Expat Social Security Taxes: A Country-by-Country Guide

The lure of international expansion for US citizens often masks a hidden danger – unexpected social security tax liabilities. 

Many businesses, particularly US citizens freelancing or working in entrepreneurial roles abroad, fall into the trap of assuming they’re exempt from US social security obligations. 

This assumption is often incorrect and the consequences can be costly.

While it’s helpful for reducing income taxes, the Foreign Earned Income Exclusion (FEIE) provides no relief from self-employment tax – the combination of Social Security and Medicare taxes. 

Income tax and social security tax are separate and distinct beasts and US expats need to tread carefully when dealing with these taxes.

Even without US income tax liability, you could still face a hefty 15.3% self-employment tax bill (12.4% for Social Security and 2.9% for Medicare). 

And, without federal or state income tax payments, the employer portion of Medicare tax becomes your full responsibility.

Thankfully, there are two main ways to exempt yourself from social security taxes. 

The first is to have a foreign employer. The cut-and-dry way to do this is as part of a formal arrangement, for example, working for GE in their international office in Hong Kong. 

A not-so-cut-and-dry approach is to work for a foreign employer as a freelancer. Since you are a freelancer, you won’t have the advantage of having an entire international company backing you, but you will be a de facto employee of a foreign-based company in one sense.

The second solution is to have your own offshore business. This, of course, brings with it many more questions and priorities that should be set straight.

Priorities for the Global Entrepreneur

The ultimate goals of any business are profitability and growth. However, this becomes more complicated as you grow internationally. 

While a distributed team of freelancers can be effective in the early stages of growth, scaling a business often requires establishing a more formal operational base.

We don’t know of many US$200 million businesses that operate out of Chiang Mai where everyone works wherever they want, waking up at 10 am and spending the day in their pyjamas. 

Setting up a central hub, or even multiple regional hubs, often becomes key for efficiency and growth.

But it pays to do your homework. 

While many Western and European countries have stable legal systems and skilled workforces, hiring locally often comes with higher labour costs, including employer contributions to social security. 

Hiring remote workers as independent contractors can reduce these costs, but it’s extremely important to follow the labour laws of each relevant country, or you’ll face hefty penalties.

Wherever you choose to set up your business, here are the four factors you should look for when choosing a base.

1. Affordability of the workforce: You don’t want to shy away from a place where the taxes may be a bit higher, but labour is better quality and less expensive.

2. Accessibility: Does location matter for your business? Are you shipping to a certain region or trying to market to a specific part of the world that would make the location an issue for your business?

3. A pro-business mindset in the government: Even if taxes are low, it doesn’t do you much good if the government goes around telling you that ‘you didn’t build that’.

4. The tax burden: Weigh the total cost of hiring people, their productivity and how much you will be paying in social security taxes for those employees in the country where you choose to set up your base.

Social Security Tax Rates: A Country-by-Country Analysis

Understanding the specific social security tax rates in different countries will help you to calculate the total cost of employment and make an informed decision about where to hire. 

The following provides a snapshot of employer and employee contribution rates, along with average monthly wage data, for several countries. 

Note: Tax laws and average wages are subject to change. The data below is presented for illustrative purposes and can change.

Albania

Albania’s social security system, provided by the Social Insurance Institute (SII), covers pensions, unemployment benefits‌ and sickness and maternity benefits. It applies to both Albanian citizens and foreign nationals working in Albania. 

The system is financed through contributions from both employees and employers, with separate contributions for health insurance. 

While Albania’s social security tax rates are relatively moderate compared to some Western European countries, the overall cost of labour is lower due to the lower average wage. 

The current social security tax rates for Albania consist of: 

• Employee social security: 11.2% (9.5% social insurance contribution and 1.7% health insurance contribution)
• Employer social security: 15%
• Employee health insurance: 1.7% 
• Employer health insurance: 1.7% 
• Self-employed social security: 23% 
• Self-employed health insurance: 3.4%.

The average monthly wage in Albania is US$780.

Bosnia and Herzegovina

Bosnia and Herzegovina’s social security system is complex, reflecting the country’s decentralised political structure. 

It consists of two main entities: the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS), each with its own pension and health insurance funds. 

Contributions are mandatory for employees and employers, covering pensions, disability, health insurance‌ and unemployment. 

The current social security tax rates for the Bosnia and Herzegovina sector consist of the following.

FBiH social security contributions for employees:

• Contribution for pension and invalid insurance: 17%
• Contribution for health insurance: 12.5%
• Contribution for unemployment insurance: 1.5%.

FBiH social security contributions for employers:

• Contribution for pension and invalid insurance: 6%
• Contribution for health insurance: 4%
• Contribution for unemployment insurance: 0.5%.

