Under the agreement, you normally pay U.S. Social Security taxes only if you work as a worker in the United States. When you work as a worker in Switzerland, you usually pay only Swiss social security contributions and neither you nor your employer pay US social security taxes. All of these agreements are based on the concept of shared responsibility. Responsibility-sharing agreements are reciprocal. Under each agreement, partner countries make concessions to their social security qualification rules so that those covered by the agreement have access to payments that they may not be eligible for. The responsibility for social security is thus distributed among the countries in which a person has lived during his or her working years and where the person is able to obtain potential rights. In general, it is possible to access a pension from one country in the second country, although the paying country retains some discretion with regard to the exchange and delivery mechanisms used. To determine your exemption from U.S.
social security contributions during temporary transactions in the United States, your employer in Switzerland must apply for a certificate of coverage (FORM CH/USA 10) from the compensation fund in Switzerland that deducts your social security fees in Switzerland. The agreement can help you, your family and your employer: if your employer sends you from one country to work for that employer or a subsidiary in the other country for five years or less, you only pay social security contributions in the country from which your employer sent you. And you don`t pay taxes in the other country. If, for example.B a U.S. employer sends a worker to work for an employer or subsidiary in Switzerland for at least five years, the employer and worker pay only U.S. social security taxes. You don`t have to pay social security contributions in Switzerland. To submit a entitlement to benefits in the United States or Switzerland as part of the agreement, follow the instructions of the „Rights to Benefits“ section. If, in most cases, your U.S. employer sends you to work in Switzerland for less than five years, you (and your employer!) contribute to the U.S.
social security system. Conversely, if you are an American who works in Switzerland for more than five years or if you have been hired in Switzerland, you contribute to the Swiss social security system. With the above information, American expatriates can take advantage of this agreement to carry out effective tax planning in Switzerland. Under U.S. law, U.S. Social Security applies to the self-employed if they are U.S. citizens or foreign aliens. The agreement says that if you are independent and live in the United States or Switzerland, the country in which you live will cover you and tax you normally. Therefore, if you are self-employed and live in the United States, you pay U.S. taxes on self-employment and you do not have to pay Swiss Social Security taxes on your self-employed income. The guarantee certificate you receive from one country indicates the effective date of your exemption from paying social security contributions in the other country.
In general, this is the start date of your temporary transfer to the other country or the start date of your self-employment. To avoid any difficulties, your employer (or you, if you are self-employed) should apply for a coverage certificate as soon as possible, preferably before starting your work in the other country. In order to regulate the social security relationship between your two countries, you agreed that if you are independent and would normally be obliged to pay social security taxes to the US and Swiss schemes, you can, in accordance with the agreement, set your exemption from one of the taxes. You can apply in one country and ask that country to consider your application as a right to benefits from the other country.