Identification Number:
RS 02002 TN 10
Intended Audience:See Transmittal Sheet
Originating Office:ORDP 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. 10, 08/15/2019

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 Slovenia became February 1, 2019. This agreement has two main purposes. First, it eliminates dual social security coverage and taxation, the situation that occurs when a worker from the United States works in Slovenia, or vice versa, and is required to pay social security taxes to both the United States and Slovenia on the same earnings. Second, the agreement helps fill gaps in benefit protection for workers who have divided their careers between the United States and Slovenia.

This transmittal explains the provisions of the agreement relating to the elimination of dual social security coverage and taxes. Agreement provisions relating to the payment of benefits are found in subchapter GN 01770.000.

Summary of Changes

RS 02002.700 Effective Date U.S.-Slovene Agreement/ Effect on Coverage

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

RS 02002.705 Scope of U.S.-Slovene Agreement

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

RS 02002.710 General Coverage Rule for Employment- U.S.-Slovene Agreement

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

RS 02002.715 Detached Worker Rule - U.S.-Slovene Agreement

This new section explains what happens when workers are temporarily transferred between two countries and are subject only to the laws of their home country.

RS 02002.720 Coverage Rules for Crews of Ships and Aircraft U.S.-Slovene Agreement

This new section explains how the social security coverage of crews of ships is determined under the agreement.

RS 02002.730 Rule for Government Employees- U.S.-Slovene Agreement

This new section explains how social security coverage of government employees is determined under the agreement.

RS 02002.735 Coverage Rule for Self-Employment - U.S.-Slovene Agreement

This new section explains how social security coverage of self-employed workers is determined under the agreement.

RS 02002.740 Special Exceptions to the Coverage Rules - U.S.-Slovene Agreement

This new section explains that, by mutual consent, the two countries can permit special exceptions to the normal coverage rules under the agreement where application of those rules would have an unintended or anomalous result.

RS 02002.750 Certificates of Coverage - U.S.-Slovene Agreement

This new section explains how a country issues a certificate of coverage, when that country agrees to cover the worker. The certificate serves as proof of exemption from social security coverage and taxes in the other country.

RS 02002.700 Effective Date of the U.S.-Slovene Agreement / Effect on Coverage

A. Effective Date of Slovene Agreement

The agreement with Slovenia became effective on February 1, 2019.

B. Effect on Coverage

If both the U.S. and Slovene social security systems cover a worker’s employment or self-employment, the agreement provides that beginning February 1, 2019, 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 February 1, 2019, those earlier earnings were and would continue to be subject to social security contributions in both countries.

 

RS 02002.705 Scope of the U.S.-Slovene Agreement

A. Policy for the United States

For the United States, the agreement applies to the Retirement, Survivors and Disability Insurance (RSDI) program's Federal Insurance Contributions Act (FICA) taxes for employment and Self Employment Contributions Act (SECA) taxes for self-employment, including the Medicare portion. If an employee is exempt from U.S. Social Security coverage under this agreement, neither the employee nor 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 Slovenia

For Slovenia, the agreement applies to taxes that finance old-age retirement, survivors, disability, health insurance, sickness and maternity, work injury, and unemployment programs. A worker subject only to U.S. laws under the coverage provisions of this agreement and his or her employer will be exempt from making contributions for all mandatory Slovene benefit and pension programs.

 

RS 02002.710 General Coverage Rule for Employment- U.S.-Slovene Agreement

A. General Territoriality Rule

1. General 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.

2. 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.

B. Reference

RS 02002.715 through RS 02002.740 - exceptions to the Territoriality Rule for Employment.

RS 02002.715 Detached Worker Rule- U.S.-Slovene Agreement

A. Definition of 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. Detached worker rule

Under the agreement, a detached worker remains subject only to the social security 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 February 1, 2019, (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 Slovenia, 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 Slovene social security taxes.

C. Reference

RS 01901.070 For more information on coverage agreements under Section 3121(l) of the Internal Revenue Code.

 

RS 02002.720 Coverage Rules for Crews of Ships and Aircraft U.S.-Slovene Agreement

A. Coverage rules for crews of ships

A person employed on a ship who otherwise has dual coverage under the social security taxation and coverage laws of both countries will only have coverage under the laws of the country whose flag the ship flies.

B. Coverage rules for crews of aircrafts

A person employed as an officer or member of the crew on an aircraft who would otherwise have coverage under the laws of both the United States and Slovenia, will have coverage only in the country where the employer has its headquarters.

EXCEPTION: A person sent by a Slovene air transport organization to work as ground personnel in the United States will have coverage only under Slovene laws, regardless of the length of transfer.

C. Reference

RS 02002.730 Rule for Government Employees - U.S.-Slovene Agreement

A. Vienna Conventions

The Vienna Conventions provide that in general, nationals of a country who work abroad in the diplomatic or consular services of their country are exempt from social security coverage and contributions under the host country's laws unless the host country specifically waives that exemption.

The Conventions, to which both the United States and Slovenia are parties, apply to:

  • 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. Agreement provisions

1. General

The agreement does not affect the coverage of U.S. or Slovene Government employees to whom the Vienna Conventions apply. They remain exempt from coverage in the host country.

The agreement establishes the following rules for government employees not covered by the Vienna Conventions:

  • U.S. nationals employed by the U.S. Government or a U.S. Government instrumentality in Slovenia are subject to U.S. Social Security taxes and coverage laws only.

