Identification Number:
RS 02002 TN 9
Intended Audience:See Transmittal Sheet
Originating Office:ODEPPIN
Title:International Agreements - Continued
Type:POMS Transmittals
Program:Title II (RSI)
Link To Reference:
 

PROGRAM OPERATIONS MANUAL SYSTEM
Part RS – Retirement and Survivors Insurance
Chapter 020 – Coverage Under International Agreements
Subchapter 02 – International Agreements - Continued
Transmittal No. 9, 06/25/2019

Audience

FO/TSC: CS, CS TII, CSR, CTE, DRT, FR, OA, OS, RR, TA, TSC-CSR;
PSC: CA, CS, ICDS, IES, ISRA, RECONR, SCPS, TSA, TST;
OCO-OEIO: CR, CTE, FCR, RECONR;
OCO-ODO: CR, CST, CTE, CTE TE;

Originating Component

ODEPPIN

Effective Date

Upon Receipt

Background

A Totalization agreement with Uruguay became effective November 1, 2018. This agreement has two main purposes. First, it eliminates dual social security coverage and taxation, which occurs when both the United States and Uruguay require a worker to pay social security taxes on the same earnings. Second, the agreement helps fill gaps in benefit protection for workers who divide their careers between the United States and Uruguay.

This new transmittal explains the provisions of the agreement relating to the elimination of dual social security coverage and taxes.

Summary of Changes

RS 02002.600 Agreement with Uruguay

This section explains how the agreement affects a worker’s social security coverage on or after the effective date of the agreement.

RS 02002.605 Scope of Agreement with Uruguay

This section explains what taxes are included within the scope of the agreement.

RS 02002.610 Coverage Rule for Employment under the Agreement with Uruguay

This section explains that, with limited exceptions, employment is subject only to the laws of the country where the worker performs the services.

RS 02002.615 Detached Worker Rule under the Agreement with Uruguay

This section explains that workers who are temporarily transferred to the other country are subject only to the laws of their home country.

RS 02002.620 Crews of Ships Rule under the Agreement with Uruguay

This section explains how the agreement determines social security coverage for crews of ships.

RS 02002.625 Crews of Aircraft Rule under the Agreement with Uruguay

This section explains how the agreement determines social security coverage for crews of aircraft.

RS 02002.630 Government Employee Rule under the Agreement with Uruguay

This section explains how the agreement determines social security coverage for government employees.

RS 02002.635 Self-Employment Rule under the Agreement with Uruguay

This section explains how the agreement determines social security coverage for self-employed workers

RS 02002.640 Special Exceptions to the Coverage Rules under the Agreement with Uruguay

This section explains how the agreement provides for special exceptions to the normal coverage rules.

RS 02002.645 Processing Requests for Special Exceptions under the Agreement with Uruguay

This section explains where an individual should write to request a special exception and how the U.S. and Uruguayan agencies process requests for exceptions under the agreement.

RS 02002.650 Certificates of Coverage under the Agreement with Uruguay

This section explains the purpose of and how to obtain a certificate of coverage.

RS 02002.655 How to Issue a Certificate of Coverage under the Agreement with Uruguay

This section explains the procedure for requesting and issuing a certificate of coverage from Uruguay.

RS 02002.600 U.S.-Uruguayan Agreement

A. Effective date of the U.S.-Uruguayan Agreement

The agreement with Uruguay became effective November 1, 2018.

B. Effect on coverage

If both the U.S. and Uruguayan social security systems cover a worker’s employment or self-employment, the agreement provides that beginning November 1, 2018, only one country’s system covers the worker’s employment or self-employment. The agreement does not affect a worker’s coverage prior to that date. If a worker had dually covered earnings before November 1, 2018, those earlier earnings remain subject to social security taxes in both countries.

RS 02002.605 Scope of Agreement with Uruguay

A. Policy for the United States

For the United States, the Totalization agreement applies to the Retirement, Survivors and Disability Insurance (RSDI) program (Federal Insurance Contributions Act (FICA) taxes for employment and Self Employment Contributions Act (SECA) taxes for self-employment. The agreement does not apply to Medicare provisions. If an employee is exempt from U.S. social security coverage under this agreement, neither the employee nor the employer has to pay his or her share of the FICA tax as long as the exemption is effective. A self-employed individual is also exempt from paying SECA taxes (equivalent to the employee and employer share of the FICA tax) for any period the exemption is effective.

B. Policy for Uruguay

For Uruguay, the agreement applies to the laws governing old age, disability, and death under the different schemes currently governing social insurance in Uruguay. Consequently, if a worker or self-employed person is exempt from Uruguayan coverage because of the agreement, no contributions are due for these programs.

RS 02002.610 Coverage Rule for Employment under the Agreement with Uruguay

A. Territoriality rule

Under the agreement, employment is ordinarily subject to the laws on coverage of only the country where the worker performs the work (territoriality rule). A person working in employment or self-employment who would otherwise have dual coverage under the laws of both countries will remain covered only under the laws of the country where he or she performs the work.

