Social security agreement between Luxembourg and China

19 Mar 2018

Bill on the social security agreement between Luxembourg and China

Dorothée David

A social security agreement between the Government of the Grand-Duchy of Luxembourg and the Government of the People’s Republic of China was signed in Beijing on 27 November 2017. This is the first international agreement governing social security relations between China and Luxembourg. A Bill was submitted to the Chamber of Deputies to approve this Agreement on 5 February 2018.

As far as possible, the Agreement is in line with the general layout bilateral agreements entered into by Luxembourg and with the principles of Regulation (EC) 883/2014 on the coordination of social security systems in the European Union. However, the rules in force in each of the two countries regarding the services offered by the different branches of the social security system, including in particular old-age, disability and survivors’ pension schemes, are excluded from the scope of the bilateral agreement. According to the Bill, this is due to the fact that the principle of aggregating insurance periods for eligibility does not exist in Chinese law, and to accept it as international law would have meant that the Chinese authorities would have had to treat international migrants more favourably than Chinese migrants in different Chinese provinces.

The Agreement contains the following fundamental principles, applicable to the international coordination of social security systems:

- equal treatment, stipulating that people who live in one of the contracting countries to whom the agreement applies are subject to the obligations imposed and eligible to the benefits offered by the legislation in that country under the same conditions as nationals from that country;

- the export of services, stipulating that services purchased by virtue of the legislation of one of the contracting countries cannot be subject to any reduction, modification, withdrawal or suspension because the beneficiary resides in the other contracting country.

The main provisions of the Agreement also cover the choice of applicable legislation, the principle being that workers are subject to the legislation of the contracting country in which they carry out their professional activity. To this end, the Agreement stipulates in particular the following two exemptions:

- for posted workers: workers posted to the other country to carry out limited work in terms of scope and time will continue to be subject to the legislation by which they would normally be covered (legislation in force in the sending country). To this end, the Agreement stipulates that a posting can be for a period of 60 months, and affiliation can be extended for a further period in certain conditions. It is also stipulated that the posting rules also apply to freelancers.

- for air transport: the legislation applicable to individuals working for air transport companies is the one in force in the contracting country where the company has its headquarters.

Bill 7242 to approve the social security agreement between Luxembourg and China