Table of Contents
You get a new job offer: Managing Director for your company's London office, three-year assignment, £180,000 salary. You accept it. Six months later, your first UK paycheck shows 12% National Insurance deductions (UK Social Security). Your U.S. paycheck stub from before the move showed 7.65% FICA withholding. You assume UK taxes replaced taxes but that's incorrect.
The IRS notice arrives 18 months into your assignment. You owe $22,400 back in the U.S. Social Security Tax plus penalties and interest. Your employer never withheld U.S. FICA taxes because they assumed the UK-US totalization agreement exempted you.
U.S. totalization agreements help you understand whether you pay taxes to only one country or face double taxation on the same earnings, which country's social security system covers your work abroad and where you accumulate retirement benefits, how to obtain required Certificates of Coverage that make exemptions legally valid, and whether self-employment income abroad faces 15.3% U.S. tax even when paying foreign social security taxes.
This guide covers what these agreements are and how they eliminate double taxation. It includes which 30 countries have agreements with the United States as of 2025, how they work differently for employees versus self-employed individuals.
What are U.S. Totalization Agreements?
Totalization agreements are bilateral treaties between the United States and foreign countries designed to eliminate dual Social Security Tax and help workers qualify for benefits when they've worked in both countries.
The dual Social Security tax problem
Without totalization agreements, U.S. citizens and residents working abroad could face tax in both countries on the same earnings. The U.S. taxes worldwide income including foreign wages, while most countries tax earnings generated within their borders. This creates double taxation specifically on Social Security Tax/social insurance contributions—separate from income tax.
How totalization agreements solve the problem
Totalization agreements assign Social Security Tax liability to just one country based on specific rules, eliminating dual coverage. The agreements ensure you pay tax to only the country where you're working (in most cases), or to your home country if you're on temporary assignment.
Two primary benefits of totalization agreements
- Elimination of double taxation: You pay Social Security Tax to only one country on the same earnings, saving 7.65% to 15.3% in duplicate taxes.
- Benefit protection: Totalization agreements help workers qualify for Social Security benefits by combining work credits earned in both countries. If you worked 6 years in the U.S. and 6 years in Germany, you might not qualify for benefits in either country alone (U.S. typically requires 10 years, Germany requires 5 years minimum). The totalization agreement allows both countries to count your combined credits to determine eligibility.
Which countries have totalization agreements with the U.S.?
As of 2025, the United States has 30 active totalization agreements with the following countries:
|
Region |
Countries with US Totalization Agreements |
|
Europe |
Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom |
|
Americas |
Brazil, Canada, Chile, Uruguay |
|
Asia-Pacific |
Australia, Japan, South Korea |
|
Middle East/Africa |
None |
Notable countries WITHOUT totalization agreements
China (including Hong Kong), India, Singapore, UAE (Dubai/Abu Dhabi), Thailand, Malaysia, Philippines, Vietnam, Mexico, Costa Rica, Colombia, Argentina, and most Middle Eastern, African, and Asian countries have no totalization agreements with the United States.
Working in these countries means a potential double Social Security Tax—you may pay local social security contributions plus U.S. FICA or self-employment tax on the same income.
How to check for totalization agreements
The Social Security Administration maintains a complete list at www.ssa.gov/international/agreements_overview.html with links to each specific agreement's terms. Each totalization agreement has unique provisions regarding coverage rules, so consult the specific agreement for the country where you'll work.
How totalization agreements work for employees
For employees sent abroad by U.S. employers or foreign nationals working in the U.S., totalization agreement social security rules determine which country's Social Security system covers the employee.
The general rule: Territorial coverage
Under most totalization agreement social security provisions, you're covered by the Social Security system of the country where you work. If you work in Germany, you pay German social security taxes and are exempt from U.S. FICA taxes. If you work in the U.S., you pay U.S. FICA taxes regardless of citizenship.
The temporary assignment exception (detached worker rule)
If a U.S. employer sends you abroad temporarily (typically up to 5 years depending on the specific totalization agreement), you remain covered under U.S. Social Security and are exempt from the foreign country's social security taxes.
This works in reverse too—if a foreign employer sends a foreign national to the U.S. temporarily, they remain covered under their home country's system and are exempt from U.S. FICA taxes.
Why this matters: Remaining under U.S. Social Security coverage during foreign assignments allows you to continue accumulating U.S. Social Security credits without interruption, and you avoid paying foreign social security taxes that provide limited benefits if you don't remain in that country long-term.
The 5-year rule (varies by agreement)
Most totalization agreements allow temporary assignments of up to 5 years under home country coverage. After 5 years, coverage typically switches to the country where you're working.
Some agreements allow shorter periods (France allows 5 years, UK allows 52 weeks initially), while others allow extensions. Check the specific totalization agreement.
