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Silvia Lucantoni
- Introduction
In employment relationships with cross-border elements, EU legislation identifies, as a general criterion for determining the applicable social security legislation, the place where the work is actually carried out.
This general rule is derogated from in certain specific situations that justify recourse to alternative connecting factors.
Among these, Article 13 of Regulation (EC) No 883/2004 identifies the situation in which an employed or self-employed person habitually pursues an activity in two or more Member States.
In such a case, the social security legislation of the worker’s State of residence applies if the worker pursues a substantial part of his or her activity in that State or if the worker is employed by several employers whose registered offices or places of business are located in different Member States.
If the worker does not pursue a substantial part of his or her activity in the State of residence, the worker is subject to the social security legislation of the State in which the employer has its registered office or place of business or, in the case of a self-employed person, where the centre of interests of the activity is located.
- Substantial part of the activity: what does it mean?
Guidance on what is meant by a “substantial part of the activity” and when this requirement is met is provided by Implementing Regulation (EC) No 987/2009, in particular Article 14(8), which states:
“For the purposes of the application of Article 13(1) and (2) of the basic Regulation, a ‘substantial part of employed or self-employed activity’ pursued in a Member State shall mean a quantitatively substantial part of all the activities of the employed or self-employed person pursued there, without this necessarily being the major part of those activities. To determine whether a substantial part of the activities is pursued in a Member State, the following indicative criteria shall be taken into account: (a) in the case of an employed activity, the working time and/or the remuneration; and (b) in the case of a self-employed activity, the turnover, working time, number of services rendered and/or income.
In the framework of an overall assessment, a share of less than 25 % in respect of the criteria mentioned above shall be an indicator that a substantial part of the activities is not being pursued in the relevant Member State”.
With judgment KN of 4 September 2025, Case C‑203/24, the Court of Justice of the European Union addressed the question of whether the indicative criteria referred to in the EU provision should be regarded as exhaustive or whether other criteria not expressly provided for by EU law may also be taken into account.
The question was referred to the Court by the Dutch referring court, in light of the Dutch language version of the Regulation, whose wording includes the term “also” in relation to the criteria indicated by the provision (“The assessment of whether a substantial part of the activities is pursued in a Member State is also based on the following indicative criteria …”).
According to the Dutch referring court, the use of the adverb “also” and the adjective “indicative”, referring to the criteria to be taken into account, would suggest that, within an overall assessment of the worker’s situation, other circumstances beyond those expressly listed by the Implementing Regulation could also be considered.
Indeed, the observations of the Dutch court are not without merit. Beyond the word “also”, which does not appear in all language versions of the Implementing Regulation, the expression “indicative criteria” undoubtedly evokes the revealing or symptomatic nature of the listed criteria, but not necessarily their exclusivity.
Moreover, the Administrative Commission for the Coordination of Social Security Systems itself, in its Practical Guide on “Applicable legislation”, has provided an interpretation aligned with that suggested by the Dutch court: “Working time and/or remuneration must be taken into account obligatorily, but this does not preclude other criteria from also being taken into account. It is for the competent institutions to take account of all relevant criteria and, before deciding on the applicable legislation, to carry out an overall assessment of the person’s situation”.
The Court of Justice, however, opted for a strict interpretation, expressly aimed at ensuring legal certainty and the principle of the uniqueness of the applicable legislation.
After clarifying that the wording used in one of the language versions of a provision of EU law is not binding — since such provisions must be interpreted in the light of the general scheme and objectives of the legislation of which they form part — the Court reiterated that Article 14(8) of the Implementing Regulation operates within a derogatory framework of the general rule on applicable legislation (lex loci laboris). Its purpose is to avoid the complications that might arise from applying the general rule to situations involving activities pursued in two or more Member States.
Within this framework, the derogating provisions seek to ensure that workers who pursue activities in two or more Member States are subject to the legislation of a single Member State and, to that end, lay down connecting factors that take into account the objective situation of those workers in order to facilitate free movement.
In case of employed activity, those connecting factors are the criteria relating to working time and/or remuneration.
Court of Justice excludes the possibility of taking other criteria into account and emphasises that the fact that the assessment must be carried out “within the framework of an overall assessment of the situation of the worker concerned” does not mean that additional criteria may be added to those listed by the provision, but rather that all employed activities carried out by the same worker must be considered as a whole.
Pursuant to Article 14(8) of Regulation No 987/2009, where working time and/or remuneration in the Member State of residence do not reach 25% threshold, it cannot be said that a substantial part of the activity is pursued in that State.
Allowing otherwise would “disregard the derogatory nature of the connecting factors laid down” by Articles 12 and 14 of Regulation No 883/2004 and would give rise to “uncertainty as to the application of the conflict-of-law rules” set out in Title II of Regulation No 883/2004, “to the detriment of the simplicity that those rules are intended to establish with regard to the application of connecting factors based on the objective situation of the worker concerned”.
As regards the guidance provided by the “Practical Guide” drafted and approved by the Administrative Commission for the Coordination of Social Security Systems, the Court highlights, on the one hand, that such a document is, by its nature, devoid of binding legal force and, on the other hand, that, even according to the Guide itself, the criteria of working time and remuneration must obligatorily be applied. It follows, according to the Court, that those criteria cannot, in any event, be offset or replaced by unspecified alternative criteria.
- The relevant time period
Article 14(10) of Regulation No 987/2009 provides that, for the purposes of determining whether a substantial part of the activity is pursued in a Member State, the “situation projected over the following twelve calendar months” shall be considered.
On this point too, the above-mentioned Practical Guide showed interpretative openness: “Past activity may also constitute a reliable indicator of future conduct. Therefore, where it is not possible to base a decision on the expected working arrangements or duty rosters, it will be reasonable to take into account the situation over the previous 12 months and use it to assess the substantial activity. If a company has been recently set up, the assessment may be based on an appropriate shorter period”.
Once again Court of Justice didn’t endorse such openness in the judgment under examination. The Court specified that although “the starting point of the twelve-month period to be taken into account is not expressly specified, it is nevertheless clear” from the literal wording of the provision that “it refers to the twelve months following, since no provision of that regulation refers to the past situation of the worker concerned”.
Considering that paragraphs 8 and 10 of Article 14 of Regulation No 987/2009 refer to “cases in which a worker pursues an activity in two or more Member States”, it must be concluded that “the dies a quo must be the start of the pursuit of the activity in two or more Member States”.
It follows that, in order to assess whether a worker pursues a substantial part of his or her activity in the Member State of residence, only the situation projected over the following twelve calendar months shall be taken into account.
- Conclusions
The “indicative criteria” set out in Article 14 of Implementing Regulation (EC) No 987/2009 to Regulation (EC) No 883/2004 must be interpreted as exhaustive criteria, the fulfilment of which is necessary and mandatory for the purposes of determining whether the share of activity pursued in the Member State of residence is below or above the 25% threshold.
Other criteria cannot be taken into account, either in addition to or as an alternative to those provided for by EU law, in order to ensure legal certainty and the principle of the uniqueness of the applicable social security legislation, within the derogatory framework in which the provisions at issue operate.