The Totalization Agreement with Austria became effective on November 1, 1991, A Supplemental Agreement, effective January 1, 1997, amended the Agreement.

The primary purpose of the Supplemental Agreement was to authorize Austria to use a different method of computing benefit amounts for people who earned periods of coverage under both the U.S. and Austrian social security systems. Under the Supplemental Agreement, Austria pays benefits that are computed in accordance with Austrian domestic law, rather than the pro rata computation method. In addition, the Supplemental Agreement addresses changes to U.S. and Austrian laws.

If both the U.S. and Austrian social security systems cover a worker's employment or self-employment, the Agreement provides that beginning November 1, 1991, only one country's system will cover the worker's employment or self-employment. The Agreement does not affect a worker's coverage prior to that date. If a worker had dually-covered earnings before November 1, 1991, those earlier earnings remain subject to social security taxation in both countries.

For the United States, the Agreement applies to the Old-age, Survivors, and Disability Insurance (OASDI) programs and the corresponding tax laws (Federal Insurance Contributions Act (FICA) taxes for employment and Self-Employment Contributions Act (SECA) taxes for self-employment). The Agreement does not apply to Medicare provisions. If an employee is exempt from U.S. Social Security coverage under this Agreement, neither the employee nor the employer share of the FICA tax is due as long as the exemption is effective. A self-employed person is exempt from paying SECA taxes (equivalent to the employee and employer shares of the FICA tax) for any period the exemption is effective.

The U.S. laws to which the Agreement applies are title II of the Social Security Act except section 226 (Medicare benefits), 226A (Medicare coverage for certain persons suffering from renal disease), and section 228 (special age-72 payments-Prouty benefits). The Agreement excludes hospital insurance under Medicare. It is understood, though not specified, that persons to whom the Agreement applies who qualify independently for Medicare hospital insurance benefits would be entitled to receive such benefits.

For Austria, the Agreement applies to social security coverage and taxes that finance retirement, survivors, and disability benefits and to the taxes that finance Austrian sickness and accident insurance. Consequently, if a person is exempt from Austrian social security coverage as a result of the Agreement, no contributions are due for these programs. However, a worker may still have to pay contributions for other types of Austrian benefits such as unemployment and children's allowances.

RS 02001.662 - RS 02001.670, General coverage rules for employment

A detached worker is an employee sent by his or her employer in one country to work temporarily in the other country for the same employer or an affiliate of that employer.

Under the Agreement, a detached worker remains subject only to the social security laws of the country from which the employer transferred the employee. The following conditions apply:

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  The employer and employee expect the period of employment in the host country to last five years or fewer. The five-year period begins with the date the employment in the host country begins or November 1, 1991 (the effective date of the Agreement), whichever is later; and

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  The employment relationship existed before the employer transferred the employee from the home country; and

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  The American employer must enter into an agreement with the Internal Revenue Service (IRS) under Section 3121(1) of the Internal Revenue Code with respect to the employer’s affiliate, if an American employer sends an employee to that employer's affiliate in Austria. The 3121(l) agreement provides, among other things, for Social Security coverage for U.S. citizens and residents that the affiliate employs. In such cases, the employer must still obtain a certificate of coverage to establish the exemption from Austrian social security taxes. See RS 02001.690 for more information about certificates of coverage under the U.S. - Austrian Agreement.

RS 01901.070 Employment Outside the United States for a Foreign Affiliate or Subsidiary of an American Employer

A person employed as an officer or member of a crew on a ship who otherwise has dual coverage under the social security taxation and coverage laws of both countries will only have coverage under the laws of the country whose flag the ship flies.

A ship is considered to fly the flag of the United States if it is an American vessel as defined in section 210(c) of the Act. Under that definition, an American vessel is one that is documented or numbered under U.S. law or one that is not documented or numbered under the law of any country, if its crew is employed solely by one or more U.S. citizens or residents, or corporations organized under Federal or State law.

A person employed as an officer or member of the crew on an aircraft who would otherwise have coverage under the laws of both the United States and Austria, will have coverage only in the country where the employer has its headquarters.

EXCEPTION: A person sent by an Austrian air transport organization to work as ground personnel in the United States will have coverage only under Austrian laws, regardless of the length of transfer.

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  RS 01901.030 - RS 01901.070, Coverage of Employment Within and Outside the United States

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  RS 01901.150 Employment on American Vessels and American Aircraft

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  RS 01901.170 Employment on Foreign Vessels or Foreign Aircraft

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  RS 01901.450 Coverage under International Totalization Agreements

The Vienna Conventions provide that, in general, nationals of a country who work abroad in the diplomatic or consular services of their country are exempt from social security coverage and contributions under the host country's laws unless the host country specifically waives that exemption.

