHost country work period

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Mr. X has rendered services of:

- 7 years in India; and

- 20 years in Belgium

Example…

Eligible for pension benefit

Total period of service is 27

years (20+7) > 10 yrs

Totalisation benefit available

SSA

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Benefits under various SSAs

√√√Luxembourg

×√√Switzerland

××√Germany

√

√

Exportability of Pension

×√Netherlands

√√Belgium

Totalisation of periodsDetachmentCountry

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Deputation/Posting by Home country employer:

- For period of detachment specified in SSA (48/60/72 months)

- For period more than period of detachment specified in SSA

Coverage under Host country

Social Security

Coverage under Home country Social Security

Nature of employment

Coverage of persons under SSA

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Issues

19© 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Employee must perform services in the host country onlyfor the employer of the home country- PE issues…?

Can benefits be directly paid by the Indian PF authorities outside India?

If assignment gets extended beyond 48/60/72 months in between the tenure – exemption applicable?

Issues

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

German SSA - Employer must have 25% of total turnover in home country - What is total turnover?

Legislation applicable to prior events – what are prior events?

Strict visa guidelines issued

Issues …

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Questions

Answers

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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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