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.

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:

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

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  request a certificate of coverage from the Brazilian authorities; and

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  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.