This Article begins with a discussion of the general application of FICA, SECA, and FUTA to nonresident aliens. Knowledge of the ordinary United States employment taxation scheme is necessary for an understanding of how the totalization agreement works.
The second part of this Article explains how totalization agreements between the United States and certain foreign countries--including the Federal Republic of Germany--have altered the United States employment taxation of nonresident aliens. These agreements generally provide the following: (1) the foreign worker and employer may pay taxes and receive benefits from either the home country or the temporary host country, but in no case will the employee and employer be forced to pay double employment taxes; (2) a period of time in the host country during which the foreign employee and employer pay employment taxes to the host country is counted as a period of eligibility towards benefits in the home country; and (3) a formula that determines the computation of partial or "totalized" benefits by each country representing the period the employee actually paid into that country's social security system. The second part of this Article also includes a detailed discussion of how the German-United States Totalization Agreement changes the ordinary application of United States employment taxes for German nationals working in the United States.
The final section of this Article presents some general planning considerations for German corporate employers sending their employees to the United States in minimizing taxation for employee and employer and maximizing benefits for the employee.
John L. Gornall, Jr. and Kevin Conboy,
United States Employment Taxation of German Nationals Working in the United States,
16 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol16/iss2/2