Germany is one of India’s most important trading partners and ranks among the top ten foreign investors in this country. Bilateral trade volume between the two countries has grown dynamically during the last few years. This has led to an increase in the exchange of professionals from both countries, thereby creating a need to simplify regulations on social security between the two countries.
A bilateral agreement on Social Security, signed between India and Germany on 8th October, 2008 (implemented on 1st October, 2009), is the first step in this direction.
The agreement applies to workers temporarily posted in a branch of a company in the other contract state to fulfill or finalise some orders. The agreement will protect the interests of all those professionals sent from India-based companies to their German subsidiaries, or those being sent by German companies to India-based branches on the basis of short-term contracts (up to 48 months, with an option of another 12 month extension), by securing exemption from social security contribution in their host country. While working abroad, these employees will only be subject to the social security regulations of their home country.
This way, the agreement exempts professionals working in other countries from adopting the host country's pension system.
In view of intensified economic relations between the two countries, it is important to make provisions that reduce extra costs towards double insurance liability. Therefore the new regulations have been modified in the interest of investing companies and their employees.
The implementation arrangement contains guidelines on technical details. These include notification obligations between the insurers of both the countries, issue of certificates and the system of payment in the other country.
Implementation agency in Germany: www.dvka.de
Implementation agency in India: Employees' Provident Fund Organisation