The agreement is the second to enter into force since the 3.8% tax on unearned income, known as the Net Investment Tax (NIIT), came into force. However, NIIT is not part of FICA3 and is not covered by the social security totalization agreements in force on the date it came into force. The agreement between Hungary and Romania and the agreement between Hungary and the Soviet Union are based on the geographical principle, which means that social security benefits are paid by the country of residence at the time of the application. With regard to pensions, this means that eligibility acquired in both countries is considered by the other country to be a right acquired in its territory, the pension being always fixed by a country under contract. The amount of pension paid in Hungary depends only on the income in Hungary, if this is not the case, the average salary of the organization to be given is taken into account. This agreement may be amended in the future by complementary agreements which, as soon as they come into force, will be considered an integral part of this agreement. These agreements can take effect retroactively if they provide for them, provided they are beneficial to the individuals involved. with regard to Hungary, ministers, ministries or other relevant authorities responsible for the social security systems and systems governed by the laws provided for in Article 2 of this agreement; Any foreigner wishing to apply for an exemption from U.S. Social Security and Medicare taxes on the basis of a totalization agreement must obtain an insurance certificate from the social security authority of his country of origin and present such proof of insurance to his employer in the United States, in accordance with procedures 80-56, 84-54 and Ruling 92-9. An alternative procedure is provided in these revenue procedures for a foreigner who is unable to obtain a certificate of coverage from his country of origin. Australia currently has 31 bilateral international social security agreements. One of the common features of social security agreements is that they are no longer based on the mandatory allocation of burdens.
Therefore, in the case of an independent eligibility of Hungary, the additional rule is not applicable. What is new is that several agreements can take into account the length of employment acquired in so-called third countries, such as agreements with Canada, Montenegro or Serbia. Because of the reference to Medicare in the internal income code niit, some commentators had assumed that future agreements could include this tax. However, the language of the agreement with Hungary reflects the language of other such agreements and does not include NIIT. As a result, workers who are not subject to FICA under a totalization agreement may still be subject to NIIT. The social security agreement between the United States and Hungary (“totalization agreement”) was signed on February 3, 2015 and came into force on September 1, 2016. The full text of the main agreement and the administrative agreement is available here. The totalisation agreement covers several aspects of social protection and benefits in both countries. All of these agreements are based on the concept of shared responsibility.
Responsibility-sharing agreements are reciprocal. Under each agreement, partner countries make concessions to their social security qualification rules so that those covered by the agreement have access to payments that they may not be eligible for.