Under the agreement, a detached worker remains subject only to the social security
laws of the country from which the employer transferred the worker. However, the worker
must meet all of the following conditions:
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•
The employer/worker expects the period of employment in the host country to last 5
years or fewer. The 5-year period begins with the date the employment in the host
country begins or November 1, 1993 (the effective date of the agreement), whichever
is later.
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•
The employment relationship existed before the employer transferred the worker from
the home country; and
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•
If an American employer sends an employee to that employer's affiliate in Luxembourg,
there must be an agreement in effect between the American employer and the Internal
Revenue Service (IRS) with respect to the affiliate. The agreement under section 3121(l)
of the Internal Revenue Code provides, among other things, for Social Security coverage
for U.S. citizens and residents that the affiliate employs. In such cases, the employer
must still obtain a certificate of coverage to establish the exemption from Luxembourg
social security taxes.
The detached worker rule may apply even if the employee has not been sent directly
from one country to the other but is first assigned to work in a third country.