Applications should include the name and address of the employer in the United States and the other country, the full name, place and date of birth of the worker, nationality, U.S. and foreign Social Security numbers, location and date of employment, and the start and end date of the assignment abroad. (If the employee works for a foreign subsidiary of the U.S. company, the application should also indicate whether U.S. Social Security Insurance has been agreed upon for employees of the related company pursuant to Section 3121 (l) of the internal income code.) Self-employed workers should indicate their country of residence and the nature of their self-employment. When applying for certificates under the agreements with France and Japan, the employer (or non-employee) must also indicate whether the worker and accompanying family members are covered by health insurance. Any foreigner wishing to apply for an exemption from U.S. Social Security and Medicare taxes on the basis of a totalization agreement must obtain an insurance certificate from the social security authority of his country of origin and present such proof of insurance to his employer in the United States, in accordance with 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.
Totalization agreements are popular with U.S. companies because they exempt employers from paying a dual social security tax. According to a regular study of net tax savings by the Office of International Programs of the Social Security Administration (SSA), U.S. companies and their employees save about $1.5 billion a year in foreign social taxes based on these agreements. These tax savings help make U.S. operations more profitable around the world, while improving the competitiveness of U.S. trade. The totalization agreements also excuse foreign workers temporarily sent to the United States for payment of U.S.
Social Security taxes. The result is annual savings of approximately $500 million for the foreign workers involved and their employers. These tax savings make the United States a more attractive destination for foreign capital, thereby encouraging foreign direct investment. 12 Meanwhile, the United States had also reached an agreement with West Germany, which was also on hold until the 1977 amendments were adopted. Double social security is a widespread problem for U.S. multinationals and their employees, since the U.S. Social Security program covers foreign workers – who arrive in the U.S. and go abroad – to a greater extent than the programs of most other countries. U.S. Social Security covers U.S.
nationals and non-resident aliens who are employed by U.S. employers abroad, regardless of the duration of an employee`s intervention abroad, even if the employee was recruited abroad. This extraterritorial coverage in the United States often results in double tax debt for employers and workers, since most countries generally receive social security contributions for all those who work in their territory. Any agreement (with the exception of the agreement with Italy) provides an exception to the territorial rule, which aims to minimize disruptions in the career of workers whose employers temporarily send abroad.