In this article we will talk about a very interesting possibility that regards the possibility for American Citizens moving to Italy and working in Italy to make an election that gives them the possibility of continuing paying their Social Security in the US instead of paying to the Italian administration.
Let's see how this election works.
THE SOCIAL SECURITY AGREEMENT BETWEEN UNITED STATES AND ITALY.
The starting point of this article is the fact that Italy and the US have signed since 1971 a bilater agreement on Social Security that covers many topics, one of which is where to pay Social Security payments in case a Citizen of one of the two Countries goes to work in the other Country.
You can found resources on this agreement in the Social Security Administration site, see in particular this link:
In previous articles we have already taken into consideration the Social Security Agreement between Italy and the US:
This agreement is important as it gives the possibility to a US Citizen moving to Italy to continue paying Social Security to the US Social Security Administration in order to be able to have only one pension in the US, instead of two smaller pensions, one in Italy and the other in the States.
So this agreement is crucial as it makes the payments to Social Security Administration more efficient for reaching the goal of a future pension.
TO WHOM THIS SOCIAL SECURITY AGREEMENT APPLIES.
The second point we have to consider are the persons interested by this Social Security Agreement between Italy and the United States.
To understand this we must refer to art. 7 of the Agreement:
Art. 7 - Par. 1
"Persons to whom this Agreement applies who are employed or self-employed within the territory of one of the Contracting States shall be subject to the laws of such State, except as otherwise provided in this article."
Art. 7 - Par. 2
"Services performed by a United States national in the Italy which are covered under the laws of the United States shall remain covered under the laws of the United States".
Art. 7 - Par. 3
"Services performed by an Italian national in the United States for an Italian employer or forn an enterprise controlled by an Italian firm shall be covered under the laws of Italy".
Art. 7 - Par. 4
"a) A national of one of the States who, with respect to the same period of work, would be subject to the laws of the both States shall remain subject for such period to the laws of the State of which he is national and shall be exempt from the laws of the State of which is not national.
b) A national of Italy or a national of both States who, with respect to the same period of work, would be subject to the laws of both States shall, for such period, elect to remain subject to the laws of one of the States and shall be exempt from the laws of the other State.
c) A person who is not a national of either State and who, with respect to the same period of work, is subject to the laws of both States shall be subject, for such period, to the laws of the State in which the work si performed and shall be exempt from the laws of the other State."
Now, for the purpose of this article, we will consider the following typical cases.
The person we want to consider:
Must have US CITIZENSHIP or DUAL CITIZENSHIP;
Must have ITALIAN TAX RESIDENCE; (this is something that can be acquired by moving permanently to Italy).
Must live in: Italy;
Must be working in: Italy;
Can be an Employee: YES.
The Employer can be American: YES. (It's possible to work remotely from Italy for a US Company).
The Employer can be Italian: NO.
Can be a Self-Employment person: YES.
Self-Employment position must be opened in Italy: YES.
For more information on remote-working from Italy, please take a look at the following articles:
THE APPLICATION OF THE AGREEMENT TO THE DIFFERENT CASES
Let's see now the diffent cases and what is the Social Security that art. 7 prescribes.
CASE 1: US CITIZENS WORKING IN ITALY:
- for a US Employer: Social Security must be paid to the US.
- for an Italian Employer: Social Security must be paid to ITALY.
- as a Self-Employed person: Social Security must be paid to the US.
CASE 2: DUAL US-ITALIAN CITIZENS WORKING IN ITALY:
- as an Employee: it's possible to make an ELECTION and decide US or Italian Social Security coverage. (*)
- as a Self-Employed person: it's possible to make an ELECTION and decide US or Italian Social Security coverage.
(*): It's very uncommon the case in which a Dual Citizen working in Italy makes the election for US Social Security coverage if the Employer is Italian: this is theoretically possible, but in almost the totality of the cases this option is refused by the Italian Employer.
HOW TO MAKE THE ELECTION TO SELECT US SOCIAL SECURITY COVERAGE.
An important difference between CASE 1 and CASE 2 is that in the first case (US Citizenship) the election is not technically feasible, as it's mandatory for the US Citizen to be covered by the Social Security Administration.
In CASE 2, instead, the Election is necessary.
But the main point here is that the Election is highly suggested also in CASE 1, as it's the only way in which the US Citizen informs the Social Security Administration of his self-employment position in Italy.
Please call us or send us an email to have more information on how to make the Election. See our contacts information at the bottom of the article.
YOU MAY BE ALSO INTERESTED IN:
1) Our section of posts tagged with the keyword "TAX RESIDENCE" that you can find at the following link:
2) Our section of posts tagged with the keyword "MOVING TO ITALY" that you can find at the following link:
3) The following posts:
CONTACT US FOR MORE INFORMATION
If you need more information you can send an email to:
enrico.povolo@dottcomm.net
or make a phone call to the following number:
+39 0444 322987
Enrico Povolo