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. Since the late 1970s, the United States has established a network of bilateral social security agreements that coordinate the U.S. social security program with similar programs in other countries. This article provides a brief overview of the agreements and should be of particular interest to multinationals and people who work abroad during their careers. Norway also has bilateral agreements with the United States, Canada, Australia and India. (e) This paragraph also applies in cases where a national of a state other than a contracting state is seconded to the territory of a contracting state on the territory of a contracting state, provided that its application is not contrary to a provision of another treaty or international agreement between a contracting state and a third state. International social security agreements, often referred to as „totalization agreements,” have two main objectives. First, they remove the double taxation of social security, the situation that occurs when a worker from one country works in another country and is required to pay social security taxes to the two countries with the same incomes. Second, the agreements help fill gaps in benefit protection for workers who have shared their careers between the United States and another country.
The agreement allows U.S. and Finnish nationals living in the United States, as well as U.S. nationals in Finland, to be eligible for NPS pension and survival benefits if they have stayed in Finland five consecutive years after the age of 16. The five-year stay should not be done immediately before the law. An agreement that will enter into force on July 1, 1984 between the United States and Norway improves the protection of social security for people who work or have worked in both countries. It helps many people who, in the absence of the agreement, would not be entitled to monthly pension, disability or survival benefits under the social security system of one or both countries. It also helps people who would otherwise have to pay social security contributions to the two countries with the same incomes. International social security agreements are beneficial for both those who work today and those whose careers are over.
For current workers, the agreements eliminate the double contributions they might otherwise make to social security plans in the United States and another country. For people who have worked in the United States and abroad and are now retired, disabled or deceased, agreements often result in the payment of benefits to which the worker or family members would not otherwise be entitled. As a general rule, you are covered by social security in only one country, so you do not have to pay social security contributions in both countries. 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. 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, when a U.S. company sends an employee from its New York office to work for four years in its Hong Kong office and then re-employs its employee for an additional four years in its London office, the employee may be released from the United Kingdom.