The FCN Treaty with Italy, which came into force in 1949 and amended in 1951, expressly invited the United States and the Italian Republic to begin negotiations for a bilateral social security agreement. Since there is no precedent in U.S. law or a specific authorization status, the means of concluding such an agreement were unclear. The conclusion of treaty agreements subjects them to the recommendation and approval clause of the U.S. Constitution and would require a two-thirds positive vote of the Senate in favor of ratification. This was considered unenforceable and, when the FCN Treaty with Italy was ratified on 21 July 1953, the Senate adopted a resolution stipulating that all the resulting social security agreements “are concluded by the United States only in accordance with statutory provisions.” On the contract descriptions, you will find links to online versions of our brochures that describe each of the 30 U.S. conventions, as well as the full text of each agreement. Applications should include the name and address of the employer in the United States and the other country, the full name, place and date of birth of the worker, nationality, U.S. and foreign Social Security numbers, location and date of employment, and the start and end date of the assignment abroad. (If the employee works for a foreign subsidiary of the U.S. company, the application should also indicate whether U.S.
Social Security Insurance has been agreed upon for employees of the related company pursuant to Section 3121 (l) of the internal income code.) Self-employed workers should indicate their country of residence and the nature of their self-employment. When applying for certificates under the agreements with France and Japan, the employer (or non-employee) must also indicate whether the worker and accompanying family members are covered by health insurance. Totalization agreements are popular with U.S. companies because they exempt employers from paying a dual social security tax. According to a regular study of net tax savings by the Office of International Programs of the Social Security Administration (SSA), U.S. companies and their employees save about $1.5 billion a year in foreign social taxes based on these agreements. These tax savings help make U.S. operations more profitable around the world, while improving the competitiveness of U.S. trade. The totalization agreements also excuse foreign workers temporarily sent to the United States for payment of U.S. Social Security taxes. The result is annual savings of approximately $500 million for the foreign workers involved and their employers.
These tax savings make the United States a more attractive destination for foreign capital, thereby encouraging foreign direct investment.