TN 17 (06-97)
RS 02001.115 Detached Worker Rule Under the U.S. - German Agreement
A detached worker is:
in the case of employment, an employee who is sent by his or her employer in one country to work temporarily in the other country for the same employer or an affiliate of that employer, or
in the case of self-employment, a self-employed worker who temporarily transfers his or her business from one country to the other.
B. POLICY - INITIAL DETACHMENT
Under the agreement, a detached worker remains subject only to the Social Security laws of the country from which he or she was sent or from which the self-employment activity was transferred provided all of the following conditions are met.
For transfers beginning on or after May 1, 1996, the period of work in the host country is expected to last no more than 5 years.
For transfers beginning prior to May 1, 1996, the period of work in the host country is not expected to be permanent.
The employment relationship in the case of employment, or the business activity in the case of self-employment, existed before the transfer from the home country.
In the case of employment, if an employee is sent by an American employer to become an employee of the company's affiliate in Germany, the American employer must have entered into an agreement under section 3121(l) of the Internal Revenue Code to provide Social Security coverage for U.S. citizens and U.S. residents employed by the affiliate.
NOTE: In such cases, the employer must still obtain a certificate of coverage from SSA to establish the exemption from German Social Security taxes.
The detached worker rule may apply even if the worker does not go directly from one country to the other but first works in a third country.
C. POLICY - SERIES OF DETACHMENTS
Beginning May 1, 1996, if an employer in one country sends the same employee to work in the other country on more than one occasion, the detached worker rule will apply to that employee for the second and any subsequent assignment only if:
that assignment is expected to end within 5 years of the beginning date of the original assignment, or
at least 1 year has elapsed since the ending date of the most recent assignment.
The same conditions apply to self-employed persons who transfer their business activity from one country to the other more than once. The detached worker rule will apply to the second and any subsequent periods of self-employment in the other country only if that period of self-employment is expected to end within 5 years of the beginning date of the first period, or if at least 1 year has elapsed since the end of the most recent period.
Prior to May 1, 1996, the agreement did not include a specific rule applicable to successive assignments or periods of self-employment in the other country.