Under the agreement, employment or self-employment is ordinarily subject to the laws on Social Security taxation and coverage of only the country where the work is performed. A person working in employment or self-employment who would otherwise be covered under the laws of both countries remains covered only under such laws of the country where the work is performed.

The agreement provides several exceptions to the territoriality rule to help ensure that a worker is covered under the system of the country to which the worker has the more direct connection.