Double tax debt may also affect U.S. citizens and residents working for foreign subsidiaries of U.S. companies. This is likely to be the case when a U.S. company has followed the common practice of entering into an agreement with the Treasury, pursuant to Section 3121 (l) of the Internal Income Code, to provide social security to U.S. citizens and residents employed by the subsidiary. In addition, U.S. citizens and residents who are independent outside the United States are often subject to double social security taxation, as they are covered by the U.S. program, even if they do not have a U.S. business.
The agreement with Italy is a departure from other US agreements because it does not regulate the people cashed in. As in other agreements, the basic criterion of coverage is the territorial rule. However, the coverage of foreign workers is mainly based on the nationality of the worker. If an employed or self-employed U.S. citizen in Italy would be covered by U.S. Social Security without the agreement, he will remain covered by the U.S. program and exempt from Italian coverage and contributions. Although the social security agreements differ according to the conditions agreed by the two signatory states, their intention is similar.
The main objective of such an agreement is to abolish the double social security contributions that apply when a worker from one country works in another country and has to pay social security contributions for the two countries with the same incomes. The following lists reflect existing totalization agreements for other selected nations. Workers exempt from social security contributions under a totalization agreement must document their exemption by obtaining a country coverage certificate that continues to cover it. Eu rules apply to all EU Member States, i.e. where bilateral agreements exist, they are not mentioned here. Despite the fact that the agreements aim to allocate social security to the country where the worker is most attached, unusual situations occasionally arise, where strict enforcement of the rules of agreement would result in unusual or unjustified results. For this reason, each agreement contains a provision allowing the authorities of both countries to grant exemptions from the normal rules if both parties agree. An exception could be granted, for example, if the foreign award of a U.S. citizen was unexpectedly extended by a few months beyond the 5-year limit under the self-employed rule. In this case, the worker could benefit from ongoing U.S. coverage for the additional period.
Each totalization agreement has an exception for international staff. Under this exception, a person temporarily transferred to the service for the same employer in another county is covered only by the national form he or she received. Workers and employers continue to pay contributions to the national social security system. What complicates matters is that the task of a foreign administrator is to multiply the combinations of countries that do not have agreements. The absence of an agreement can place a significant financial burden on multinational employers, for example when a company sends a foreign trip to the United States in Brazil. Other drawbacks, if there is no agreement, are dual contributions and ineligible benefits – all factors to be taken into account in the development of an international allocation policy. You can also write to this address if you want to propose negotiating new agreements with certain countries. In developing its negotiating plans, the SSA attaches considerable importance to the interests of workers and employers who will be affected by potential agreements.