Do expatriates pay social insurance (social security) taxes to their home country, their host country, or both?

The answer depends on whether a totalization agreement exists between the home and the host country. Totalization agreements are international cooperative treaties that the President of the United States enters into with foreign countries. The agreements coordinate social security coverage and taxation (of workers and employers) for citizens of one country who work in another, or for persons with work records in both the United States and a foreign country. In general, the agreements make sure that social security taxes are paid only to one country, eliminating dual benefit coverage and dual contributions (taxes) for the same work.

Generally, expatriates will only be subject to social security taxes in the country where they are working, although an agreement may provide for coverage by the country to which the worker has the greater benefit attachment. However, if an individual is temporarily sent to work in a foreign country, and his or her pay would otherwise be subject to U.S. and foreign social security taxes, he or she can remain covered only by U.S. social security if a totalization agreement exists (i.e., the employee would be exempt from foreign social security taxes).

How to get a coverage exemption. A U.S. national employed or self-employed in a cooperating foreign country, who is covered by both systems and wishes to be exempt from foreign social security taxes (coverage exemption), must complete (or have his employer complete) an Application for a Certificate of Coverage. A certificate of coverage is a certification stating that the person named on the certificate is subject to the social security law of the country issuing the certificate. For example, a cooperating foreign country (host country) may accept a certificate issued by the United States (home country) as evidence that the overseas employment is subject to U.S. social security laws. The employment is therefore exempt from the foreign country's social insurance coverage and taxes. Each certificate will indicate the period of time for which it is valid.

Certificates from the United States are issued by the Social Security Administration's Office of International Programs. Online Certificate of Coverage service is available at www.socialsecurity.gov/coc . For assistance with the use of the online forms, contact the Office of International Programs by phone at (410) 965-7306. Certificates are also available by mail or by fax.

Countries with totalization agreements. The United States currently has totalization agreements with a number of foreign countries, mostly European. A list of existing agreements and those under active consideration is maintained by the Social Security Administration’s Office of International Programs at www.socialsecurity.gov/international/status.html .