TN 49 (09-22)

RS 02001.475 Self-Employment Rule - U.S. Spanish Agreement

The agreement also includes a rule that eliminates dual coverage of self-employment income by assigning coverage to the country in which the worker is a resident. Under this rule, a self-employed U.S. resident whose earnings would otherwise be compulsorily covered under both U.S. and Spanish law is covered only by the U.S. Similarly, a dually covered Spanish resident is covered only by Spain. (See GN 01702.230 concerning determinations of residence.)

In accordance with this rule, a self-employed U.S. citizen who is a resident of Spain is covered only under Spanish law. Although the person is exempt from paying U.S. SECA tax in this situation, the person is still required to file a U.S. income tax return. In preparing the Schedule SE, the individual should indicate that the earnings are exempt from SECA tax under the agreement and attach a copy of the certificate of coverage issued by Spain (see RS 02001.485) as proof of the exemption.