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. In 2019, the United States and the French Republic recalled, through diplomatic communication, the agreement that the taxes of the French Confederation of Generalisee Contributions (CSG) and the Contribution to the Repayment of Sociate Debt (CRDS) are not social charges covered by the social security agreement between the two countries. As a result, the IRS will not challenge foreign tax credits for CSG and CRDS payments on the basis that the social security agreement applies to these taxes. Double tax debt may also affect U.S. citizens and residents working for foreign subsidiaries of U.S. companies. This is likely to be the case when a U.S. company has followed the common practice of entering into an agreement with the Treasury, pursuant to Section 3121 (l) of the Internal Income Code, to provide social security to U.S. citizens and residents employed by the subsidiary.
In addition, U.S. citizens and residents who are independent outside the United States are often subject to double social security taxation, as they are covered by the U.S. program, even if they do not have a U.S. business. As a general rule, individuals should only take action on totalization benefits under an agreement when they are willing to apply for a pension, survival or disability. A person wishing to introduce a entitlement to benefits as part of a totalization agreement can do so with any social security agency in the United States or abroad. In addition to the bilateral provisions, there are a number of multilateral agreements, including the European Economic Area (EEA) agreement, which came into force on 1 January 1994. To qualify for benefits under the U.S. Social Security program, a worker must have earned enough work credits, known as insurance quarters, to meet the “insurance status requirements” specified. For example, a worker who turns 62 in 1991 or later generally needs 40 calendar terms to be insured for old age pensions. As part of a totalization agreement, SSA accounts for periods of coverage acquired by the worker under the social security program of a contracting country when a worker has some U.S. insurance coverage but is not sufficient to qualify for benefits.
Similarly, a country that is a party to an agreement with the United States takes into account a worker`s coverage under the U.S. program when it is required for that country`s social security benefits. If the combined credits in the two countries allow the worker to meet the eligibility requirements, a partial benefit may be paid depending on the proportion of the worker`s total career in the paying country. Most U.S. agreements eliminate dual coverage of autonomy by allocating coverage to the worker`s country of residence. For example, under the US-Swedish agreement, an American citizen living in Sweden and living in Sweden is covered only by the Swedish system and is excluded from US coverage. 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.