TN 1 (09-05)
RS 02002.065 Detached Worker Rule under the Agreement with Japan
A. Definition – Detached Worker
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 country.
Under the agreement, a detached worker remains subject only to the 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:
The period of work in the host country is expected to last no more than 5 years. The 5-year period begins with the date the work in the host country begins or October 1, 2005 (the effective date of the agreement) whichever is later.
The employment relationship (in the case of employment) or the business activity (in the case of self-employment) existed before the worker is transferred 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 Japan, the American employer must have entered into an agreement with the Internal Revenue Service under section 3121(l) of the Internal Revenue Code to provide Social Security coverage for U.S. citizens and residents employed by the affiliate. In such cases, the employer must still obtain a certificate of coverage from SSA to establish the exemption from Japanese Social Security taxes.
NOTE: 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.
2. Family Members of Detached Workers Going to Japan
Any family members who are not Japanese nationals and who accompany an exempted worker to Japan will be subject only to U.S. law and will be exempt from Japanese laws, unless he or she requests otherwise.
Any family members who are Japanese nationals and who accompany the exempted worker to Japan will have his or her coverage determined in accordance with Japanese laws.
RS 01901.070, Agreement under Section 3121(l) of the Internal Revenue Code
RS 01901.050C, American employer defined
RS 02002.095, Certificates of coverage under the Agreement with Japan