A person whose earnings from self-employment would otherwise be subject to compulsory coverage in both the United States and Finland is subject only to the laws of the country of which that person is a resident. If any question on residence arises, the appropriate agency of the country in which the person claims residency will make residency determinations.

Since this rule applies only to U.S. or Finnish residents, it would not affect a dually covered worker who resides in a third country (e.g., a self-employed U.S. citizen who works in Finland but resides in Sweden). For this reason, the special exception provision of the agreement will eliminate dual coverage for such a worker (see RS 02001.735).

If a person who would otherwise have coverage under the laws of both countries engages in work activity, and that same activity is considered employment in one country and self-employment in the other country, the agreement assigns coverage as follows:

A self-employed U.S. citizen who is subject only to Finnish law under the agreement and is exempt from paying the Self-Employment Contributions Act (SECA) tax must still file a U.S. tax return every year.

If the person is a self-employed U.S. citizen who is a resident of Finland, the worker's self employment is subject to Finnish social security coverage law. However, that does not relieve the person of the obligation to file a U.S. tax return. To show that the self-employment earnings are exempt from SECA tax, the individual must do the following:

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  indicate on Schedule SE that the earnings are exempt under the agreement;

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  request a certificate of coverage from the Finnish authorities; and

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  attach a photocopy of the certificate of coverage issued by Finland to the U.S. tax return every year (see RS 02001.745) as proof of the exemption.

Special exception to the Coverage Rules Under U.S. - Finnish Agreement see RS 02001.735