RS social security contributions for employees:

• Contribution for pension and invalid insurance: 18.5%
• Contribution for health insurance: 12%
• Contribution for unemployment insurance: 0.6%
• Contribution for child protection: 1.7%.

Although the average monthly salary is only around US$1,150, the high contribution rates play a major role in ‌total labour expenses.

Bulgaria

Bulgaria’s social security system covers pensions, sickness and maternity benefits, unemployment ‌and occupational accidents and diseases. 

Contributions are split between employers and employees, with the employer paying a larger share. 

​​The current social security tax rates for Bulgaria consist of:

• Employee: 10.58%
• Employer: 14.82%.

The average monthly wage in Bulgaria is around US$1,220.

Canada

Canada’s social security system is comprised of two main components: the Canada Pension Plan (CPP) and Old Age Security (OAS). 

CPP is a contributory, earnings-related program that provides retirement, disability‌ and survivor benefits. 

OAS is a non-contributory program funded from general government revenues, providing a basic level of income for seniors. 

Canadian social security taxes are generally considered moderate compared to European levels, but the overall tax burden in Canada can be relatively high due to federal and provincial income taxes.

​​The current social security tax rates for Canada consist of:

Employee contributions (outside Quebec): 

• CPP: Up to CAD 4,055.50 
• EI: Up to CAD 1,049.12.

Employer contributions (outside Quebec): 

• CPP: Equal to the employee’s contribution (up to the maximum)
• EI: 1.4 times the employee’s premium (up to a maximum)

Employee contributions (Quebec):

• QPP: Up to CAD 4,348.00
• EI: Up to CAD 834.24
• QPIP: Up to CAD 464.36.

Employer contributions (Quebec):

• QPP: Equal to employee’s contribution
• EI: 1.4 times the employee’s premium.

Self-employed (Outside Quebec):

• CPP: Up to CAD 8,111.

Self-employed (Quebec):

• QPP: Up to CAD 8,696
• QPIP: CAD 825.32.

The average monthly wage in Canada is around US$3,650. 

Czech Republic

The Czech social security system is comprehensive, covering pensions, sickness benefits, unemployment‌ and health insurance. Employers here pay a notably higher percentage. 

​​The current social security tax rates for the Czech Republic consist of the following:

Employer contributions:

• Social security: 24.8%
• Health insurance: 9%
• Total employer contribution: 33.8%.

Employee contributions:

• Social security: 7.1%
• Health insurance: 4.5%
• Total employee contribution: 11.6%.

The Czech Republic has a relatively high overall tax burden compared to some other countries in the region, and the average monthly wage is US$1,870. 

Estonia

Estonia’s social security system includes pensions, health insurance, unemployment benefits and parental benefits. 

The employer’s contribution is significantly higher than the employee’s. Estonia has a ‘funded pension’ pillar (second pillar), which is mandatory for most employees. The Estonian Tax and Customs Board handles social tax collection. 

​​​​The current social security tax rates for Estonia consist of:

• Employer social security: 33%
• Employee social security: 1.6%
• Employee unemployment insurance: 1.6%
• Employer unemployment insurance: 0.8%

Estonia is generally considered a business-friendly environment with a competitive tax system and an average monthly wage of US$2,023.

Georgia

Georgia stands out for its unique approach to social security, along with its other tax benefits. In 2008, the country eliminated mandatory payroll-based social security contributions for both employers and employees. 

However, Georgia introduced a mandatory-funded pension scheme in 2019, which requires contributions from employees, employers and the state.  

​​​​The current mandatory pension scheme rate consists of:

• Employee contribution: 2% of gross salary
• Employer contribution: 2% of the employee’s gross salary
• Self-employed contribution: 4% to the individual pension account
• State contribution: 2% of the employee’s gross salary (or 1% for self-employed individuals earning above a certain threshold).

The average monthly wage in Georgia is US$720.

Hungary

Hungary has a comprehensive social security system that funds pensions, health insurance, unemployment benefits and various family support programs. 

Both employers and employees are required to make substantial contributions, making the overall tax burden relatively high compared to some other countries in the region. 

However, the corporate tax rates in Hungary are some of the best in Europe. 

​​​​The current social security tax rates for Hungary consist of:

• Employer social security contribution: 13%
• Employee social security contribution: 18.5%

The average monthly wage in Hungary is US$1,790.

Latvia

Latvia’s social security system includes pensions, sickness benefits, maternity and paternity benefits, unemployment benefits and occupational accident insurance. 

Contributions are mandatory for both employees and employers, with the employer’s share being significantly higher. 

The State Social Insurance Agency (SSIA) administers the system. Latvia has been undergoing reforms to its pension system in recent years. 

The current Social Security tax rates for Latvia consist of:

• Employee: 10.5%
• Employer: 23.59%
• Self-employed: 31.07
• Self-employed (eligible for retirement): 29.36

The average monthly wage in Latvia is US$1,250.

