A person whose earnings from self-employment would otherwise be subject to compulsory coverage in both the United States and Austria is subject only to the laws of the country of which they are a resident.

Since this rule applies only to U.S. or Austrian residents, it would not affect a dually covered worker who resides in a third country (e.g., a self-employed U.S. citizen who works in Austria but resides in Switzerland). For this reason, the special exception provision of the Agreement will eliminate dual coverage for such a worker (see RS 2001.680).

A self-employed U.S. citizen who is subject only to Austrian law under the Agreement and is exempt from paying Self-Employment Contributions Act (SECA) tax must still file a U.S. tax return every year. To show that the self-employment earnings are exempt from U.S. Social Security self-employment tax, the individual must do the following:

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  Indicate on Schedule SE that the earnings are exempt under the Agreement; and

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  Request a certificate of coverage from the Austrian authorities; and

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  Attach a photocopy of the certificate of coverage issued by Austria to the U.S. tax return every year (see RS 02001.690) as proof of the exemption.