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Totalization Agreement Hong Kong

By April 13, 2021 No Comments

The agreements also have a positive effect on the profitability and competitive position of companies operating abroad by reducing their business costs abroad. Companies with staff stationed abroad are encouraged to use these agreements to reduce their tax burden. One of the general beliefs about the U.S. agreements is that they allow dual-coverage workers or their employers to choose the system to which they will contribute. That is not the case. The agreements also do not change the basic rules for covering the social security legislation of the participating countries, such as those that define covered income or work. They simply free workers from coverage under the system of either country if, if not, their work falls into both regimes. Hong Kong (SAR) continues to develop its network of global double taxation conventions. When a double taxation agreement is in effect, a worker may apply for a full exemption from payroll tax or tax relief as part of the corresponding agreement.

Most U.S. agreements eliminate dual coverage of autonomy by allocating coverage to the worker`s country of residence. For example, under the US-Swedish agreement, an American citizen living in Sweden and living in Sweden is covered only by the Swedish system and is excluded from US coverage. Under certain conditions, a worker may be exempt from coverage in a contracting country, even if he or she has not been transferred directly from the United States. For example, if a U.S. company sends an employee to its New York office to work for 4 years in its Hong Kong office, and then re-opens the employee for an additional 4 years in its London office, the employee may be a member of Social Security under the U.S.U.K. agreement. The rule for the self-employed applies in cases such as this, provided the worker has been seconded from the United States and is under U.S.

Social Security for the entire period prior to the transfer to the contracting country. International social security agreements are beneficial for both those who work today and those whose careers are over.