B. Exceptions to the territoriality rule

The agreement provides several exceptions to the territoriality rule to ensure that a worker’s coverage is under the system of the country to which he or she has the more direct connection. For more information about exceptions to the territoriality rule, see RS 02002.615 through RS 02002.640.

RS 02002.615 Detached Worker Rule under the Agreement with Uruguay

A. Definition of a detached worker

A detached worker is an employee whose employer in one country sends him or her to work temporarily in another country for the same employer or an affiliate of that employer.

B. Policy for the detached work rule

Under the agreement, a detached worker remains subject only to the social security taxation and coverage laws of the country from which the employer transferred him or her. However, the worker must meet all the following conditions:

  • The employer/worker expects the period of work in the host country to last no more than 5 years. The 5-year period begins with the date the work in the host country begins or November 1, 2018, (the effective date of the agreement), whichever is later;

  • The employment relationship existed before the employer transferred the worker from the home country; and

  • If an American employer sends an employee to the company's affiliate in Uruguay, the American employer must enter into an agreement with the Internal Revenue Service (IRS) under section 3121(l) of the IRS Code. The 3121(l) agreement provides, among other things, 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 to establish the exemption from Uruguayan social security taxes.

For more information on employment within the United States, see RS 01901.030.

For more information on employment outside the United States for an American employer, see RS 01901.050.

For more information on employment outside the United States for a foreign affiliate or subsidiary of an American employer, see RS 01901.070.

RS 02002.620 Crews of Ships Rule under the Agreement with Uruguay

Policy for crews of ships rule

A person employed as an officer or member of a crew on a U.S. or Uruguayan ship who would otherwise have dual coverage under the social security taxation and coverage laws of both the United States and Uruguay, only has coverage under the country whose flag the ship flies. The agreement states that a vessel that flies the flag of the United States is the same as an “American vessel” under the Social Security Act.

For more information on employment on American vessels and aircraft, see RS 01901.150.

For more information on employment on foreign vessels and aircraft, see RS 01901.170.

RS 02002.625 Crews of Aircraft Rule under the Agreement with Uruguay

Policy for crews of aircraft rule

A person employed as a member of the flight crew on an aircraft who would otherwise have dual coverage under the laws of both countries, will only have coverage in the country where the employer has its headquarters. However, if the employee resides in the other country, he or she will only have coverage in that country.

For more information on employment on American vessels and aircraft, see RS 01901.150.

For more information on employment on foreign vessels and aircraft, see RS 01901.170.

RS 02002.630 Government Employee Rule under the Agreement with Uruguay

A. Policy for Vienna Conventions

Under the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations, nationals of a country who work abroad in the diplomatic or consular service of their home country are exempt from social security coverage and taxes under the laws of their host country, unless they waive that exemption. The Conventions, to which both the United States and Uruguay are parties, apply to the following:

  • members of the staff of a diplomatic or consular mission, including the diplomatic, consular, administrative, and technical staffs;

  • dependents of members of those staffs;

  • the domestic service staffs of those missions; and

  • under certain conditions, the private servants employed by members of such missions.

B. Policy for agreement provisions

The agreement does not affect any exemption provided under the Vienna Conventions. The agreement establishes the following rules for government employees not covered by the Vienna Conventions:

  • U.S. nationals whom the U.S. Government or a U.S. Government instrumentality employs in Uruguay are subject to U.S. social security taxation and coverage laws only.

  • Uruguayan nationals whom the Uruguayan Government or a Uruguayan Government instrumentality employs in the U.S. are subject to Uruguayan social security taxation and coverage laws only.

For more information on employees of the Federal Government or any of its instrumentalities, see RS 01802.050.

RS 02002.635 Self-Employment Rule under the Agreement with Uruguay

A. Policy for the self-employment rule

Under the agreement, a self-employed worker who transfers his or her trade or business to the other country for a period of 5 years or less will remain covered only by the country from which he or she moved.

B. Process to establish exemption from paying U.S. social security self- employment taxes

A self-employed U.S. citizen, who is subject only to Uruguayan social security taxes and contributions under the agreement, must take the following actions to prove his or her exemption from U.S. social security self-employment tax:

  • request a certificate of coverage from the Uruguayan authorities; and

  • attach a photocopy of the Uruguayan certificate of coverage to his or her U.S. tax return every year.

For more information about obtaining a Uruguayan certificate of coverage, see RS 02002.650.

RS 02002.640 Special Exceptions to the Coverage Rules under the Agreement with Uruguay

A. Introduction to the special exception provision

The rules for eliminating dual coverage described in RS 02002.610 through RS 02002.635 cover the majority of situations where both the United States and Uruguay would otherwise cover and tax a worker. However, these rules may not cover all situations or, if applied, may have unintended results in certain cases. For this reason, the agreement includes a special exception provision.

B. Policy for obtaining a special exception

To assign a worker’s coverage other than in accordance with the normal coverage rules of the agreement, an employer or self-employed worker may request a special exception. The exception must:

  • result in coverage under the laws of either the United States or Uruguay but not both; and

  • both countries must agree to grant the exception.

