A totalization agreement is a social security agreement between two countries that aims to prevent double taxation for employees who work in both countries. The United States and Italy signed their totalization agreement on November 17, 1995.
The main purpose of this agreement is to eliminate dual social security taxes for employees who work in both countries. Without such an agreement, workers might have to pay social security taxes to both countries, leading to higher costs and financial burdens for the employees.
According to the agreement, if you are an American employee working in Italy, you will only have to pay social security taxes to Italy. If you are an Italian employee working in the United States, you will only have to pay social security taxes to the United States. This is particularly beneficial for individuals who work temporarily or frequently in both countries.
The totalization agreement also enables workers to qualify for benefits in both countries, based on their combined work credits. For example, if a US citizen works for ten years in the United States and five years in Italy, they will be eligible for benefits from both countries based on their total work history.
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In summary, the totalization agreement between the United States and Italy is a beneficial agreement that eliminates dual social security taxes for employees who work in both countries, while also enabling workers to qualify for benefits in both countries based on their total work history.