A self-employed person would otherwise be subject to compulsory coverage in both the United States and Switzerland is subject only to the laws of the country of which the 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 Swiss 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 Switzerland but resides in France). For this reason, the special exception provision of the agreement will eliminate dual coverage for such a worker (see RS 02001.180).

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

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  If the worker is a resident of the country that considers the work to be self-employment, then coverage is subject to the laws of the country of residence.

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  In any other case, coverage is subject to only the laws of the other country.

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

To show that 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 Swiss authorities; and,

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  attach to the U.S. tax return every year (see RS 02001.190) as proof of the exemption a photocopy of the certificate of coverage Switzerland issues.

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  RS 02001.180 Special Exceptions to the Coverage Rules under the U.S. - Swiss Agreement

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  RS 02001.190 Certificates of Coverage under the U.S. - Swiss Agreement