If either country does not agree with granting an exception, the agreement determines the worker's coverage in accordance with the applicable coverage rule.

For more information on the general coverage rules for employment or self-employment under the agreement with Uruguay, see RS 02002.610 through RS 02002.635

 

RS 02002.645 Processing Requests for Special Exceptions under the Agreement with Uruguay

A. Process to request a special exception

An employer or self-employed worker who wishes to apply for a special exception must write to the agency in the country where the worker desires coverage.

1. United States coverage

If the worker desires U.S. coverage, send the request to:

Social Security Administration Office of Data Exchange, Policy Publications, and International Negotiations (ODEPPIN)
Attn: International Agreements
6401 Security Blvd.
4700 Annex Building
Baltimore, MD 21235

2. Uruguayan coverage

If the worker desires Uruguayan coverage, send the request to:

Banco de Previsión Social
Sector Convenios y Asunios Internacionales
Colonia 1881 piso 6,
CP, 112000
Montevideo-Uruguay

3. Contents of the letter requesting an exception

The letter requesting the exception should include:

  • an explanation of why both countries should grant an exception; and

  • all of the required information to issue a certificate of coverage (see RS 02002.655).

Upon receipt of a request for a special exception, the agency that received the request will consider it in collaboration with the other country’s agency. If both agencies approve the request for a special exception, the agency that received the request will issue a certificate of coverage. The certificate of coverage will serve as proof of exemption from coverage and taxes in the other country.

For more information on how to issue a certificate of coverage under the agreement with Uruguay, see RS 02002.655.

RS 02002.650 Certificates of Coverage under the Agreement with Uruguay

A. Purpose of the certificates of coverage

Certificates of coverage are the forms that the United States and Uruguay issue to workers who, without the agreement, would have to pay social security taxes to both countries on the same earnings. The certificate serves as proof that the worker named on the certificate is:

  • subject to the social security taxation and coverage laws of the country issuing the certificate; and

  • exempt from such laws on the same earnings in the other country.

1. United States coverage

Social Security Administration Office of Earnings and International Operations
P.O. Box 17741
Baltimore, MD 21235-7741

2. Uruguayan coverage

Banco de Previsión SocialSector Convenios y Asunios Internacionales
Colonia 1881 piso 6,
CP, 112000
Montevideo-Uruguay

RS 02002.655 How to Issue a Certificate of Coverage under the Agreement with Uruguay

A. Process for issuing certificates of coverage

The following steps describe the process for issuing a certificate of coverage:

1. The employer (in the case of employment) or the worker (in the case of self-employment) writes to the appropriate authority requesting a certificate.

NOTE: For U.S. requests, the employer or the worker's representative (attorney or accounting firm) may request the certificate on the employee’s or the worker's behalf.

NOTE: If an employee requests the certificate, we need to contact the employer to confirm the accuracy of the information provided.

2. The United States or Uruguay issues the certificate, if appropriate.

3. The issuing agency sends the original, and one copy, to the requestor.

4. The employer or worker retains the certificate and presents it to the tax authorities in the other country, if requested. If the worker is a self-employed U.S. citizen or national who is subject only to Uruguayan laws under the agreement, he or she must attach a photocopy of the Uruguayan certificate to his or her U.S. Federal income tax return for each year for which the certificate applies.

B. Procedure for issuing certificates of coverage

1. Required information for a certificate

Advise the person to provide the following information when writing to obtain a certificate of coverage:

  • full name of worker;

  • U.S. Social Security Number or the Uruguayan ID number

  • country of citizenship;

  • date and place of birth;

  • country of permanent residence;

  • name and address of employer in both countries if employed, or address or trade or business in both countries if self-employed;

  • nature of self-employed activity, if self-employed;

  • date and place of hire by employer transferring the employee, if employed; and

  • beginning and ending dates of employment or self-employment in the other country.

NOTE: If the worker is an employee of a Uruguayan affiliate of an American employer, the request must indicate whether the American employer has an agreement with the Internal Revenue Service under Section 3121(l) of the Internal Revenue Code and, if yes, the effective date of such agreement.

2. Where to send the request for certificate

Advise the person to send the request to the appropriate address:

a. For U.S. certificates

Employers and self-employed individuals may request a certificate of U.S. coverage over the Internet using a special online request form available at opts.ssa.gov or they may mail or fax the request to the following address:

Social Security Administration Office of Earnings and International Operations
P.O. Box 17741
Baltimore, MD 21235-7741
Fax: (410) 966-1861
Request online: opts.ssa.gov

NOTE: This fax number is only for requesting U.S. certificates of coverage or letters stating that workers named in the letters are exempt from foreign social security coverage and taxation.

b. For Uruguayan certificates

Banco de Previsión SocialSector Convenios y Asunios Internacionales
Colonia 1881 piso 6,
CP, 112000
Montevideo-Uruguay

RS 02002 TN 9 - International Agreements - Continued - 6/25/2019