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. Workers exempt from social security contributions under a totalization agreement must document their exemption by obtaining a country coverage certificate that continues to cover it. In cases where there is no totalization agreement between the two countries, additional costs may be incurred by the employer. These additional costs are the same: although these considerations represent a challenge for the employer, it is important to recognise that there are currently a number of multilateral agreements (EU Regulation 883/2004, Iberoamerican Organization Social Security Agreement, etc.) or bilateral totalisation agreements (social security contracts between two countries) to allay fears about contributions and benefit rights and thus facilitate the employer`s task. This article discusses the scope and impact of these agreements in a selection of countries, as well as the potential social security costs associated with seconding a staff member on a temporary international mission. Under these agreements, Australia equates social security periods/stays in these countries with periods of Australian residence in order to meet minimum qualification periods for Australian pensions.
In other countries, periods of Australian working life are generally counted as social security periods to meet their minimum payment periods. Typically, each country pays a partial pension to a person who has lived in both countries. Canada has international social security agreements with more than 50 countries with comparable pension plans. These agreements aim to: 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. If a worker is not entitled to benefits in his country of origin or in the host country because the deadlines are not met, a totalization agreement between the two countries can provide a solution. The agreement allows the worker to add up the time spent between the two sites and to recover social security benefits in one of the countries, provided that a minimum amount is reached in one or both countries. If, for example, in the United States, the combined credits in both countries allow the worker to meet the eligibility requirements, a partial benefit may be paid on the basis of the proportion of the person`s total career in the paying country. The two objectives of the totalization agreements are achieved in different ways in different agreements and make it essential to understand the concept and specifications of each home host alliance. Many totalization agreements follow the same general pattern of contribution and time. Below is a description of the types of agreements reached by some countries.
For example, U.S. agreements allow the U.S. Social Security Administration to add U.S. and foreign coverage credits only if the employee earns at least six-quarters of U.S. coverage. (« quarter » refers to work credits, with a credit for 2014 for each gain of $1,200 up to a maximum of four credits per year).) Similarly, a person may need a minimum amount of coverage under the foreign country plan in order to account for U.S. coverage to meet the conditions for foreign benefits.