To understand the complex situation that can occur when a worker is sent to an international mission – solely on the basis of the cost of social security – you consider charts 2 and 3 below, which show the social contributions of workers and employers as a percentage of income in a number of countries of origin. The charts use US$150,000 and the corresponding monetary value in the countries concerned. The United States has agreements with several nations, the so-called totalization conventions, in order to avoid double taxation of income in relation to social contributions. These agreements must be taken into account in determining whether a foreigner is subject to the U.S. Social Security Tax/Medicare or whether a U.S. citizen or resident alien is subject to the social security taxes of a foreign country. If you are applying for an exemption from U.S. Social Security, your employer must apply for a coverage certificate or a D/USA 101 form from the local German health fund that deducts your German social security contributions. To apply for the exemption, the following information is necessary: social security contributions can become, depending on the country of origin and the host country, a very expensive aspect of an allowance abroad.
Due to a large number of totalisation agreements that set specific conditions, confusion over social security contributions and benefit rights has gradually subsided – with the costs of employers – but the subject still often requires the advice of experts with expertise in this area. Currently, the United States has totalization agreements with the following countries: At the time of the signing of the social security agreement reached today between the United States of America and the Federal Republic of Germany, the plenipotentiary parties of the two States Parties stated that they agreed on the following: If you are self-employed and work only in the United States or if you relocate your business to Germany for five years or less, you will continue to pay U.S. social security contributions. If you are self-employed and work only in Germany or if you relocate your business to the United States for five years or less, you will contribute to the German social system. If you are entitled to social security benefits from the United States and Germany and do not need the agreement to receive one of the two benefits, the amount of your benefit in the United States may be reduced. This is the result of a provision of U.S. law that can influence how your benefit is determined if you also receive a work-based pension that was not covered by U.S. Social Security.
For more information, visit the Windfall Elimination Commission (publication 05-10045). If you are outside the United States, you can write to us in the “More Information” section. In desire: to regulate the relationship between them in the field of social security, any foreigner wishing to benefit from an exemption from U.S. Social Security and Medicare taxes under a totalization agreement must obtain a certificate of coverage from the social security authority of his country of origin and present such a guarantee to his employer in the United States, in accordance with the procedures provided in the tax procedures 80-56, 84-54 and Ruling 92-9. An alternative procedure is provided in these revenue procedures for a foreigner who is unable to obtain a certificate of coverage from his country of origin. When several states are involved, the EC`s social security provisions determine the country that must pay the benefits and the applicable national legislation. The basic principles are simple: the agreements cover a period of two to five years depending on the host country and require at least one valid contribution in Canada for an individual to receive benefits in Canada.