HR and tax alert | April 2017

Brazil-India Social Security Agreement signed on 16 March 2017

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Executive summary

The Social Security Agreement (the “Agreement”) between India and Brazil was signed on 16 March 2017. For international assignments between the two countries, the Agreement allows for the issue of Certificates of Coverage provided the conditions of the Agreement are met. Details of the agreement have not yet been publically released.

The Agreement will enter into force once the administrative procedures in both countries have been completed and approved by the respective governments. This is expected to take place in early 2018.

Background

The purpose of the Agreement is to ensure that employees assigned between the countries, and their employers, fall under one country's social security law (India or Brazil), avoiding instances of double social security liability.

Under the Agreement, employees assigned between India and Brazil may remain within their home country social security scheme and claim exemption from the host country social security scheme for the insurance elements covered under the scope of the Agreement. The Agreement also addresses the transfer of benefits and equality of treatment of employees covered by the relevant legislation of both the countries.

Key features of the Social Security Agreement

Certificate of Coverage

Once the Agreement comes into force, employees assigned between India and Brazil may remain within their home country social security scheme and claim exemption from the host country social security scheme for the insurance elements covered under the scope of the Agreement, provided the conditions of the Agreement are met.

Export and totalization of pension related benefits

The provisions of the Agreement regulate the export of the pension insurance related benefits and provides for totalization of periods of coverage gained in both countries.

Nationals of both countries will receive equal treatment and unrestricted payment of pensions even in where resident in the other country (export of benefits principle).

The requirements to be entitled to a pension can be met by aggregating the periods of insurance completed in India and Brazil, whereby each country pays only the pension for the insurance periods covered by its laws (totalization of period principle).

Advantages of the Agreement

Once the Agreement is brought into force after completion of the ratification process in the respective countries, the Agreement should favorably impact the profitability and competitive position of Indian and Brazilian companies with foreign operations in either countries by reducing their cost of doing business abroad. The Agreement will also help promote more investment flows between the two countries.

Next steps

Employers who currently have employees assigned between India and Brazil, or who intend to assign employees between these countries, should review how the Agreement might affect future liabilities and employment costs. Further, assignment models and structures will need to be reviewed to maximize benefits under the Agreement.

In particular, employers should:

  • Review the impact of the introduction of the Agreement will have on existing secondment policies
  • Review the population that may be impacted by the introduction of this Agreement and consider whether communications need to be made to employees affected by the Agreement.

EYG no. 01948-173Gbl

For additional information with respect to this alert, please contact the following:

International Social Security Services

India

Brazil