Social Security Treaty

Jurisdiction Assignment

The primary rule establishes that workers are subject to the legislation of the country where they perform the work. Special rules apply to detached workers who are sent temporarily to work in the other state. These workers can remain in their home country’s social security system for a limited period.

Benefit Coordination

Pensions are coordinated through totalization provisions that combine periods of coverage accumulated in both countries to determine benefit eligibility. Under a social security treaty, each country pays a pro-rata share of the benefit based on the proportion of the worker’s career spent in that country. This ensures that a worker does not lose their pension rights because they divided their career between two different jurisdictions.

It also allows for the payment of pensions to beneficiaries residing in the other country without deduction or restriction. The treaty ensures that pension calculations are fair and reflect the total contributions made by the worker.

Treaty Administration

To claim the benefits of the agreement, employers must obtain a certificate of coverage from the tax or social security authority of the home country. This certificate serves as proof of exemption from social security contributions in the host country. Cooperation between national administrative bodies is required to exchange the necessary data and verify worker status.

This administrative collaboration reduces the risk of fraud and simplifies the application process for multinational employers.