Ambassador Colleen Bell and Hungarian Minister for Human Resources Zoltán Balog signed an agreement today to eliminate dual taxation of U.S. and Hungarian citizens as a result of the payment of social security taxes to both countries based on the same earnings. The agreement promotes equity and fairness for workers who divide their careers between the two countries.
Currently, U.S. companies that employ U.S. citizens in Hungary must contribute to both the U.S. and Hungarian social security systems. When the Agreement takes effect, U.S. and Hungarian employers and their employees will contribute to either the U.S. or Hungarian social security system, but not both. On the American side alone, this will result in approximately 500 U.S. workers and their employers sharing in annual tax savings estimated at $20 million over the first eight years of the Agreement.
The Agreement signed today will improve social security protection for people who work in both countries. Presently, some workers who divide their careers between the United States and Hungary fail to qualify for social security benefits from either country because they do not meet minimum eligibility requirements. This Agreement allows credits to be combined from both countries to qualify workers and their family members for pro-rated U.S. or Hungarian social security benefits. This option will result in approximately 10,000 new U.S. and Hungarian beneficiaries after the first eight years of the Agreement.
Before this Agreement can take effect, the U.S. Congress and the Hungarian Parliament must review it. The United States has similar social security agreements with 25 other countries, including Australia, Canada, Chile, Japan, Norway, South Korea, Switzerland, and many other countries in the European Union.