Lithuania

Like many Baltic States, Lithuania has been working to modernise its social security system and improve its long-term sustainability. 

Lithuania’s social security system covers pensions, sickness and maternity benefits, unemployment and occupational accidents. The system is administered by the State Social Insurance Fund Board (SoDra). 

Setting up a business here is also a good pathway to a second residency in Europe. 

The current social security tax rates for Lithuania consist of:

• Employee: 1.45% to 2.71%
• Employer: 19.5%

The average monthly wage is US$2,307.

Macedonia

Starting a business in North Macedonia is quite an underrated experience. 

Nevertheless, the social security system includes pension and disability insurance, health insurance and unemployment insurance. 

The system is managed by several different funds, including the Pension and Disability Insurance Fund and the Health Insurance Fund. 

The current social security tax rates for Macedonia consist of:

• Employer: 28%
• Employee: 28% (total Social Security contributions).

North Macedonia’s social security rates are considered relatively high in the region, with an average monthly wage of US$1,060.

Moldova

Moldova, as one of Europe’s less affluent nations, faces ongoing challenges in funding and sustaining its social security programs. 

Moldova’s social security system provides pensions, sickness, maternity and unemployment benefits, with the employer contribution significantly exceeding the employee contribution.

The current social security tax rates for Moldova consist of:

• Employer social security contribution: 24% to 32%
• Employee social security contribution: 6%
• The employee also has to pay 9% of their salary toward health insurance.

The average monthly wage is relatively low, at US$750. 

Montenegro

Montenegro’s social security system covers pension and disability insurance, health insurance and unemployment insurance. Contribution rates are relatively high compared to some other countries in the region. 

The system is administered by several funds, including the Pension and Disability Insurance Fund, the Health Insurance Fund and the Employment Agency. 

Employee contributions consist of:

• Pension and disability insurance: 15%
• Unemployment insurance: 0.5%.

Employer contributions consist of:

• Pension and disability insurance: 5.5%
• Unemployment insurance: 0.5%.

The average monthly wage in Montenegro is US$1,250.

Poland

Poland’s social security system, managed by the Social Insurance Institution (ZUS), is a cornerstone of the country’s social safety net.

Unlike some countries with simpler flat rates, Polish social security contributions are calculated based on a complex set of rules and brackets, with different rates applied to different components of the system. 

​​​​The current social security tax rates for Poland consist of:

• Employer social security contribution: 19.21% to 22.41%
• Employee social security contribution: 13.71%.

The average monthly wage in Poland is US$2,030. 

Portugal

Portugal’s social security system (‘Segurança Social’) provides a wide range of benefits, including pensions, unemployment benefits, sickness and maternity pay and family allowances. 

The system is primarily financed through contributions from both employers and employees, with relatively high rates compared to the EU average. 

A key feature of the Portuguese system is the different contribution rates for different types of employment contracts and for self-employed workers. 

Another distinguishing feature is that certain areas, like Madeira, might be more favourable than others when starting a business. 

​​​​The current social security tax rates for Portugal consist of:

• Employee contribution: 11% of gross salary
• Employer contribution: 23.75% of the employee’s gross salary
• Self-employed individuals: 21.4%.

The average monthly wage in Portugal is US$1,190

Romania

Romania’s social security system funds pensions, health insurance, unemployment benefits, sick leave and coverage for work-related accidents and illnesses. 

A defining characteristic of the Romanian system is the significant disparity between employer and employee contributions. 

The employee bears the brunt of the contribution burden, particularly for the pension fund, while the employer’s contribution is consolidated into a single, relatively low ‘Work Insurance Contribution’.

Employee contributions consist of:

• Pension fund (CAS): 25%
• Health insurance fund (CASS): 10%.

Employer contributions consist of:

• Work insurance contribution (CAM): 2.25% to 8%.

The average monthly wage in Romania is US$1,840. 

Serbia

Serbia’s social security system covers pensions, health insurance and unemployment. However, it’s different from many other systems in how contributions are split. In Serbia, employees pay a bit more than employers.

Employee contributions consist of:

• Pension and disability insurance: 14%
• Health insurance: 5.15%
• Unemployment insurance: 0.75%.

Employer contributions consist of:

• Pension and disability insurance: 10%
• Health insurance: 5.15%.

The average monthly wage in Serbia is only around US$890. 

Slovenia

Slovenia’s social security system provides a comprehensive range of benefits, including pensions, health insurance, parental leave, unemployment benefits and coverage for work-related injuries and illnesses. 

The system is characterised by relatively high contribution rates for both employers and employees, reflecting the broad scope of social protection. 

