- Aprile 12, 2021
The agreement with Italy is a departure from other US agreements because it does not regulate the people cashed in. As in other agreements, the basic criterion of coverage is the territorial rule. However, the coverage of foreign workers is mainly based on the nationality of the worker. If an employed or self-employed U.S. citizen in Italy would be covered by U.S. Social Security without the agreement, he will remain covered by the U.S. program and exempt from Italian coverage and contributions. The agreements work by assigning social security and therefore the tax obligation to a single country, as stipulated by the rules of each convention. These rules can vary considerably, but all agreements have some commonalities, such as the allocation of coverage, so that workers pay social security taxes to one or the other country, not both. SSA cooperates with representatives of its totalization partners throughout the negotiation process and after the agreement enters into force to ensure that workers are covered by the laws of the country to which they attach the greatest economic link. When a person is qualified for a social security benefit in the United States on the basis of cumulative coverage in the U.S. and abroad under a totalization agreement, the amount of the U.S.
benefit payable is only proportional to the periods of coverage earned in the United States. Similarly, the partner country pays a partially or proportionately paid benefit when combined coverage entitles you to a claim. It is therefore possible for a person to enjoy an overall benefit from an agreement of one of the two countries or both countries if he meets all the conditions applicable to the claim. The provisions for calculating benefits used in the United States are uniform in all totalization agreements, as required by law in provisions 42 U.S.C. Determining a proportional amount of U.S. benefits as part of a totalization agreement is a three-step process. Most TOTALization partners in the United States have more social security agreements in force than the United States with their 28 as of November 2018. By comparison, in 2014, Canada, France, Germany and the United Kingdom – which enter into treaty-to-treaty totalization agreements, thus avoiding some of the legal constraints of the U.S. process – had 57, 80, 50 and 53 agreements respectively (Leeuwenhaag 2014). As has already been said, the removal of double taxation of income in other countries could lead to greater foreign direct investment in the United States. In addition, thousands of beneficiaries who are not currently eligible for a pension from one or both countries could benefit from an extensive totalization program.
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 protect the benefit rights of workers who divide their professional careers between the two countries by allowing each country to count, as needed, the social security rights acquired in the other country to constitute benefit rights.