SOCIETATE CIVIL PROFESIONAL DE AVOCAI

Client: MP Rayno Solutions SRL

Legal opinion regarding construction services to be delivered by Romanian company in
Switzerland

Preliminaries:

MP Rayno Project SRL (MPRS) is a Romanian start-up company, incorporated in April

2014. The shareholders are:
- Mr. Marian Oltean, Romanian citizen, also administrator of MPRS with full powers
- Mr. Pul Julen, Swiss citizen, also administrator of the MPRS with full powers.
MPRSs main object of activity is Construction of Residential and Non-Residential
Buildings
MPRS is activating in the construction field. At the time of drafting of the present case
study the company has no employee;
MPRS has a Potential Client (PC), a Swiss company owning a Hotel resort situated in
Switzerland. The PC wants to refurbish the interior of the Hotel;
MPRS intend to undertake as general contractor the operation of refurbishment of the
interiors of the Hotel. MPRS will provide temporary services of refurbishment of the Hotel
rooms and other interior spaces;
MPRS will hire all the necessary working staff in Romania. The Romanian employees
will have to work in Switzerland for a period of maximum 90 days starting with the 17th of
August 2015 up to 14th of November 2015;
In order to obtain the Swiss working permits for the Romanian employees, MPRS should
communicate to the Swiss consultants the Labor Contract on or before July 2015.
Nevertheless MPRS will not have any use of the construction workers before August
2015;
The Swiss legislation provides that in case a foreign company will provide construction
work services in CH, the company shall pay the employees providing respecting services
at a similar level with the general industry salary in CH. A similar provision exists also in
the Romania Labor Law.
The Gross Salary (Brutto Wage) requested value is x
MPRS intends to include in the salary the payment of the costs with
o Transportation
o Accommodation at Hotel in CH.
o 1 to 3 meals a day at the restaurant of the Hotel

Questions to be responded:
1. It is possible for Romanian company to provide service in CH using its Romanians
Employees?
Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

Delegation (Delegare) vs Temporarily Transferring of the employee (Detasare).

2. A1Form (Fromularul A1) is it mandatory or not?
3. Fiscal issues
4. Timeframe for the Contractual Relationship

1. Delivery of services abroad

According to Romanian Law and the EU Regulation that applies also to European Economic
Area and Switzerland, the Romanian company is able to contract and provide services in
Switzerland.
MPRS will deliver a temporary service and will have to oblige to:
-

Romanian law and regulations on posting workers;

CH law regarding the terms and conditions for a Romanian worker to work in
Switzerland;
EU Regulation regarding social contributions (especially Regulation (EEC) No
1408/71 of the Council of 14 June 1971 on the application of social security schemes
to employed persons and their families moving within the Community and
Regulation (Ec) No 883/2004 Of The European Parliament and of the Council of 29
April 2004)

Romanian Labor Code distinguishes between 2 legal institutions on what matters the posting of
workers:
A. Delegation
Article 43 of Romanian Labor Code defines the Delegation as being the temporary exercise by
the Employee at the request of Employer of works or tasks according to his normal work
obligations outside the usual working place.
According to the Article 44 the delegation will be decided by the Employer for a period of
maximum 60 days within a 12 months period and can be extended with the acceptance of the
Employee for another 60 days period maximum.
So for the initial period of 6o days of Delegation the acceptance of Employee is not required.
The delegated worker is not changing his working place, it is only mandated for a limited period
of time to fulfill some tasks for the Employer on another place.
Analyzing the provisions of the Law and with the case in study, it is clear that MPRS will

Nevertheless, due to the fact that MPRS will have to post the workers in Switzerland for up to 90
days, we advise for the following:
Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

To insert in the Individual Labor Contract a mobility clause, providing that the
Employee understands and agrees that he might have to work abroad;
Before stating the initial Delegation the Employer to sign with the Employee an
Agreement for the extension of Delegation period.
3

