Malta Payroll and Tax Overview

Your guide to doing business in Malta

Doing Business in Malta

Malta is a European island nation situated in the Mediterranean Sea around 50 miles off the southern coast of Italy, and 176 miles off the eastern coast of Tunisia. One of the smallest countries in the world, Malta is a historically important trading destination thanks to its strategic location between Europe, North Africa, and the Middle East. Malta’s economy relies on international shipping and transportation, but its biggest industries include IT, communications technology, pharmaceuticals, and manufacturing. The tourism industry is also a particularly important contributor to the Maltese economy, attracting almost 2 million visitors per year and accounting for around 12% of the country’s $14.65 billion GDP. Malta is a parliamentary republic with a relatively high standard of living and is a member of the Commonwealth of Nations, the United Nations, and the European Union. In 2019, Malta was ranked 88 on the World Bank’s Ease of Doing Business Survey.

Why invest in Malta?

The government of Malta is eager to encourage and attract foreign investment. In particular, the government is seeking to attract high, value-added capital intensive and high technology industries - with special preference given to manufacturing businesses. The Malta Enterprise Corporation (MEC) plans and promotes industrial development in Malta, dealing with inquiries and evaluating applications for tax relief and other business incentives.

Registering a Company and Establishing an Entity in Malta

It is not necessary to establish a Legal Entity in Malta in order to process payroll. Instead, businesses may register as Private Employers. Employers that choose to set up in Malta as a Private Employer should consider the following:

  • After creating a Maltese company, owners may register as a Private Employer in order to set up payroll for their employees.
  • Employers with a well-established business outside Malta that do not have a physical office in Malta, may also register as a Private Employer in order to set up payroll.
  • In order to set up as a Private Employer, the business owner will need to obtain a dormant tax number and PE number which represent Tax ID for non-resident companies with a permanent establishment in Malta.

Business Banking in Malta

Banking hours in Malta are usually Monday to Friday between 8.30 a.m. and 12.30 p.m. Most banks are open until 12.00 p.m. on Saturdays.

Payments can be made to employees via cheque, direct deposit, and cash. The Maltese authorities can be paid by cheque and direct deposit.

Working Days in Malta

The working week in Malta runs from Monday to Friday and, as a rule, employees may work a maximum of 40 hours per week. Overtime is permitted but only up to 8 hours per week. Overtime hours over and beyond 8 hours per week are permitted but only if an employee agrees to the arrangement in writing.

Basic Facts about Malta

Full Name: Republic of Malta

Population: 525,285 (2020)

Capital: Valletta

Primary Language: Maltese, English

Main Religion: Christianity

Monetary unit: Euro

Main exports: Machinery and transport equipment

GNI per capita: US $30,765 (2020)

Internet domain: .mt

International Dialing Code: +356

How Do I Say in Maltese?

Hello Merħba

Good morning Bonġu

Good evening Lejl it-tajjeb

Do you speak English? Titkellem bl-Ingliż?

Goodbye Saħħa

Thank you Grazzi

Income Tax in Malta

The Tax Year in Malta runs from 1 January to 31 December.

Income Tax in Malta

An individual who is ordinarily resident and domiciled in Malta is subject to income tax on their worldwide income and taxable gains.

Taxable income refers to a person’s aggregate amount of income after allowable exemptions and deductions. Some of the major items included in an individual’s taxable income include:

  • Salaries, wages, and other benefits from employment
  • Profits or gains from a business
  • Dividends, interest, royalties, rents and other investment income
  • Pensions and annuities

Income tax in Malta is withheld from salaries under the final settlement system. Employers are required to deduct income tax from salaries/wages that are paid to their employees whether they are a resident or a non-resident.

Contributions are due by the end of the month and must be made using the appropriate form, which will include both tax and social security contributions. Contributions are usually paid online or by cheque to the Inland Revenue Department.

Social Security in Malta

Social security in Malta is compulsory for every employee between the ages of 16 and 65, including non-resident persons working in the country.

The Social Security Contribution rate is based on earnings derived from an employee’s basic weekly wage. The basic weekly wage does not include allowances, bonuses, and/or overtime earned in a particular week.

There are different classes of Social Security contributions in Malta. Social Security contributions by Employed persons are referred to as Class 1 Contributions and are paid by direct deductions from the same employees’ wages/salary. Under normal rules, employers contribute an equivalent amount to their employees’ social security, based on the amount that individual employees pay.

Part-time employees who work less than 40 hours per week and who earn less than the National Minimum (weekly) Wage can opt to have their share on social security contributions, paid at the rate of 10% of their basic weekly wage.

Reporting Tax in Malta

Monthly

Income Tax and Social Security in Malta should be reported on the appropriate form (FS5) and must be submitted to the Inland Revenue Department by the end of the subsequent month.

Yearly

Employers must report all tax and social security contributions on Form FS7. The form must be completed by employers annually and submitted to the Inland Revenue Department by the 15th of February of the following tax year.

Employers must provide employees with form FS3 which is an annual report summarizing all taxes and social security contributions paid throughout the year. Form FS3 is submitted to the Inland Revenue Department along with the FS7 and is also due on 15th February each year.

New Employees in Malta

All new employees in Malta must be registered with the Maltese Inland Revenue Department and JOBSPLUS, the Employment and Training Department. New employees must be registered within 14 days of the engagement date.

Please see below for examples of information required for the new employee registration process. This list is not exhaustive.

  • Full name
  • Date of Birth
  • Nationality
  • Date of arrival in Malta
  • Copy of Maltese ID card or tax number
  • Copy of Maltese Social Security Card/Certificate
  • Residential Address
  • Annual Gross Salary
  • All third-country nationals must obtain a work permit before starting work in Malta.

Leavers in Malta

JOBSPLUS must be informed of all terminations in Malta. In the case of expatriates, the Inland Revenue Department must be informed that the employee is leaving.

All termination documents and final salary payments must be made to the employee on the last day of employment.

Payroll in Malta

It is legally acceptable in Malta to provide employees with online payslips.

Maltese law requires payroll reports to be kept for 10 years.