EU Coordination of Social Security: New ECJ Standard for Calculation of “Substantial Activity”

Our German member firm Keller Menz, outlines the changes made from the 11 December 2025 judgement (C-743/23) from the European Court of Justice ruled that, under Regulation (EC) No 883/2004, all worldwide employment must be considered when assessing the 25% “substantial activity” threshold, significantly affecting cross-border social security determinations.

The European Court of Justice (ECJ) established a new legal standard with its judgment for determining applicable social security law in cases of cross-border employment. 

Under Article 13 of Regulation (EC) No 883/2004, the assessment of whether a “substantial part” (at least 25%) of employment is performed in the Member State of residence must now include all dependent employment activities worldwide, not just those carried out within the EU. 

Shift in administrative practice 

Historically, German authorities calculated the 25% threshold by considering only employment within EU Member States, excluding activities in third countries. 

The ECJ has now made it clear that the calculation must be based on the employee’s entire dependent employment, regardless of its geographic location. 

This substantially affects compliance requirements and the determination of the applicable social security regime. 

Practical impact for employers 

• All employment activities worldwide must be considered when assessing the 25% threshold for social security law under Article 13

• Existing A1 certificates remain valid for their periods but must be reassessed under the new standard for future applications

• Assignments involving third countries may change the applicable law from the state of residence to the employer’s state of establishment

Recommended actions 

1. Review cross-border employment arrangements to identify all countries of employee activity, including third countries. 

2. Update calculation methods and compliance processes to reflect the ECJ’s worldwide assessment standard. 

3. Coordinate with payroll, HR and global mobility teams to ensure correct application and documentation. 

4. Monitor upcoming renewals of A1 certificates and adapt to the revised legal standard. 

Conclusion 

The ECJ’s judgment of 11 December 2025 (C-743/23) is binding across the EU and redefines the “substantial activity” threshold under Article 13 Regulation (EC) No 883/2004. 

Employers must include all worldwide dependent employment in their assessment. Immediate adjustment of compliance and assignment structures is necessary to prevent risks of incorrect social security coverage and regulatory consequences. 

References:  

• ECJ, Judgment of 11 December 2025 – C-743/23  

• Regulation (EC) No 883/2004 (2019 version), Article 13 

For further information or to discuss any of the issues raised, please contact Stefanie Andrelang (stefanie.andrelang@keller-menz.de) on +49 (0) 89 2422300. 

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