B. Temporary Transfer (Detasare)

The Temporary Transfer is according to the article 45 of the Romanian Labor Code the act by
which it is ordered by the Employer the temporary change of the place of work of the Employee
to another Employer, in the interest of this second Employer. The Temporary Transfer can
be ordered for a period of maximum 1 year. The TT can be extended with periods of 6 months
with the agreement of both parties.
From the legal definition of the TT results that according to the Romanian Law the TT implies a
change of working place, and the Employee will work for another Employer for the period he is
transferred.
C. EU Regulations on Posting Workers
Notwithstanding the above mentions regarding Romanian Law provisions in the matter of
transfer of workers, the EU regulations on the matter of posting workers does not make any
distinction between the a worker posted to another member country to work for the same
Employee or for another Employer. The regulations refer to posted workers as workers send by
the Employer to work in another state.
In what regards the social security system applicable to the posted worker the principle is that
the persons to whom regulations apply are subject to the legislation of a single Member State
only. The principle was stated in Regulation regarding social contributions especially Regulation
(EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes
to employed persons and their families moving within the Community. As a general rule, it will
be applied the legislation of the Member State where the activity is carried out usually.
There are some exceptions to the rule, which are set out in the Articles 11 to 16 of the
Regulation (Ec) No 883/2004 Of The European Parliament and of the Council of 29 April 2004.
The article 12 of the Regulation No 883/2004 provides that a person who pursues an activity as
an employed person in a Member State on behalf of an employer which normally carries out its
activities there and who is posted by that employer to another Member State to perform work on
that employer's behalf shall continue to be subject to the legislation of the first Member State,
provided that the anticipated duration of such work does not exceed twenty-four months and that
he is not sent to replace another person.
The application of the rules set out according Regulation No 883/2004 are stated in the
Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September
2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the
coordination of social security systems. Regarding the determination of the legislation
applicable, the article 14 of Regulation (EC) No 987/2009 offers details elating to Articles 12 and
13 of the basic Regulation 883/2004. Paragraph one of the article provides that a "person who
Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

pursues an activity as an employed person in a Member State on behalf of an employer which

normally carries out its activities there and who is posted by that employer to another Member
State" shall include a person who is recruited with a view to being posted to another Member
State, provided that, immediately before the start of his employment, the person concerned is
already subject to the legislation of the Member State in which his employer is established.
To normally carry out its activities in one Member State shall refer to an employer that ordinarily
performs substantial activities, other than purely internal management activities, in the territory
of the Member State in which it is established, taking account of all criteria characterizing the
activities carried out by the undertaking in question. The relevant criteria must be suited to the
specific characteristics of each employer and the real nature of the activities carried out.

2. A1 Forms:
REGULATION (EC) No 883/2004 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 29 April 2004 on the coordination of social security systems provides the frame for issuing an
using of the A1 Form (the Portable Document A1).
The A1 form is not a prerequisite for posting the workers abroad but it is a form to be presented
to the authorities Member State were the worker is posted in order to prove that the
contributions due to the social system for the posted worker are paid in the Member State of
origin of the Employer.
According to the Romanian Law, the A1 Form is only requested for the Temporary Transfer of
the Employee. In case of Delegation, the Employee will not request A1 Form. The employer will
pay all contributions due to social security system in Romania. As previously explained the
Delegation is possible only for short period of maximum 120 day in a year (an initial 60 days
Delegation + a second 60 days period, extendable only with the written agreement of
Employee).
At this point, it will be prudent for MPRS to establish together with the Swiss client if in
Switzerland the A1 Form will be required as mandatory in order to obtain working permits
for the MPRS workers.

2. Fiscal Matters regarding taxation of the Posted Workers

According to the Romanian Fiscal Code the Delegated worker will be taxed in Romania also for
the income obtain during the period they worked abroad.
The OECD Committee on Fiscal Affairs Model Tax Convention on Income and on Capital set
out the 183-days-rule, providing that remuneration derived by a resident of a Contracting State
(Romanian in our case) in respect of an employment exercised in the other Contracting State
(Switzerland in our case) shall be taxable only in the first-mentioned State if:

Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

a) the recipient is present in the other State for a period or periods not exceeding in the
aggregate 183 days in any twelve month period commencing or ending in the fiscal year
concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other
State, and
c) the remuneration is not borne by a permanent establishment which the employer has in the
other State.
In our case MPRS will not have a permanent establishment in Switzerland, but will only provide
services to a contractual partner residing in Switzerland, the payment of the salary will be done
by the Romanian company and the workers will be delegated (posted abroad) only for maximum
90 days.

