On January 29, 2011 a bilateral social security agreement (“SSA”) between Switzerland and India came into force.
What is the effect of the SSA?
The SSA helps and encourages cross-border movement of professionals across the two countries. The SSA ensures the avoidance of double payments of social security for Indian professionals working in Switzerland and vice versa and provides mechanisms for the entitlement to acquisition of totalised benefits.
The SSA between Switzerland and India is novel compared to other Swiss social security agreements as it does not provide for the export of pension payments to Indian citizens who move from Switzerland back to India. The other social security agreements concluded by Switzerland provide for the export of pension payments to citizens of the contracting states who move from Switzerland back to contracting states.
The SSA covers the following benefits:
Switzerland – old-age and survivors’ insurance, invalidity insurance, accident insurance and health insurance.
India – old-age and survivors’ pension, permanent total disability pension and health insurance.
72 month exemption from social security contribution
According to the terms of the SSA, detached workers (i) sent by Swiss companies to their Indian business operations or (ii) sent by Indian companies to their business operations in Switzerland are exempt from social security contributions in the host country for a period of 72 months. These employees remain subject to the social security regulations of their home country.
Refund of social security contributions
The SSA facilitates the refund of social security contributions at the time of relocation for non-detached workers. In so far as Switzerland is concerned, social security contributions are refunded to Indian citizens who leave Switzerland for good in accordance with current Swiss legislation. In so far as India is concerned, Swiss citizens entitled to social security benefits who leave India for good are paid the withdrawal benefit or, in certain circumstances, an Indian pension is paid in Switzerland or in a third country, as the case may be, in accordance with Indian legislation.
Certificates of coverage
The certificate of coverage is issued by the home country upon request. In Switzerland, the certificate of coverage is issued by the competent compensation fund for old-age, survivors’ and disability insurance. In India, the certificate of coverage is issued by the Employees Provident Fund Organization.
Individuals falling within the scope of the SSA and currently on international assignment may apply for a certificate of coverage as of February 1, 2011 for a period not exceeding 72 months. The certificate of coverage must be filed with the competent compensation fund for old-age, survivors’ and disability insurance with which the Swiss employer is affiliated. Certificates of coverage can be filed retroactively for periods starting February 1, 2011.
Both Swiss and Indian employers are advised to examine the social security situation of relevant employees under the new SSA.