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. Under certain conditions, a worker may be exempt from coverage in a contracting country, even if he or she has not been transferred directly from the United States. For example, if a U.S. company sends an employee to its New York office to work for 4 years in its Hong Kong office, and then re-opens the employee for an additional 4 years in its London office, the employee may be a member of Social Security under the U.S.U.K. agreement. The rule for the self-employed applies in cases such as this, provided the worker has been seconded from the United States and is under U.S.
Social Security for the entire period prior to the transfer to the contracting country. Anyone wishing to write more information about the United States Social Security Totalization Agreements program, including details of certain existing agreements: In addition, your employer must indicate whether you remain an employee of the U.S. company while you work in Italy or if you are ahead of the U.S. company`s subsidiary in Italy. If you become a related company, your employer must indicate whether the U.S. company has entered into an agreement with the Internal Revenue Service pursuant to Section 3121 (l) of the Internal Revenue Code to pay U.S. Social Security taxes for U.S. citizens and residents employed by the subsidiary and, if so, the effective date of the agreement.
If you are entitled to social security benefits from both the United States and Italy and you do not need the agreement to qualify for these 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. 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. 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. Under this exception for “self-employed workers,” a person temporarily transferred to work for the same employer in another country is covered only by the country from which he or she was seconded. A U.S. citizen or resident who, for example, is temporarily transferred by a U.S.
employer to work in a contract country, is still under U.S. action.