Payment of Social Security Contributions Contingent on the Establishment of Residence?

  • By:Melissa Speigner
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The title of this article may preliminarily be perceived as self-evident and self-explanatory, nevertheless this apparent clarity becomes nebulous when applied to sea-farers on board Maltese vessels.

The general perception pertaining to the payment of social security contributions is that by reason of one carrying out an economic activity and siphoning off a portion of remuneration derived therefrom as contribution to a state, then that state shall insure such person. By insurability one infers that such person satisfies the conditions required under legislation of that particular Member State in order to avail him/herself of the rights and benefits emanating from said legislation. Given the nature of vessels as being extensions of the state in which they have been registered, it would be evident that sea farers could elect to be insured under the jurisdiction akin to that of the vessel on which they carry out their activity.

The EU provides guidance on the payment and provision of social security contributions retaining cross-border elements, with EC Regulation EC no. 883/2004 (On the Coordination of Social Security Systems) (hereinafter, the “Regulation”) The underlying principle buttressing this Regulation is maintaining equal treatment of workers who do not reside in the Member State of their employment. Another central theme, is that persons should only be subject to the social security regime of one Member State at a time.

Article 11 sub articles 3(a), 3(b) and 3(d) of the Regulation demonstrate that generally speaking, a worker shall be subject to the legislation of the Member State wherein such economic activity or service shall take place and not where the worker’s residence may lie. Nevertheless, in some instances, such as in cases where a person is receiving unemployment benefits, determination of residence may come into play, however this would not appear to be the rule.

Consequently, the application of this Regulation implies that seafarers carrying out their duties upon Maltese flagged vessels may elect to be governed by the Maltese social security contributions regime. However, the Regulation only applies to nationals of Member States, stateless persons and refugees resident in the territory of a Member State who are or have been subject to the social security of one or more Member States, as well as to the members of their families and to their survivors.

Therefore, when considering third country nationals who are not resident in any Member State one must refer to the national law of the flag state. Accordingly, the Social Security Act, Chapter 318 of the Laws of Malta (hereinafter, the “Act”) in its First Schedule, article 1, asserts that employment outside Malta may only be deemed and therefore treated as employment in Malta, if the employee concerned is ordinarily resident in Malta and the employer is the Government of Malta or has a place of business in Malta. The work of seafarers aboard any ship or vessel (or master or crew member aboard a Malta-flagged vessel) is, in accordance with article 2(a) and (c) of the First Schedule to the Act, categorized as employment outside Malta.

It follows, therefore, that non-EU seafarers working on Malta-flagged vessels may not elect to be insured under the Act unless they first satisfy both compulsory requirements under article 1 of the First Schedule of the Act, that is residency in Malta and being employed by the Government of Malta or being employed by an undertaking having a place of business in Malta.



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