TN 2 (10-08)
RS 02002.105 Scope of Agreement with Denmark
A. Policy for the United States (U.S.)
For the U.S., the agreement applies to Social Security taxes related to the retirement, survivors, disability and health insurance (RSDHI) programs (i.e., Federal Insurance Contributions Act (FICA) taxes for employment and Self-employment Contributions Act (SECA) taxes for self-employment, including the Medicare portion). Thus, if an employee is exempt from U.S. Social Security coverage under this agreement, neither the employee or employer has to pay their share of the FICA tax with respect to that employee for any period the exemption is effective. A self-employed person is also exempt from paying the SECA taxes (same as to the employee and employer share of the taxes) for any period the exemption is effective.
B. Policy for Denmark
For Denmark, the agreement applies to taxes that finance:
retirement, survivors and disability benefits,
work accident, and
family allowance benefits.
Consequently, if a worker is exempt from Danish coverage as a result of the agreement, no contributions are due for these programs.