Malta Budget 2026: Key Payroll and Employer Takeaways
by activpayroll
Malta’s 2026 Budget is here, with a mix of measures that will affect employees, employers, and payroll operations.
From tax relief for families to incentives for retaining staff, plus new residency and tax regimes, this Budget has something for everyone. Payroll and HR teams will need to act fast to update systems, communicate changes, and maximise the opportunities.
Rewarding Loyalty and Driving Retention
To reward long-term employees, the Budget will subsidise pay rises for workers who have spent four or more years with the same company, covering 65% of the increase in Malta and 80% in Gozo. This helps businesses recognise loyalty while sharing the cost with the Government.
Other measures impacting employers include:
- Tax credits for qualifying business investments, supporting payroll and HR planning.
- Government-funded upskilling programmes, such as free AI courses, to enhance workforce capability.
Payroll teams should track these subsidies and ensure contracts reflect new entitlements.
Families Get a Boost
Supporting parents remains a central theme. New income tax thresholds for parents with dependent children mean higher take-home pay, while grants and allowances have been increased to ease the cost of raising children.
Highlights:
- Enhanced children’s allowances for families below certain income levels.
- A new “in-work” benefit providing a small extra sum per child for working parents.
- Social security contributions made before age 18 now count toward pensions, requiring payroll adjustments.
Updating payroll systems and ensuring accurate pension calculations will be crucial for compliance and employee communication.
Action Steps
To prepare for the 2026 Budget and related legislation, payroll, HR and mobility teams should:
- Update tax tables and payroll systems to reflect new thresholds and benefits.
- Adjust pension tracking to account for pre-18 contributions.
- Monitor pay-rise subsidy schemes and eligibility criteria.
- Evaluate senior financial-services roles for the 15% tax regime and update payroll accordingly.
Malta’s 2026 Budget, alongside residency and tax incentives, underscores the country’s focus on families, talent retention, and attracting global business. By taking a proactive approach, payroll and HR teams can ensure compliance, streamline processes, and help employees make the most of these changes.
Other New Residency and Tax Incentives
Two legislative updates complement the Budget and impact payroll and mobility planning.
Malta Permanent Residence Programme (MPRP)
The MPRP has been updated with simplified contributions, temporary residence cards during processing, and expanded property leasing options. Employers managing international assignees should note potential payroll and benefits implications.
Senior Employees of Family Offices, Back-Offices, and Treasury Management Operations
Legal Notice 250 of 2025 introduces a flat 15% tax rate for qualifying senior professionals in family offices, back-office, or treasury roles. Key points:
- Employees must have a qualifying contract, work in Malta, and meet a minimum income threshold.
- Eligible roles include senior managers, heads of risk/compliance, portfolio managers, senior traders, and structuring professionals.
- The regime applies from 1 January 2025 for assessment year 2026 onward.
Payroll teams should review contracts, verify eligibility, and ensure compliance with the new tax treatment.
How activpayroll Can Help
We support businesses managing global payroll, international assignments and evolving tax-residence issues.
For tailored guidance on how these Malta developments affect your business or for support with implementation, please complete our Contact Us form, and a member of our team will be happy to assist with your queries.