TN 15 (02-95)
RS 02001.625 Coverage Rule for Self-Employment - U.S. Dutch Agreement
Generally, a work activity which is considered to be self-employment under U.S. Social Security law is also considered to be self-employment under Dutch law. In certain cases, however, a person may be engaged in a work activity that is considered self-employment in one country but employment by the other. For example, ordained ministers and members of a board of directors are usually considered self-employed under U.S. law but are usually employees under Dutch law. The following subsections explain how coverage is assigned in each situation.
B. POLICY - ACTIVITY CONSIDERED SE IN BOTH COUNTRIES
If the work activity is considered self-employment under the laws of both countries, the worker will be covered only by the country of which he or she is a resident.
C. POLICY - ACTIVITY CONSIDERED SE IN ONLY ONE COUNTRY
If the work activity is considered self-employment under the laws of one country and employment under the laws of the other, the worker's coverage is determined as follows.
A worker who is a resident of the country which considers the activity to be self-employment is covered under the laws of that country.
A worker who is not a resident of the country which considers the activity to be self-employment is subject to the agreement rules on employment. Thus, the worker is covered under the laws of the country where the work is performed in accordance with the territoriality rule described in
RS 02001.610 - RS 02001.612, or under the laws of the
country from which the worker was transferred for less than 5 years as described in RS 02001.614.
D. POLICY - SE U.S. CITIZEN SUBJECT TO DUTCH LAW
A self-employed U.S. citizen who is subject only to Dutch law under the agreement and is exempt from paying SECA tax must still file a tax return every year. When preparing the schedule SE to determine the amount of the SECA tax, the worker must indicate that the earnings are exempt under the agreement and attach a photocopy of the certificate of coverage issued by the Netherlands (see RS 02001.640) as proof of the exemption.