U.S. employer vs foreign employer matters
U.S. employer sending you abroad: You likely remain under U.S. Social Security for up to 5 years (detached worker), paying U.S. FICA taxes, exempt from foreign social security taxes.
Foreign employer hiring you abroad: You're typically covered under the foreign country's social security system from day one, exempt from U.S. FICA taxes.
Self-employed: Different rules apply (covered below).
Certificate of Coverage: The required document
This is critical: To claim exemption from either U.S. or foreign Social Security Tax under a totalization agreement social security provision, you MUST obtain a Certificate of Coverage from the social security agency of the country where you're covered.
Certificate of Coverage is legally required
Recent court cases confirmed that totalization agreements are not "self-executing"—meaning the exemption doesn't apply automatically just because you qualify. You must obtain and present a Certificate of Coverage to claim the exemption.
In Bond v. United States (2023), an Australian national sent by his Australian employer to work in the United States argued he qualified for exemption from U.S. FICA taxes under the US-Australia totalization agreement and had proof he paid Australian social security taxes. The court ruled against him because he never obtained a Certificate of Coverage, stating the certificate is mandatory regardless of other proof.
What is a Certificate of Coverage?
A Certificate of Coverage is an official document issued by the social security agency of one country certifying that the worker is covered under that country's social security system and is therefore exempt from the other country's Social Security Tax.
The certificate shows your name, dates of coverage, employer information, and confirms which country's social security system covers your employment.
How to obtain Certificate of Coverage
If working abroad temporarily under the U.S. Social Security coverage: Apply to the U.S. Social Security Administration using Form SSA-2490 (Application for a Certificate of Coverage Under a U.S. International Social Security Agreement). SSA issues the certificate confirming you remain under U.S. Social Security coverage. Present this certificate to your foreign employer to claim exemption from foreign social security taxes.
If working abroad permanently under foreign social security coverage: Apply to the foreign country's social security agency for a Certificate of Coverage. Present this certificate to your U.S. employer to claim exemption from U.S. FICA taxes.
When to apply for Certificate of Coverage
You must apply before starting work abroad or before the foreign national starts work in the U.S. Certificates cannot be issued retroactively in many cases—if you work two years without obtaining the certificate, you may owe back taxes for those years even if you technically qualify for exemption.
Self-employed individuals must also obtain Certificates of Coverage, though the process differs slightly (covered below).
How totalization agreements work for self-employed individuals
Self-employed U.S. expats face unique challenges because they pay both the employer and employee portions of Social Security Tax—15.3% combined (12.4% Social Security + 2.9% Medicare).
Self-employment tax basics
The 15.3% self-employment tax applies to net self-employment income up to $176,100 for 2025 (wage base limit for Social Security portion). The 2.9% Medicare portion continues without limit.
For self-employed expats, the question becomes: Do I pay 15.3% U.S. self-employment tax, foreign social security taxes, or both?
Totalization agreements for self-employed: Residence-based
Unlike employees (where coverage depends on employer location and assignment details), self-employed individuals are generally covered under the social security system of the country where they reside according to Expat Social Security rules.
If you're self-employed and reside in Germany, you're covered under the German social security system and exempt from U.S. self-employment tax—if you obtain the proper Certificate of Coverage.
The residence requirement
To claim exemption from U.S. self-employment tax under a totalization agreement, you typically must be a resident of the foreign country with the totalization agreement. Temporary presence isn't enough—you must establish residence.
Example: Self-employed consultant living in France (totalization country) pays French social security contributions of approximately 19-22% and is exempt from U.S. 15.3% self-employment tax with proper Certificate of Coverage.
Contrast: Self-employed consultant living in Dubai (no totalization agreement) pays zero UAE social security taxes but owes full 15.3% U.S. self-employment tax with no exemption available.
Certificate of Coverage for self-employed
Self-employed individuals must apply to the foreign country's social security agency for a Certificate of Coverage proving they're covered under that country's system. Present this certificate when filing U.S. taxes to claim exemption from self-employment tax.
Critical timing: Apply for the certificate before starting self-employment activity in the foreign country, not retroactively. Retroactive certificates may not be available, leaving you liable for U.S. self-employment tax for periods without valid certificates.
U.S. Social Security wage base limit
The Social Security portion of FICA/self-employment tax (12.4% combined employer/employee) applies only to income up to $176,100 for 2025. Income above this amount is not subject to Social Security Tax, though the 2.9% Medicare tax continues without limit (plus 0.9% Additional Medicare Tax on earnings over $200,000 for singles or $250,000 married filing jointly).
How wage base affects expats
If your foreign wages exceed $176,100, only the first $176,100 is subject to the Social Security Tax portion. This limits the annual savings from totalization agreements.
