EY Tax Alert - Law ratifying the Agreement in the field of social security between Romania and the United States of America

Law no. 3 on the ratification of the Social Security Agreement between Romania and the United States of America was published in the Official Gazette no. 7 from 4 January 2024, signed at Bucharest at 23 March 2023.

This Agreement will facilitate the mobility of workers between the two countries.

The Agreement provides inter-alia:

• For Romania, the material scope of the Agreement covers pensions and death grants in the public pension system, and as regards only Part II of this Agreement on applicable law, the health insurance contributions;
• For the United States, the material scope of the Agreement covers the laws governing the federal old-age, survivors and disability insurance program.
• The rules applicable to posted workers and self-employed workers, carrying out activities in the territory of the other Contracting State. Under certain conditions, they will be able to remain insured in the territory of the State of origin for a period not exceeding 5 years. The competent authorities may also agree to grant exemptions from the rules provided by this Agreement;
• The determination of the benefits that may be granted will be made either on the basis of Romania or United States laws, taking into account the total insurance periods completed and the "pro-rata temporis" principle (proportional to the contributions in the national system).
• For posted workers, the Agreement shall apply from the time of its entry into force.
• Entitlement to benefits will be maintained even in the event of termination of the Agreement for the requests for benefits submitted before its expiry date;
• The competent authorities of Romania and the United States will agree over an administrative arrangement to implement this Agreement;
• The Agreement will enter into force on the first day of the fourth month following the date of the last note by which the two States notify each other of the completion of their internal procedures for entry into force.

The EY team is available for further details on the above.