Introduction
Working abroad or expanding a business internationally as a US citizen comes with more than just new opportunities—it brings complex tax responsibilities. Many expats are surprised to learn that living overseas doesn’t automatically free them from US social security tax obligations.
Understanding how social security taxes apply in different countries is crucial. This guide breaks down key factors that affect expat tax liability and compares social security rates across various countries so you can plan smarter, reduce exposure, and stay compliant globally.
Why Social Security Tax Matters for Expats
For US citizens, taxation is based on citizenship—not residency. That means your social security tax obligations don’t stop just because you’ve moved abroad. Even if you qualify for the Foreign Earned Income Exclusion (FEIE), self-employment tax—which includes Social Security and Medicare—is generally still due.
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US Self-Employment Tax: 15.3% total
-
12.4% for Social Security
-
2.9% for Medicare
-
Expats who are self-employed must pay this full rate unless they qualify for an exemption under a totalization agreement with another country.
How to Minimize Social Security Tax Liability
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Work for a Foreign Employer
If you’re employed by a non-US entity, you may be exempt from US self-employment taxes. However, local taxes may still apply in your country of residence. -
Set Up an Offshore Business Entity
Structuring your business through a foreign legal entity can help reduce or defer US self-employment taxes, though it adds reporting and compliance requirements.
Strategic planning is essential. Both the structure of your income and the country in which you reside can significantly affect how much social security tax you owe.
Social Security Tax Rates by Country
|
Country |
Employee Rate |
Employer Rate |
Self-Employed Rate |
Avg. Monthly Wage (USD) |
|
Albania |
11.2% |
15% |
23% |
780 |
|
Bosnia & Herzegovina |
Varies by type |
Varies by type |
— |
1,150 |
|
Bulgaria |
10.58% |
14.82% |
— |
1,220 |
|
Canada |
Max CAD 4,055.50 (CPP) |
Matches employee + 1.4x EI |
Double CPP contribution |
3,650 |
|
Czech Republic |
7.1% |
24.8% |
— |
1,870 |
|
Estonia |
1.6% (employee only) |
33% |
— |
2,023 |
|
Georgia |
2% |
2% |
4% |
720 |
|
Hungary |
18.5% |
13% |
— |
1,790 |
|
Latvia |
10.5% |
23.59% |
— |
1,250 |
|
Lithuania |
1.45–2.71% |
19.5% |
— |
2,307 |
|
Macedonia |
28% |
28% |
— |
1,060 |
|
Moldova |
6% |
24–32% |
— |
750 |
|
Montenegro |
15.5% |
6% |
— |
1,250 |
|
Poland |
13.71% |
19.21–22.41% |
— |
2,030 |
|
Portugal |
11% |
23.75% |
21.4% |
1,190 |
|
Romania |
35% total |
2.25% |
— |
1,840 |
|
United Kingdom |
8–2% (income-based) |
13.8% |
Varies |
3,500 |
|
United States |
6.2% + 1.45% |
6.2% + 1.45% |
15.3% total |
5,350 |
Note: Some countries offer reduced rates or caps based on income level or sector.
FAQs on Expat Social Security Taxes
Do US expats pay social security tax?
Yes, unless exempt under a totalization agreement with the country in which they reside.
Which countries don’t tax US social security income?
This varies by treaty. Some countries may fully exempt US social security income, while others treat it as taxable.
What is the social security tax rate in Singapore?
Singapore’s Central Provident Fund (CPF) contributions can reach 37% (20% from the employee and 17% from the employer).
Does California tax social security benefits?
No, California does not tax social security income.
Do expats pay social security tax in the Netherlands?
Yes, unless covered under a tax treaty or totalization agreement.
How is social security taxed in the UK?
The UK uses the National Insurance Contribution (NIC) system, with rates varying by income level.
Conclusion
Managing social security tax as an expat requires careful consideration of both US tax rules and the laws of your country of residence. Without a proper strategy, expats and global business owners may face unnecessary tax burdens that reduce profitability and financial flexibility.
At Block3 Finance, we help expats and entrepreneurs design tax-efficient global strategies. Whether you're relocating, expanding your business overseas, or optimizing cross-border income, we ensure your approach is legally sound and financially optimized for long-term success.
If you have any questions or require further assistance, our team at Block3 Finance can help you.
Please contact us by email at inquiry@block3finance.com or by phone at 1-877-804-1888 to schedule a FREE initial consultation appointment.
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