However, if Brazil has an international social security contract with the taxpayer`s country of origin, the rules set out in the treaty may be respected, which may lead to the payment of the social security contribution in a single country or the transformation of the benefits covered by the contract. John Seery: And that can cause problems in international operations. How does the totalization agreement prevent it? Recently, it was learned that the Comprehensive Social Security Agreement (SSTA) between the United States and Brazil will finally come into force on October 1, 2018. It is estimated that approximately 1.3 million Brazilians and 35,000 Americans will benefit from this agreement. There are three more. The agreement with Uruguay did not enter into force until 1 November and there is an agreement on Slovenia that will come into force on 1 February 2019. An agreement with Iceland is also being prepared. Obviously, the one with Brazil is the one that will reach the most people. The provisions of Brazil`s agreement are similar to those of most other NTSS to which the United States belongs7 As a general rule, a worker is covered by the social security system of the country in which he operates. However, when a worker normally employed in one of the contracting states of an employer established in that country is seconded to the other country for a period of five years or less, he is covered by the social security system of his country of origin. The employer of such a worker should receive a certificate of coverage from his country of origin stating that he has the right to remain covered by the system of his country of origin. Although employees already employed in the United States or Brazil are not entitled to a retroactive coverage certificate, their five-year intervention period is not considered to be in between beginnings until after the agreement with Brazil enters into force. In addition, if a worker is sent temporarily (usually up to five years) to the employer of the country of origin or a subsidiary in the other country, the worker may remain in the social security of the country of origin and benefit from an exemption from the social security tax at the place of reception.
Workers who can benefit from this exemption for “self-employed” would apply for a certificate of coverage from their social security administration in their country of origin. BOB ROTHERY: Therefore, if a person can be subject to social security tax, both in the countries of origin and in the host countries, the agreement determines the country responsible for taxation. So, in general, this is the country in which the person works. For example, a U.S. person working in Brazil is generally exempt from FICA and is subject to social security tax in Brazil. Well, that`s true. There are certain transitional rules that people have to follow when a new agreement comes into force. But the first thing to understand is that the agreement is not retroactive. A person who has paid social security tax in both countries is not entitled to the tax tax refund for — before the agreement comes into effect. Under Brazil`s social security system, a worker who stops contributing to the plan before claiming a benefit may lose the entitlement to benefits unless the worker resumes contributions for certain periods.
As a result, a worker can contribute to the Brazilian system for many years, but is not entitled to benefits, since the worker recently has little or no health insurance.