There is an agreement between Germany and the United States on the country that receives social security contributions when a person works in Germany. If a person from a U.S. company has to work in Germany for 5 years or less, he or she pays taxes to the U.S. social security system. If their assignment is more than 5 years, they contribute to the German social security system. A person whose employer is not in the United States pays his taxes in Germany. Germany has currently entered into double taxation agreements with the following countries: 2. This convention cannot in any way restrict any exclusion, exemption, deduction, credit or other allowance granted now or at a later: a) under the laws of one of the two contracting states; or b) by another agreement to which the States Parties are parties. 2. If, under paragraph 1, a person resides in the two contracting states, his position is set as follows: (a) it is applicable by a resident of the state in which he or she has permanent housing; if he has a permanent homeland in both states, he is considered a resident of the state with which his personal and economic relations are closer (vital interests); (b) if the state in which it is headquartered is not determined or does not have permanent housing in one of the two states, it is considered a resident of the state in which it has its usual residence; (c) if he has a habitual residence in either or any of them, he is considered a resident of the state of which he is a national; and (d) if he is a national of either state or one, the competent authorities of the contracting states resolve the matter by mutual agreement. A separate agreement called the Totalisation Agreement helps us expatriates in Germany not pay payroll taxes to both governments, while their contributions paid in Germany can be credited to both systems.
The country they pay depends on the length of their life in Germany. While the agreement allows the Social Security administration to qualify for U.S. pension, disability or survival benefits, the agreement does not cover Medicare benefits. 3. The competent authorities of the contracting states endeavour to resolve by mutual agreement any difficulty or doubt about the interpretation or application of this convention.