SOCIAL SECURITY AGREEMENTS
The Tax Manager at Deloitte S.C., Cecilia Valverde, points out the advantages of doing business in Uruguay
Advantages of doing business in Uruguay
Uruguay has currently around 25 social security agreements in force, some of which date from the 80s (such as that signed with Italy and Portugal), while some others are more recent as it is the case of Germany, France, Luxembourg, Peru, Switzerland
Throughout this article, we will explain each of these general benefits, although it is important to verify the text of the agreement to
Temporary transfer of workers – Certificate of coverage
The general rule in terms of social security is that workers make contributions in the country in which the activity is carried out (territorial principle). The exception to this rule is embedded in Social Security agreements, in particular in the clause that regulates the temporary transfer of workers under what is called a Certificate of Coverage (CoC).
When a worker from one country is temporarily transferred to a different country with which a social security agreement exists, the worker may request to remain contributing to the social security of its home country and not contributing to the social security of the country of destination (host country). This applies to both, employee and employer contributions.
The definition of what is considered a “temporary transfer” may vary among different agreements, but applies in general to a 1-year period (as it is the case of MERCOSUR agreement) or a 2-year period (as it is the case of that with Spain). In general, an extension for the same period is available upon request. In particular, the agreement signed with
The procedure to request the CoC should be started in advance to make sure it is approved before the start of the activity in the host country. The CoC is requested in the country of origin of the worker before competent social security authority. Once approved, the CoC is issued for a specific period of time under which the worker can work in the country of destination and not contribute to the social security system.
Each agreement may or not limit the applicability of the CoC. For example, the MERCOSUR agreement only allows the CoC to be requested for
Totalization of periods of coverage
Where a CoC has not been requested, the individual will have to contribute to the social security system of the country of destination (where the work is carried out), and according to the regulations of that country.
For these cases, the agreements
In Uruguay, in
This totalization is only for the purpose of determining the applicability of the social benefit (retirement in this case).
Unlike the CoC, the totalization of periods of coverage does not require a previous procedure, but it is an automatic process that is run once the individual applies to obtain the social benefit before the corresponding social security authority (for example, when applying for retirement).
When evaluating transfers of employees to a different country (being it outbound or inbound), social security agreements are an excellent tool to take into consideration. The application of these agreements brings benefits not only to the
Uruguay has a wide range of agreements in force, and
Cecilia Valverde - Manager | Tax at Deloitte S.C.