Social Security taxes/totalization agreement (Part I)

TO: H.E. Ambassador Rachad Bouhlal

From: Ed Gabriel

RE: Eliminating Duplicate Social Security Payments

Mr. Ambassador

This document provides the background on the need to promote the adoption of a “totalization” agreement between Morocco and the US in order to eliminate duplicate social security payments for US employees residing in Morocco for more than six months. 

I have also attached a copy of the Social Security Administrations (SSA) Totalization Agreement with Spain which clarifies what type of clauses are included in such agreements.

I appreciate your attention to this concern and look forward to discussing it in detail with you.

Regards,

Ed

Morocco US Totalization Alliance (MUSTA)

To eliminate duplicate social security payments

Overview

With increased prospects for a greater number of US citizens working in the Kingdom of Morocco, US employers with operations in Morocco, whether corporate or NGO, have expressed increased concern with regard to ensuring that the tax consequences for the employer and employees are dealt with equitably. Morocco has a tax agreement with the United States (Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income – signed in Rabat 1 August 1977, and Related Exchanges of Notes), but it does not apply to the estate, gift, and generation-skipping transfer taxes, the Windfall Profits Tax, Federal unemployment taxes, social security taxes, or excise taxes on premiums paid to foreign insurers. Therefore, US expatriates must conform to Moroccan social security laws and US employers are required to register their employees with the Caisse National de Securite Sociale (CNSS) and pay social security taxes on the basis of an employee’s gross salary and other benefits granted to the employees. 

To alleviate this double taxation in other cases, the US Social Security Administration (SSA) has signed treaties, often referred to as Totalization Agreements, with government social insurance programs in various foreign countries. These treaties serve two main functions: 1) they eliminate dual Social Security taxation, so that workers from one country working in another country will not have to pay Social Security taxes to both countries on the same earnings; and 2) they help fill gaps in benefit protection for workers who have divided their careers between the United States and another country by providing continuity in their social security payments.

Since a bi-lateral social security agreement/convention does not currently exist between the US and Morocco, it is necessary to initiate an effort to promote the mutual adoption of such an agreement at the earliest possible opportunity.