Since the late 1970s, the United States has established a network of bilateral social security agreements that coordinate the U.S. social security program with similar programs in other countries. This article provides a brief overview of the agreements and should be of particular interest to multinationals and people who work abroad during their careers. International social security agreements, often referred to as “totalization agreements,” have two main objectives. First, they remove the double taxation of social security, the situation that occurs when a worker from one country works in another country and is required to pay social security taxes to the two countries with the same incomes. Second, the agreements help fill gaps in benefit protection for workers who have shared their careers between the United States and another country. If you have any questions about international social security agreements, contact the Social Security Administration`s Office of Data Exchange, Policy Publications and International Negotiations (ODEPPIN) after surfing our website. For questions about the rules for coverage of agreements, please visit (410) 965-7306. If you would like to find out more about individual services or services, please contact the Office of Earnings and International Operations. The single-family home rule in U.S.
agreements generally applies to workers whose interventions in the host country are expected to last 5 years or less. The 5-year limit for leave for exempt workers is much longer than the limit normally set by agreements in other countries. All of these agreements are based on the concept of shared responsibility. Responsibility-sharing agreements are reciprocal. Under each agreement, partner countries make concessions to their social security qualification rules so that those covered by the agreement have access to payments that they may not be eligible for. The responsibility for social security is thus distributed among the countries in which a person has lived during his or her working years and where the person is able to obtain potential rights. In general, it is possible to access a pension from one country in the second country, although the paying country retains some discretion with regard to the exchange and delivery mechanisms used. The agreements also have a positive effect on the profitability and competitive position of companies operating abroad by reducing their business costs abroad. Companies with staff stationed abroad are encouraged to use these agreements to reduce their tax burden.
In 2019, the United States and the French Republic recalled, through diplomatic communication, the agreement that the taxes of the French Confederation of Generalisee Contributions (CSG) and the Contribution to the Repayment of Sociate Debt (CRDS) are not social charges covered by the social security agreement between the two countries. As a result, the IRS will not challenge foreign tax credits for CSG and CRDS payments on the basis that the social security agreement applies to these taxes. If you would like more information on the U.S. Social Security Totalization Program – including details of the concrete agreements in force – you should write that Australia currently has 31 international bilateral social security agreements.