SSA publishes January 2017 Update

The Social Security Administration (SSA) published its January 2017 update and covers the following topics:

  • ¬†Finland Implements Reform to Earnings-Related Pension Program
  • Poland Approves Law Lowering Retirement Ages
  • Japan’s Legislature Approves Public Pension Reform Provisions
  • Uruguay and the United States Sign Totalization Agreement

Of particular interest is the last topic concerning the U.S. / Uruguay Totalization Agreement that was signed on January 10, 2017. (The text of this agreement has not been released yet. Once it is released this article will be updated for any changes.) At present, the United States has totalization agreements with 26 countries. In addition, recently signed agreements with Brazil and Iceland are currently in the review process.

The agreement appears to contain the same “detached worker” provision found in all U.S. agreements. This provision generally exempts U.S. citizens sent by U.S.-owned companies (and certain electing foreign affiliates) to work in Uruguay for five years or less from paying social security taxes to Uruguay. Uruguayan citizens sent to work temporarily in the United States by Uruguayan-owned companies will receive similar tax treatment. As a result, employers will in most cases pay social security taxes only to their workers’ home countries for assignments lasting five years or less. In order to document this exemption, employers should apply for a “Certificate of Coverage” from the Social Security Administration.

Individuals who have worked in both countries but do not meet the minimum benefit eligibility requirements for either system may qualify for a benefit based on combined coverage credits from both countries. Combined coverage periods may be used to calculate retirement, disability, and survivor benefits. However, as with all other agreements, this one does not cover Medicare benefits. As a result, individuals must have 40 quarters if U.S. coverage in order to be eligible for full Medicare benefits.

Before the agreement can enter into force, each country has to complete a review process: The Uruguayan General Assembly must ratify the agreement; in the United States, the president must transmit the agreement to Congress for a required 60-day review period. At present, the United States has totalization agreements with 26 countries. In addition, recently signed agreements with Brazil and Iceland are currently in the review process.

If you have any questions contact Brady Ware’s International Tax team member Ed Kennedy at ekennedy@bradyware.com or 770-454-4222.


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