Under the agreement, a detached worker remains subject only to the social security
taxation and coverage laws of the country from which the employer transferred him
or her. However, the worker must meet all the following conditions:
The employer/worker expects the period of work in the host country to last no more
than 5 years. The 5-year period begins with the date the work in the host country
begins or September 1, 2016, (the effective date of the agreement), whichever is later;
The employment relationship existed before the employer transferred the worker from
the home country; and
If an American employer sends an employee to the company's affiliate in Hungary, the
American employer must enter into an agreement with the Internal Revenue Service (IRS)
under section 3121(l) of the IRS Code. The 3121(l) agreement provides, among other
things, social security coverage for U.S. citizens and residents employed by the affiliate.
In such cases, the employer must still obtain a certificate of coverage to establish
the exemption from Hungarian social security taxes.