  • Slovene nationals employed by the Slovene Government or a Slovene Government instrumentality in the United States are subject to Slovene social security taxation and coverage laws only.

2. Definitions

a. U.S. Government employee

For purposes of applying this provision of the agreement, the phrase "U.S. Government employee" means employees of the Federal Government or any of its instrumentalities.

b. Slovene Government employee

For purposes of applying this provision of the agreement, the phrase "Slovene Government employee" means employees of Slovenia.

C. Reference

RS 01802.050 U.S. citizens employed by foreign governments.

 

 

RS 02002.735 Coverage Rule for Self-Employment - U.S.-Slovene Agreement

A. Resident Rule

A person whose earnings from self-employment would otherwise be subject to compulsory coverage in both the United States and Slovenia is subject only to the laws of the country of which he or she is a resident.

B. Filing Obligation

A self-employed U.S. citizen, who is subject only to Slovene social security taxes and contributions under the agreement and is exempt from paying Self-Employment Contributions Act (SECA) tax must still file a U.S. tax return every year. To show that the self-employment earnings are exempt from U.S. Social Security self-employment tax, the individual must do the following:

  • indicate on Schedule SE that the earnings are exempt under the agreement;

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

  • attach a photocopy of the Slovene certificate of coverage to his or her U.S. tax return every year (refer to RS 02002.750) as proof of the exemption.

RS 02002.740 Special Exceptions to the Coverage Rules - U.S.-Slovene Agreement

A. Intent of special exception provision

The rules for eliminating dual coverage described in RS 02002.710 through RS 02002.735 cover the majority of situations where both the United States and Slovenia would otherwise cover and tax a worker in the absence of an agreement. However, sometimes the application of the normal agreement rules would yield anomalous or inequitable results. For this reason, the agreement includes a provision that permits the authorities in both countries to grant exceptions to the normal coverage rules of the agreement if both sides agree.

The intent of the exception provision is not to provide workers or employers with the freedom to elect coverage in conflict with normal agreement rules. The purpose of the special exception provision is to allow a worker to continue coverage in the country where he or she normally works and has coverage, in order to ensure that he or she will meet eligibility requirements for retirement or disability benefits.

B. Consensus requirement for special exceptions

An employee, employer or self-employed person may request a special exception to the normal coverage rules of the agreement. Both countries must agree to the special exception and agree on the country of coverage. If either country does not agree with a proposed exception, the applicable coverage rule of the agreement determines the worker's coverage.

C. How to request special exceptions

A worker or employer who wishes to apply for a special exception writes to the designated agency in the country where the worker wishes to remain covered. The letter should:

  • give all the information necessary to issue a certificate of coverage under the U.S.-Slovene agreement (refer to RS 02002.750); and

  • explain why a special exception should be granted.

Individuals wishing to request an exception granting U.S. coverage should write to the following address:

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

Individuals wishing to request an exception granting Slovene coverage should write to the address below:

Ministry of Labour, Family, Social Affairs
and Equal Opportunities
Kotnikova 28
1000 Ljubljana
SLOVENIA

Upon receipt of a request for a special exception, the agency that receives 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 receives 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.

RS 02002.750 Certificates of Coverage - U.S.-Slovene Agreement

A. Purpose of the certificates of coverage

Certificates of coverage are the forms that the United States and Slovenia 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 social security coverage and contributions on the same earnings in the other country.

B. Issuing agency

1. United States Coverage

The Social Security Administration (SSA) issues certificates of U.S. Coverage. Their contact information is below:

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

2. Slovene coverage

The Slovene Ministry of Labour, Family, Social Affairs and Equal Opportunities issues certificates of Slovene coverage. Their contact information is below:

Ministry of Labour, Family, Social Affairs and Equal Opportunities
Kotnikova 28
1000 Ljubljana
Slovenia

C. Requesting a certificate of coverage

1. United States certificate of coverage

Advise inquirers that to obtain a certificate of coverage from the United States, they should contact SSA at:

Social Security Administration Office of Earnings and International Operations (OEIO)
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.

2. Slovenian certificate of coverage

Advise inquirers that to obtain a certificate of coverage from Slovenia, they should contact:

Ministry of Labour, Family, Social Affairs and Equal Opportunities
Kotnikova 28
1000 Ljubljana
Slovenia

D. Required information when making a request

Advise inquirers that when writing to obtain a certificate of coverage, they should provide the following information:

  • full name;

  • Social Security number (U.S. number for U.S. certificate and Slovene Number for Slovene certificate);

  • country of citizenship;

  • date and place of birth;

  • country of permanent residence;

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

  • date and place of hire by sending company, if employed; and

  • beginning date and ending date (if known) of employment or self-employment in the other country

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

E. Processing requests for certificates of coverage

OEIO or the Slovene authority takes the following steps to issue a certificate of coverage:

1. The employee, 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 requests for U.S. certificates of coverage, the employer’s representative (attorney, accounting firm, employer services firm, etc.) or worker's representative may request the certificate on the employer's or worker's behalf. If an employee requests the certificate, OEIO will need to contact the employer to confirm the accuracy of the information provided.

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

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

4. The employer, employee or worker presents the certificate to the tax authorities in the other country upon request.

5. If the worker is a self-employed U.S. citizen or national who is subject only to Slovene laws under the agreement, the self-employed worker must attach a photocopy of the Slovene certificate of coverage to the Schedule SE filed with the U.S. income tax return each year.

 


RS 02002 TN 10 - International Agreements - Continued - 8/15/2019