Example: Employee earning $300,000 in Germany with U.S. employer on 3-year assignment (covered under U.S. Social Security via detached worker rule):
U.S. Social Security tax: $176,100 × 12.4% = $21,836
German social security: Exempt due to Certificate of Coverage
Total social security taxes: $21,836
Without totalization agreement:
U.S. Social Security tax: $21,836
German social security: Approximately $35,000-$40,000 (no wage cap in Germany)
Total: $56,000-$62,000
Annual savings from totalization agreement: $34,000-$40,000.
What happens in countries without totalization agreements
Working in countries without U.S. totalization agreements creates the double taxation problem these agreements were designed to solve affecting Expat Social Security planning.
You may pay both U.S. and foreign social security taxes
Without a totalization agreement, you typically owe social security taxes to both countries on the same earnings—foreign social security contributions required by local law, plus U.S. FICA taxes (if employee) or self-employment tax (if self-employed).
No exemption available
Totalization agreements are the only mechanism to exempt you from one country's social security taxes. Without an agreement, no exemption exists.
Foreign tax credits (Form 1116) that offset income taxes do NOT apply to Social Security Tax—foreign social security contributions cannot be credited against U.S. FICA or self-employment tax.
Common countries without totalization agreements
China, India, Singapore, UAE, Thailand, Mexico, and most developing countries have no totalization agreements with the U.S. Americans working in these countries often face double Social Security Tax.
Strategies when no totalization agreement exists
Employees: Negotiate salary to account for double social security burden. Some employers provide tax equalization or protection covering excess social security taxes.
Self-employed: Consider whether establishing residence in a totalization country for business purposes could eliminate U.S. self-employment tax (requires genuine residence, not just mail forwarding address).
Short-term assignments: Some countries exempt foreign workers from local social security contributions during the first 1-2 years (China has a 6-year exemption for foreigners). Check local law.
How to apply for a U.S. Certificate of Coverage
If you're remaining under U.S. Social Security coverage while working abroad (detached worker rule), follow these steps:
Step 1: Complete Form SSA-2490
Download Form SSA-2490 (Application for a Certificate of Coverage Under a U.S. International Social Security Agreement) from SSA.gov.
Step 2: Provide required information
Include details about your employment abroad: employer name and address, foreign work location, assignment dates, whether you're an employee or self-employed, and copies of employment contract or assignment letter.
Step 3: Submit to Social Security Administration
Mail completed Form SSA-2490 to the address listed on the form (varies by totalization country) or submit through the SSA's Office of Earnings and International Operations.
Step 4: Allow processing time
Processing typically takes 4-8 weeks. Apply before starting work abroad to ensure timely issuance.
Step 5: Present certificate to foreign employer
Once received, provide the certificate to your foreign employer so they don't withhold foreign social security taxes.
How expats can verify they need totalization relief
Question 1: Are you working in a totalization agreement country?
Check the list of 30 countries with U.S. agreements. If your country is not listed, no totalization relief is available—you'll owe both countries' social security taxes.
Question 2: Are you employed or self-employed?
Employed: Determine if you're on temporary assignment (detached worker) or permanent hire. Temporary assignments typically maintain home country coverage.
Self-employed: You're generally covered under the social security system of the country where you reside.
Question 3: Have you obtained a Certificate of Coverage?
Without a certificate, the exemption does not apply even if you technically qualify.
Question 4: Did you present the certificate to your employer?
The certificate must be presented to the employer withholding the "wrong" social security taxes (foreign employer if you're staying under U.S. coverage, or U.S. employer if you're under foreign coverage).
How NSKT Global can help with totalization agreements and social security tax planning
NSKT Global specializes in international tax planning for U.S. expats through comprehensive expat tax services, including navigating totalization agreements and eliminating double Social Security Tax.
We offer comprehensive totalization agreement services including coverage determination analyzing whether you qualify for totalization agreement benefits based on employment type and country, Certificate of Coverage application assistance preparing Form SSA-2490 or foreign country applications and ensuring timely issuance before starting work, employer coordination ensuring your employer properly applies the exemption and stops withholding the wrong country's social security taxes, self-employed expat analysis determining residence requirements and optimal structure to minimize combined U.S. and foreign social security taxes, and retroactive relief for missed certificates seeking IRS penalty abatement when certificates weren't obtained timely.
Whether you're planning an international assignment with a U.S. employer, hired directly by a foreign company abroad, self-employed working internationally, or facing double social security taxation in a non-totalization country, our expat tax services ensure you obtain required Certificates of Coverage before starting work to avoid retroactive tax liabilities, properly present certificates to employers to stop incorrect withholding, minimize combined U.S. and foreign social security tax burden through strategic planning, and maintain compliance with both U.S. and foreign social security reporting requirements throughout your international career.