4. Timeframe for the Contractual Relationship

The following steps are suggested from a legal pint of view:
- obtaining from Swiss authorities a list of documents, terms and conditions for MPRS and its
workers to work in Switzerland. Please request a clear answer regarding the A1 Form.
- concluding the Service Contract between MPRS and the CH company. The Contract will
provide:

type of services;
Duration of services;
Price and terms of payment;
The Law applicable to the contract to be Romanian Law if possible (this way well
have more reasons to consider the services as delivered as delivered according
to Romanian Law)

- Signing of Labor Contracts:

Individual Labor Contracts to be signed with each and every Employee. The contract
will include a mobility clause;
If the number of Employees is superior to 21 you will need to sign also Collective
labor Contract.

- Obtaining working permits in CH;

- Signing Addendums to the Labor Contracts with the employees regarding the Delegation in
Switzerland. The Addendum will provide:

the Gross Salary will be of X, and to comprise:

Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

o
o

Net Salary to be paid in cash/bank transfer and by way of benefits as

accommodation and meals at the Hotel. The Employer will contract with the
Hotel the accommodation and meals for the employees and will offer the
benefits to the Employees as a part of monthly salary. Alternatively the
Employer will pay the full salary to the Employee and the Employee will pay
to the Hotel for ash and accommodation
Contributions due to the Romanian Social Security System;
Taxation on the salary to be retained by Employer and transferred to
Romanian State directly.

Please find below a approximated estimation of the amounts to be paid by the Employer:
Lei
24,000
6,115

Eur
5,381.05
1,371.05

17,885

4,010

29,520

6618.69

5.

Type of costs
Gross Salary
Amounts due by the Employee to the State
budgets (to be retained by Employer and
transferred to State)
Net Salary (to be received by the
Employee)
Complete Salary (the total cost of the
Employer with the Employee)
Amounts due by Employer to State Budgets

5520

1237.64

6.

Total Amount collected by the State

11,635

2,608.69

1.
2.

3.
4.

Separately from the Salary the Employer will pay the cost of transportation and the
Daily Subsistence Allowance (Diurna) to be paid per each day of Delegation. The
Romanian law provides minimum and maximum limits for Subsistence Allowance to
be paid and to be completely deductible. The minimum limit is for Delegation in
Switzerland 38 / day and the maximum of Allowance in order to be deductible will
be of 2.5 * the minimum, so of 95 / day. If the amount paid as Allowance is superior
to the maximum limit, the difference between the maximum and the Allowance
actually paid will be considered as salary income and will be taxed accordingly.
!! As stated above, in Romania the Subsistence Allowance in the limits
permitted by the Law it is not considered salary income. Please check if the
Swiss legislation allows considering the Allowance as part of the BruttoWage
in order to meet the requirements regarding the minimum salary to be paid by
the Employer to Employee for the period the Employee will work in
Switzerland.
The duration of Delegation to be 60 days. At the signing of addendum the Employee
will also sign an acceptance regarding the extension of the Delegation with a new 30
to 60 days period;

- transporting the Employees to Switzerland on the costs of MPRS

Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com

SOCIETATE CIVIL PROFESIONAL DE AVOCAI

- Executing the construction works and delivering adjacent services according to the Services
Contracts and local regulations.
- repatriating the Employees at the end of the period. Amending the working contracts.
Compensating the workers for the supplementary time works by giving to them vacation days of
paying compensations.

Timisoara, Str. Semenic, nr. 14, ap. 3, cod potal 300035, jud Timi, Romania
tel: +40-256 201607 fax: +40-256 228672 timisoara@valentin-asociatii.com, www.valentin-asociatii.com