Most totalization agreements remove restrictions on the payment of benefits to residents of partner countries. Under current law, U.S. citizens are generally entitled to U.S. social security benefits regardless of their country of residence.7 Non-resident aliens who have been absent from the United States for 6 months or more consecutive are generally not entitled to benefits unless they meet a legal exception to this requirement.8 The most frequent exceptions are Effective implementation of these agreements, however, depends on concrete operational mechanisms. , including the exchange of data between participating countries. In response to a growing number of international social security agreements and an increasing number of insured migrant workers, it is necessary to improve the efficiency and scalability of implementation. The next ISSA database will provide important information on the existence and implementation of international social security agreements. As U.S. commercial and commercial interests have spread around the world, the list of major trading partners increasingly includes countries that do not have a system that meets all U.S.
legal requirements. This may penalize U.S. companies, workers and potential social security beneficiaries abroad who could benefit from such agreements. 3 An agreement can contain only one of these rules, not both. Thus, in the agreements, employment coverage is allocated either on the basis of a delegated activity or on the basis of place of residence. Totalization agreements are popular with U.S. companies because they exempt employers from paying a dual social security tax. According to a regular study of net tax savings by the Office of International Programs of the Social Security Administration (SSA), U.S. companies and their employees save about $1.5 billion a year in foreign social taxes based on these agreements. These tax savings help make U.S.
operations more profitable around the world, while improving the competitiveness of U.S. trade. The totalization agreements also excuse foreign workers temporarily sent to the United States for payment of U.S. Social Security taxes. The result is annual savings of approximately $500 million for the foreign workers involved and their employers. These tax savings make the United States a more attractive destination for foreign capital, thereby encouraging foreign direct investment. 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. International social security agreements can be bilateral agreements concluded by two countries to coordinate their specific rules or multilateral agreements allowing several countries to coordinate parts of their social security rules.