Identification Number:
RS 02002 TN 11
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. 11, 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

Background A Totalization agreement with Brazil became effective October 1, 2018. 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 Brazil, or vice versa, and is required to pay social security taxes to both the United States and Brazil 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 Brazil. 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 01757.000.

Summary of Changes

RS 02002.400 U.S. -- Brazilian Agreement

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

RS 02002.405 Scope of Agreement with Brazil

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

RS 02002.410 Coverage Rule for Employment under the Agreement with Brazil

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

RS 02002.415 Detached Worker Rule under the Agreement with Brazil

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 02002.420 Crews of Ships Rule under the Agreement with Brazil

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

RS 02002.430 Government Employee Rule under the Agreement with Brazil

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

RS 02002.435 Self-Employment Rule under the Agreement with Brazil

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

RS 02002.440 Special Exceptions to the Coverage Rules under the Agreement with Brazil

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 02002.450 Certificates of Coverage under the Agreement with Brazil

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 02002.400 Effective Date of the U.S.-Brazilian Agreement / Effect on Coverage

A. Effective Date of Brazilian Agreement

The agreement with Brazil became effective on October 1, 2018.

B. Effect on Coverage

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

RS 02002.405 Scope of the U.S.-Brazilian Agreement

A. Policy for the United States

For the United States, the agreement applies to the Retirement, Survivors, Disability (RSDI) program, 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 nor the employer has to pay his or her share of the FICA tax as long as the exemption is effective. A self-employed person is also exempt from paying the SECA taxes (equivalent to the employee and employer share of the FICA tax) for any period the exemption is effective.

B. Policy for Brazil

For Brazil, the agreement applies to the laws governing old-age, survivors, and disability benefits insurance programs of two branches of the social security system: the General Regime of Social Security (RGPS) and the Regime of Social Security of Public Servants (RPPS). Consequently, if a worker is exempt from Brazilian coverage because of the agreement, no contributions are due for these programs.

 

RS 02002.410 General Coverage Rule for Employment U.S.-Brazilian 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 otherwise would have dual coverage under the laws of both countries, will remain covered under the system of the country where the worker is working.

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 the worker has the more direct connection.

B. Reference

For exceptions to the Territoriality Rule for Employment, refer to RS 02002.415 through RS 02002.420.

RS 02002.415 Detached Worker Rule - U.S.-Brazilian Agreement

A. Definition of detached worker

A detached worker is an employee sent by an employer in one country to work temporarily in another country for the same employer or for an affiliate of that employer.

B. Detached worker 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 October 1, 2018 (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 Brazil, 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, for 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 Brazilian social security taxes.

C. Reference

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

 

RS 02002.420 Coverage Rules for Crews of Ships and Aircraft U.S.-Brazilian 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 aircraft

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 Brazil, will have coverage only in the country where the employer has its headquarters.

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

C. Reference

RS 02002.430 Rule for Government Employees-U.S. Brazilian Agreement

A. Vienna Conventions

Nationals of a country who work abroad in the diplomatic or consular services of their home country are exempt from social security coverage and taxes under the laws of the host country under the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations, unless that exemption is waived by the host country. The Conventions, to which both the United States and Brazil are parties, apply to the following:

  • members of the staff of a diplomatic or consular mission, including members of the administrative and technical staffs, members of consular posts and family members of such staff who form part of their households,

  • the domestic service staffs of the mission; and

  • private servants whom the members of such missions employ.

B. Agreement provisions

1. General

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 employed by the U.S. Government or U.S. Government instrumentality in Brazil are subject to U.S. Social Security taxation and coverage laws only.

  • Brazilian nationals employed by the Brazilian Government or Brazilian Government instrumentality in the United States are subject to Brazilian 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. Brazilian Government employee

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

C. Reference

U.S. citizens employed by foreign governments, refer to RS 01802.050.

RS 02002.435 Coverage Rule for Self-Employment - U.S.-Brazilian Agreement

A. Self-employment rule

Under the agreement, a self-employed worker is generally subject only to the social security laws of the country in which the worker performs the work. However, the agreement provides for an exception from the place-of-work coverage if a person transfers self-employment activity from one country to the other for five years or fewer. In the case of a temporary transfer of work for five years or fewer, the self-employment activity remains subject to the social security laws of the country from which the worker transferred the activity, and is exempt from social security coverage and taxation in the other country where the worker temporarily performs the work.

B. Filing Obligation

A self-employed U.S. citizen, who is subject only to Brazilian 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 Brazilian authorities; and

  • attach a photocopy of the Brazilian certificate of coverage to his or her U.S. tax return every year (refer to RS 02002.450) as proof of the exemption.

RS 02002.440 Special Exceptions to the Coverage Rules under the Agreement with Brazil

A. Intent of special exception provision

The rules for eliminating dual coverage described in RS 02002.410 through RS 02002.435 cover the majority of situations where both the United States and Brazil 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 exception

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.-Brazilian agreement (refer to RS 02002.450); 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 Brazilian coverage should write to the address below:

APSAIBH - Social Security Agency Attendance of International Agreements – Belo Horizonte
Av. Amazonas nº 266, 9º andar, Ala “A”
Centro, Belo Horizonte - MG -
CEP: 30180-001
BRAZIL

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 02002.450 Certificates of Coverage - U.S.-Brazilian Agreement

A. Purpose of certificates of coverage

Certificates of coverage are the forms that the United States and Brazil issue to workers, who would otherwise 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.

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. Brazilian Coverage

The APSAIBH - Social Security Agency Attendance of International Agreements – Belo Horizonte issues certificates of Brazilian coverage. Their contact information is below:

APSAIBH - Social Security Agency Attendance of International Agreements – Belo Horizonte
Av. Amazonas nº 266, 9º andar, Ala “A”,
Centro Belo Horizonte - MG -
CEP: 30180-001
Brazil

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 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. Brazilian certificate of coverage

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

APSAIBH - Social Security Agency Attendance of International Agreements – Belo Horizonte
Av. Amazonas nº 266, 9º andar, Ala “A”,
Centro Belo Horizonte - MG -
CEP: 30180-001
Brazil

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;

  • U.S. Social Security number when requesting a U.S. certificate or the Brazilian social security number (Cadastro de Pessoa Físicas (CPF) or the Brazilian Workers Identification Number (NIT)) when requesting a Brazilian 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 is an employee of a Brazilian 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 an agreement

E. Processing requests for certificates of coverage

OEIO or the Brazilian 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 Brazil issues the certificate, if appropriate.

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

4. The employer 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 Brazilian laws under the agreement, the self-employed worker must attach a photocopy of the Brazilian certificate of coverage to the Schedule SE filed with the U.S. income tax return each year.

 


RS 02002 TN 11 - International Agreements - Continued - 8/15/2019