The Conventions, to which both the United States and Austria are parties, apply to:

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  Members of the staff of a diplomatic or consular mission, including the diplomatic, consular, administrative and technical staffs; and

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  Dependents of members of those staffs; and

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  The domestic service staff of the mission; and

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  Private servant employees of the members of such missions (under certain conditions).

RS 01802.050 Coverage Status - Employees of Foreign Governments and International Organizations - Policy Principle

Prior to the entry into force of the Agreement, employees of the American International School in Austria were exempt from Austrian social security taxes. The Agreement contains a provision designed to maintain that exemption for certain school employees. The exemption applies regardless of whether the school hired them in the United States or a third country and sent them to Austria, or hired them in Austria. It also applies even if their employment in Austria will last for more than five years.

Employees of the American International School in Austria are exempt from Austrian social security taxes if they are either:

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  U.S. citizens, or

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  Citizens of a country other than the United States or Austria who do not reside in Austria.

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 he or she is 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.

RS 02001.650 through RS 02001.675 describe terms of the Agreement that eliminate dual social security coverage and includes the majority of situations where the United States and Austria would both cover and tax a worker in the absence of an Agreement. However, sometimes the application of the normal Agreement rules would yield anomalous or inequitable results. For this reason, the Agreement includes a provision that permits the authorities in both countries to grant exceptions to the normal coverage rules of the Agreement if both sides agree.

The intent of the exception provision is not to provide the freedom to elect coverage in conflict with normal Agreement rules. The purpose of the special exception provision is to allow a worker to continue coverage in the country where he or she normally works and has coverage, in order to ensure that he or she will meet eligibility requirements for retirement or disability benefits.

An employee and his or her employer or a self-employed person may request a special exception to the normal coverage rules of the Agreement. Both countries must agree to the special exception and agree on the country of coverage. If either country does not agree with a proposed exception, the applicable coverage rule of the Agreement determines the worker's coverage.

An employee and his or her employer or a self-employed person who wish(es) to apply for a special exception may write to the addresses below in the country where the worker wishes to remain covered. The letter should:

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  Give all the information necessary to issue a certificate of coverage under the U.S. - Austrian Agreement (see RS 02001.690); and

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  Explain the reason for the special exception request.

Persons wishing to request an exception granting U.S. coverage should write to the following address:

Individuals wishing to request an exception granting Austrian coverage should write to the address below:

Upon receipt of a request for a special exception, the agency that receives the request will consider it in collaboration with the other country's agency. If both agencies approve the request for a special exception, the agency that receives the request will issue a certificate of coverage. The certificate of coverage will serve as proof of exemption from coverage and taxes in the other country. See RS 02001.690 for more information about certificates of coverage under the U.S. - Austrian Agreement.

The U.S. - Austrian Agreement requires each country to issue certificate of coverage forms for workers who, without the Agreement, would have to pay social security taxes to both countries on the same earnings. The certificate serves as proof that the worker named on the certificate is:

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  Subject to the social security taxation and coverage laws of the country issuing the certificate; and

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  Exempt from social security coverage and contributions on the same earnings in the other country.

Advise inquirers that when writing to obtain a certificate of coverage, they should provide the following information:

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  Full name; and

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  Social security number (U.S. number for U.S. certificate and Austrian number for Austrian certificate); and

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  Country of citizenship; and

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  Date and place of birth; and

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  Country of permanent residence; and

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  Name and address of employer in both countries (if self-employed, address of trade or business in both countries); and

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  Date and place of hire by sending company, if employed; and

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  Beginning date and ending date (if known) of employment or self-employment in the other country.

OEIO or the Austrian authority takes the following steps to issue a certificate of coverage:

1. 1. 

   The employee, employer, or self-employed person writes to the appropriate authority requesting a certificate.

   NOTE: 

   For requests for U.S. certificates of coverage, the employer or worker's representative (attorney, accounting firm, employer services firm, etc.) may request the certificate on the employee's or worker's behalf. If an employee requests the certificate, OEIO will contact the employer to confirm the accuracy of the information provided.

2. The United States or Austria issues the certificate, if appropriate.

3. The issuing agency sends the original and one copy to the requester.

4. The employer or worker presents the certificate to the tax authorities in the other country upon request. The tax authority in the other country may ask the employer or the worker for a copy of the certificate.

5. If the worker is a self-employed U.S. citizen or national who is subject only to Austrian laws under the Agreement, the self-employed worker must attach a photocopy of the Austrian certificate of coverage to the Schedule SE filed with the U.S. income tax return each year.