As U.S. commercial and commercial interests have spread around the world, the list of major trading partners increasingly includes countries that do not have a system that meets all U.S. legal requirements. This may penalize U.S. companies, workers and potential social security beneficiaries abroad who could benefit from such agreements.  2 An exception to this rule is the agreement with Italy, which allows some transferred workers to choose the social security system to which they are subject. No other U.S. totalization agreement contains a similar rule. Under these agreements, double coverage and double dues (taxes) for the same work are abolished. Agreements generally guarantee that you only pay social security contributions to one country. One of the general beliefs about the U.S. agreements is that they allow dual-coverage workers or their employers to choose the system to which they will contribute.

That is not the case. The agreements also do not change the basic rules for covering the social security legislation of the participating countries, such as those that define covered income or work. They simply free workers from coverage under the system of either country if, if not, their work falls into both regimes. The provisions to eliminate dual coverage for workers are similar in all U.S. agreements. Each of them establishes a basic rule regarding the location of the employment of a workforce. Under this basic “territorial rule,” a worker who would otherwise be covered by both the United States and a foreign regime is subject exclusively to the coverage laws of the country in which he or she works. In the absence of a totalization agreement, a large number of workers who work or are self-employed in another country, as well as employers in the first country, face the prospect of paying social security contributions to two countries with the same income. For example, a U.S.

employer may send a U.S. worker to another country to continue his or her employment. In the absence of a totalization agreement, the employer and the worker are generally required to pay social security contributions on the worker`s income in the United States and the host country. When a foreign employer sends a worker to the United States to continue his or her employment, the employer and the worker often have to pay double taxes on social security, unless that country and the United States have a totalization agreement. A totalization agreement is an agreement between two countries that prevents double social security contributions for the same income. At this point, the United States has active totalization agreements with 24 countries. To find out which countries have reached an agreement with the United States, take a look at the IRS list of social security conventions. You will see that they are most often related to developed countries and not to emerging countries. The Social Security Agreement between the United States and Japan, which came into force on October 1, 2005, improves the protection of social security for people working or working in both countries. It helps many people who, in the absence of the agreement, would not be entitled to monthly pension, disability or survival benefits under the social security system of one or both countries. It also helps people who would otherwise have to pay social security contributions to the two countries with the same incomes. Totalization agreements are extremely important because American expatriates who live and work abroad can face double taxation when it comes to social security if such an agreement does not exist.

You are especially important when you are independent. There are usually specific rules on autonomy and social security and it is important to understand all the details if you are in a country with which the United States has a totalization agreement.