Deductions from earned income are made under the Pay-for-Pay (PAYE) system. If a South African-based employer or representative employer pays or is required to pay taxable remuneration to a person, paye withholding tax is required on a monthly basis. Some social security contributions, as mentioned above, are also payable monthly. These exceptions, which are based on the country of nationality or nationality of the employee, are provisions of the Social Security Act. In most cases, tabulation agreements further expand the portability of benefits based on residence. The partner country will also consider periods of insurance in the United States to qualify for a benefit in similar circumstances. Most countries require an employee to have at least 1 year of national coverage to qualify for totalization benefits. In addition, an employee`s combined coverage periods in the United States and their national country must meet or exceed the legal minimum applicable in that country. The minimum duration of combined coverage that a worker must earn for aggregation varies from country to country. For example, Switzerland requires 1 year, Hungary 20 years and Japan 25 years (SSA 2016, 2017). The totalization agreements relieve American workers and their employers of the burden of contributing to the social security systems of two countries. Under these agreements, U.S. employers and employees contribute to the U.S.

or foreign social security system, but not both, depending on the length of their stay in the country where they work. Former South African residents returning to South Africa may not be eligible for alien status under exCon regulations unless they have formally applied for and received emigration facilities from the Reserve Bank, but this Excon emigration concept will expire on 1 March 2021. In these cases, advice should be sought to ensure that there is no ”failed emigration”. If the transferee has to contribute to social security in more than one country or has to contribute a higher total amount than if he had remained in the country of origin, the employer must consider covering these additional costs on behalf of the employee. In addition to the contribution dilemma, the employer must also decide how to handle the situation if the expatriate loses his rights to benefits as a result of the assignment abroad. Under all but one of the agreements currently in force, a ”temporary” contract cannot last more than five years. The agreement with Italy allows fixed-term contracts for an indefinite period. A common misconception about the U.S.

agreements is that they allow dually insured workers or their employers to choose the system to which they will contribute. This is not the case. Nor do the agreements change the basic coverage provisions of the social security laws of the participating countries – such as those that define income or insured work. They exempt workers from coverage under the scheme of one country or another only if their work would otherwise fall under both schemes. Four new Social Security ”totalization agreements” have recently entered into force between the United States and four countries: with Brazil on October 1, 2018 [83 F.R. 52298], with Iceland on March 1, 2019, with Slovenia on February 1, 2019 [83 F.R. 64631], and with Uruguay on November 1, 2018 [83 F.R. 53936].

Although agreements aim to allocate social security coverage to the country where the employee has the most important ties, unusual situations sometimes occur in which strict application of the rules of the agreement would lead to abnormal or unfair results. For this reason, each agreement contains a provision that allows the authorities of both countries to grant exceptions to the normal rules if both parties agree. An exemption could be granted, for example, if the foreign representation of a U.S. citizen was unexpectedly extended by a few months beyond the 5-year limit under the draw rule. In this case, the employee could be granted continuous U.S. coverage for the additional period. If a U.S. employer sends a U.S.

citizen or a resident alien to work in a foreign country that does not have a tabulation agreement with the United States, the U.S. employer and employee are generally required to pay Social Security taxes to both countries. However, if a U.S. employer sends a U.S. citizen or foreigner residing to work in a foreign country with which the U.S. has a totalization agreement, a double-tax exemption on Social Security is granted. In general, tabulation agreements stipulate that the payment of double social security contributions is particularly costly for companies that offer ”fiscal equalization schemes” for their foreign employees. A company that sends an employee to another country often guarantees that the order will not result in a reduction in the employee`s after-tax income. Employers with tax equalization programs therefore generally agree to pay both the employer`s and the employee`s share of social security taxes on behalf of their transferred employees. The United States has agreements with several countries, called tabulation agreements, to avoid double taxation of income in terms of social security taxes. These agreements should be considered in determining whether a foreigner is subject to U.S.

Social Security/Medicare tax or whether a U.S. citizen or resident alien is subject to a foreign country`s social security taxes. The enabling legislation contained in the 1977 amendments is section 233 of the Social Security Act (42 U.S.C§ 433),13 which allows the president to enter into bilateral tabulation agreements with countries that have a social security system similar to that of the United States. Section 233 establishes totalization agreements as agreements between Congress and the executive branch that have essentially the same legislative force as treaties, but do not require full ratification by the Senate. For an agreement to enter into force, the President must submit it to Congress, where he must rest for 60 days before both chambers, during which one or both chambers meet; this period must elapse without either House adopting a resolution of disapproval. Depending on the country of origin and the host country, social security contributions can become a very expensive aspect of a mission abroad. Due to the many aggregation agreements that set specific conditions, confusion about social security contributions and entitlements to benefits – as well as employer costs – has gradually diminished, but the subject still often requires the advice of professionals with expertise in the field. Under these agreements, double coverage and double contributions (taxes) for the same work are eliminated. Agreements usually ensure that you pay social security taxes to a single country. Expats with additional tax preparation questions for US expats, FATCA, FBAR, PFIC or other overseas tax issues should contact an expatriate tax CPA who has helped expats in South Africa.

Artio Partners` international tax experts are satisfied with various tax issues for expats. To date, the United States has entered into tabulation agreements with 28 countries; 3 additional agreements have been signed but are not yet in force. A list of all tabulation agreements can be found in Appendix C. On the contrary, for social security purposes, the administrator is considered an ”individual taxpayer” and his Contributions to Brazilian Social Security must be deducted monthly from his local compensation through the local source of payment. .