Employee contributions:

• Pension and disability insurance: 15.5% of gross salary
• Health insurance: 6.36% of gross salary
• Unemployment insurance: 0.14% of gross salary
• Parental leave: 0.10% of gross salary.

Employer contributions:

• Pension and disability insurance: 8.85% of gross salary
• Health insurance: 6.56% of gross salary
• Injury at work and occupational disease insurance: 0.53%
• Unemployment insurance: 0.06% of gross salary
• Parental leave: 0.10% of gross salary.

​​The average monthly wage in Slovenia is US$2,613.

United Kingdom

The UK’s social security system, called National Insurance (NI), is a fundamental part of the country’s welfare state. 

It funds state benefits, including the state pension, unemployment benefits (jobseeker’s allowance), sickness and disability benefits (employment and support allowance) and maternity pay. 

National insurance contributions (NICs) are paid by both employees and employers, and the rates and thresholds vary depending on earnings and employment status. 

A key trademark of the UK’s system is the existence of different ‘classes’ of National Insurance, each with its own contribution rules. 

Employee National Insurance (Class 1):

• 0% on earnings below £12,57 per year
• 8% on earnings between £12,571 and £50,270 per year
• 2% on earnings above £50,270 per year.

Employer National Insurance (Class 1):

• 0% on earnings below £9,100 per year
• 13.8% on earnings above £9,100 per year.

Employer National Insurance (Class 1) – From 6 April 2025:

• 0% on earnings below £5,000
• 15% on earning above £5,000.

Self-Employed National Insurance:

• Class 4 NICs (2024/25): 6% on profits between £12,570 and £50,270, and 2% on profits above 
• Class 2 NICs: Abolished from April 2024. Voluntary contributions of £3.45 per week are possible to maintain access to entitlements.

The average monthly wage is US$3,500.

United States

The United States Social Security system, officially known as Old-Age, Survivors and Disability Insurance (OASDI), provides retirement benefits, disability benefits and benefits for survivors of deceased workers. 

Alongside OASDI is Medicare, which provides health insurance primarily for people aged 65 and older. 

Both OASDI and Medicare are funded through payroll taxes, known collectively as Federal Insurance Contributions Act (FICA) taxes. 

Unlike some countries with multiple tiers or complex calculations, the US system has relatively straightforward percentage-based contributions, although there’s an annual wage base limit for social security. 

Employee FICA Tax:

• Social Security (OASDI): 6.2% of gross wages up to the annual wage base limit (US$160,200 for 2023 and US$168,600 for 2024)
• Medicare: 1.45% of gross wages (no wage base limit)
• Additional Medicare Tax: 0.9% on wages exceeding US$200,000 (single-filer), US$250,000 (married filing jointly), or US$125,000 (married filing separately).

Employer FICA Tax:

• Social Security (OASDI): 6.2% of employee’s gross wages up to the annual wage base limit (US$160,200 for 2023 and US$168,600 for 2024).
• Medicare: 1.45% of employee’s gross wages (no wage base limit).

Self-Employed Individuals:

• Social Security (OASDI): 12.4% of net earnings up to the annual wage base limit (US$160,200 for 2023 and US$168,600 for 2024).
• Medicare: 2.9% of net earnings.
• Additional Medicare Tax: 0.9% on net earnings exceeding the thresholds mentioned above.

As far as the rest of the world goes, labour is pretty cheap. However, the average wage in the United States is US$5,350 per month.

Understanding Social Security Tax for US Expats

US citizens are required to pay social security taxes regardless of what country they live in. That’s the nature of its citizenship-based tax policy. 

Expats living and working in the United States will also have to make social security contributions if they’re self-employed or working for a US employer.

However, that’s not the case with all countries. There are plenty of countries that reduce or waive social security taxes for citizens living abroad. 

The United Kingdom is one example of a country that allows expats to make voluntary contributions if they want access to its state pension and other potential benefits.

If you’re an expat, it’s recommended to familiarise yourself with the policies of your country to ensure you’re aware of any potential tax obligations.       

Expat Social Security Taxes by Country: FAQs

Go Where You’re Treated Best

The complexities of international social security taxes highlight the importance of proactive planning in any global business venture. 

Don’t wait until you’re facing unexpected tax bills – understand your obligations and explore your options before you expand or hire overseas. The right strategy can make a significant difference to your bottom line.

From billionaires and celebrities to everyday investors and entrepreneurs, we’ve helped more than 2,000 successful clients create their own ‘Plan B’, grow their wealth and increase their peace of mind. 

The Nomad Capitalist Action Plan helps entrepreneurs and investors create a holistic, bespoke plan for legal offshore tax reduction, financial diversification, global investment and lifestyles and Plan B residence and citizenship – all under one roof. 

If our services align with your beliefs and future vision, get in touch with us today and let us help you go where you’re treated best.