Under totalization agreements, where is the employee generally taxed?

Under totalization agreements, where is the employee generally taxed?

• A. Only by the jurisdiction where services are performed
• B. Equally by both jurisdictions
• C. Only by the host jurisdiction
• D. By the employer's home country

Answer: (A)

Totalization agreements are designed to prevent double social security taxation when someone works across borders. The standard rule is that social security taxes are due only to the country where the employee actually performs the work. This keeps contributions from being paid to two systems for the same earnings and aligns coverage with where services are rendered. There can be exceptions for specific assignments under the agreement, but as a general principle the tax/withholding for social security goes to the jurisdiction of the work location, not the host country or the employer’s home country.

Totalization agreements are designed to prevent double social security taxation when someone works across borders. The standard rule is that social security taxes are due only to the country where the employee actually performs the work. This keeps contributions from being paid to two systems for the same earnings and aligns coverage with where services are rendered. There can be exceptions for specific assignments under the agreement, but as a general principle the tax/withholding for social security goes to the jurisdiction of the work location, not the host country or the employer’s home country.