RS 02001.530 Rules for Non-Agricultural Self-Employment - U.S. French Agreement

A. INTRODUCTION

The agreement contains several coverage rules that may apply to the self-employed, depending on where the self-employment activity is performed.

B. POLICY PRINCIPLE

This chart shows how coverage is assigned under the agreement:

Self-employment activity is:

Coverage is assigned to country:

performed exclusively in 1 country

where work is performed

normally performed in both countries

where principal activity is performed (see RS 02001.530C.)

normally performed in 1 country but temporarily transfered to the other country

from which business was transferred, but only if:

  • period of transfer is 24 months or less (period is deemed to begin with date of transfer or July 1, 1988, whichever is later), and

  • if business transfer is from U.S. to France, worker and any family members who accompany the worker have private health insurance coverage while in France.

  • in the case of a subsequent period of self-employment in a series of transfers, at least 1 year has elapsed since the end of the most recent period of self-employment in the host country, or the period of self-employment is expected to end within 24 months of the beginning date of the first period of self-employment in the host country.

NOTE: A self-employed U.S. citizen who is subject to French law in accordance with the agreement is exempt from paying SECA tax. However, he or she is still required to file a tax return every year. When preparing the schedule SE, the individual should indicate that his or her earnings are exempt from SECA tax under the agreement and attach a copy of the certificate of coverage issued by France (see RS 02001.546) as proof of the exemption.

C. DEFINITION — PRINCIPAL ACTIVITY

The principal activity is considered to be in the country in which the worker maintains a fixed base for more than 183 days in the taxable year. If the worker maintains a fixed base in neither the United States nor France for more than 183 days, or maintains a fixed base in both countries for more than 183 days, the worker's country of principal activity will be considered the one in which he or she is physically present for the greater number of days in the taxable year.


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