Landmark Decision on 25% Multi-State Workers’ Rule

A recent ruling by the European Court of Justice (ECJ) provides new clarity on how working time in third countries (i.e., outside the EU and Switzerland) must be included when calculating social security coverage percentages in cases of simultaneous employment. This clarification simplifies the application of the 25% test used to determine social security obligations and has significant implications for employers managing cross-border workforces.

In an increasingly globalised workforce, understanding how social security rules apply to employees working across multiple countries is more important than ever.

Coordination Legislation

The coordination of social security systems within the EU and with Switzerland is governed by Regulation (EC) No 883/2004 and its implementing Regulation (EC) No 987/2009, which have been incorporated into Swiss legislation. These regulations aim to ensure that employees working in multiple Member States are subject to only one social security system at a time, thereby avoiding double contributions and gaps in coverage. The rules provide detailed criteria for determining the applicable legislation, often based on the place of work and the proportion of working time spent in each country.

However, the increasing mobility of workers often extends beyond the EU and Switzerland to third countries. This creates complexity for employers and authorities when calculating working time percentages, particularly in simultaneous employment scenarios. In such cases, the question of how to integrate working time in these third countries into the calculation of social security coverage percentages becomes critical. This is especially relevant for multinational companies with employees working across EU, Swiss, and third-country locations, as well as for cross-border workers and expatriates.

Ruling European Court of Justice

A recent ruling published in December 2025 by the ECJ (case C-743/23, German or English) addresses the crucial question of whether the worldwide working days of an employee should be considered when calculating the 25% threshold.

The case arose from a dispute involving an employee residing in Germany, employed by a Basel-based company, whose working pattern over five years was as follows:

• 10.5 days per quarter in Germany (home office)
• 10.5 days per quarter in Switzerland (employer premises)
• Other days of the quarter in third countries (i.e. outside EU and Switzerland)

Considering only the working days in Germany and Switzerland, the working time spent in the country of residence amounts to 50%, which would indicate social security affiliation in Germany (method 1). However, when including the days worked in third countries, the proportion of working time spent in Germany falls to 16%, meaning affiliation in Switzerland (the country of employment) would be appropriate (method 2).

The court ruled that it is necessary to take into account not only the activity pursued in Switzerland and the EU Member States but also the activity pursued in third countries (method 2). It confirmed that affiliation in Switzerland (the country of employment) is correct.

Until now, working time in third countries was partially excluded from the total working time, complicating calculations and compliance efforts. The ECJ’s ruling clarifies that all working activities must be included when calculating working percentages in multi-state employment situations, explicitly including work performed in third countries.

Deloitte’s View

The ECJ’s decision clearly establishes that all working activities must be counted when calculating working percentages in multi-state employment situations, including those performed in third countries outside the EU and Switzerland. This ruling provides clarity on the application of the 25% test used to determine whether an employee’s work in their state of residence meets the threshold for social security coverage.

For Swiss-based companies, this ECJ ruling is significant as many organisations have employees working simultaneously in Switzerland, EU Member States, and third countries. The inclusion of third-country working time in social security calculations simplifies compliance but also requires a more integrated approach to workforce management. Our key recommendations for Swiss employers are:

• Review and update global mobility policies: Ensure that your policies explicitly account for working time in third countries when assessing social security obligations. This includes clear guidelines for clients and HR teams on tracking and reporting working time across jurisdictions.
• Enhance data collection and monitoring systems: Currently, A1 forms do not provide for the input of third-country activity. Employers should consider whether their current tracking of days also covers third countries.

For tailored advice and support in navigating these changes, Deloitte’s social security and global mobility experts are ready to assist you in developing compliant and efficient strategies.

Authors

• Céline Wehrle – Director, Global Employer Services
• Vanessa Prins – Manager, Global Employer Services
• Annabelle Haas – Senior Consultant, Global Employer Services