Malta Payroll Services

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Malta Payroll Services

Bradford Jacobs’ 20 years’ experience as a front line international payroll provider puts us in prime position to deal with payroll and tax regulations facing companies expanding into Malta, where the financial climate is attractive for foreign companies and investors with the potential for tax refunds.

These possibilities make it all the more important for companies planning expansion into Malta to seek expert guidance and advice. Dealing with tax issues is a major concern for companies developing an international presence. Relax – Bradford Jacobs are the Employer of Record (EOR) payroll specialists for Malta.

Using our Professional Employer Organization (PEO) international recruitment platforms and EOR payroll services is strongly recommended for the Maltese market, and Bradford Jacobs ensure companies always comply with the latest regulations while onboarding new employees. Our dedicated experts remove the burden of Malta’s payroll, tax and employment laws while you focus on building your business in a new territory.

Staff are employed through Bradford Jacobs’ payroll services with their income paid as salary, expenses, allowances and bonuses depending on their circumstances. Employees remain under the daily operational control of the parent company.

Malta Taxes

Tax liability in Malta hinges on workers being domiciled (long term involving a permanent home) or resident (short term stay, maybe domiciled in another country). Individuals living in Malta are taxed on worldwide income. Those resident but not domiciled are taxed on income in Malta and on income arising outside Malta that is received in Malta.

Personal tax rates for 2020 were:

Single rates (tax-free allowance of €9,101)

From To % Deduction Subtract (€)

€9,101 €14,500 15% €1,365

€14,501 €19,500 25% €2,815

€19,501 €60,000 25% €2,725

€60,000 and over 35% €8,725

Married rates (tax-free allowance of €12,700)

From To % Deduction Subtract (€)

€12,701 €21,200 15% €1,905

€21,201 €28,700 25% €4,025

€28,701 €60,000 25% €3,905

€60,001 and over 35% €9,050

Parent rates (tax-free allowance of €10,500)

From To % Deduction Subtract (€)

€10,501 €15,800 15% €1,575

€15,801 €21,200 25% €3,155

€21,201 €60,000 25% €3,050

€60,001 and over 35% €9,050

Non-resident rates (tax-free allowance of €700)

From To % Deduction Subtract (€)

€701 €3,100 20% €140

€3,101 €7,800 30% €450

€7,801 and over 35% €840

Employers must withhold 10% social security tax from employee salaries. 

Corporate tax is 35% and includes worldwide income and certain capital gains. Malta’s tax refund system is attractive for international businesses taking advantage of the island’s proximity to Europe, North Africa and the Middle East and can leave entrepreneurial companies paying around only 5% corporation tax.

VAT is administered by the Maltese Ministry of Finance. Companies with a turnover above €35,000 must register for VAT, but registration is optional for turnover between €7,001 and €35,000.

VAT is set at 18% on goods and services, though tourist accommodation, medical equipment, electricity and other categories are charged at lower rates.

Malta has no capital gains tax. Income tax is imposed on any gain made from shares, securities, intellectual property, partnerships or trusts for example. Malta imposes no taxes on inheritances, estates or gifts, though stamp duty may apply in some cases.

What Taxation Rules exist for Payroll in Malta?

Individuals must submit tax returns annually by June 30 the following year. For married couples, one spouse registers and files a joint tax return. Registration lasts five years.

Malta’s financial year runs from January 1 to December 31, but companies can request a different year-end date from the Maltese Inland Revenue. Companies must file tax returns by March 31 after the assessment year or nine months after the financial year end, whichever is later.

1998’s Final Settlement System (FSS) was created to regulate tax collection and aims to ensure the correct of tax is deducted from gross pay to reduce large refunds and tax bills arising from end-of-year tax assessments.

Employers deduct tax and social security contributions from employees’ salaries each month and remit to the Commissioner for Revenue. End-of-year reconciliations must be completed by February 15 the following year, either online or manually depending on the number of employees.

Employers must submit:

  • Employees tax and social security deductions
  • Corporate tax return

What Maltese Payroll Options are available for Companies?

Bradford Jacobs’ Employer of Record (EOR) platforms provide complete payroll solutions for companies moving operations to Malta, avoiding the huge commitment in time and expenditure in forming a subsidiary. A full understanding of employment law and tax regulations is vital for efficient and stress-free transition.

The sensible option is to utilize our dedicated payroll solutions for Malta. They are tailored to your specific requirements, because we understand that each business faces unique issues. Bradford Jacobs navigate the administration of the Maltese payroll system for you, send the returns and associated payments for wage tax and social security contributions directly from our payroll system to the tax authority.

Staying up to date with these demands is a crucial element of our payroll services. Our role includes:

  • Registering with the Maltese Commissioner for Revenue Office
  • Registering with the Maltese Directorate of Social Security
  • Creating employment contracts
  • Applying special expatriation status (if applicable)
  • Calculating monthly salary and creating pay slips
  • Researching available tax free allowances
  • Submitting wage tax returns and national insurance forms
  • Corresponding with involved parties
  • Producing annual accounts, administration and year-end statements
  • Creating payment schedules for wage tax, national insurances and net wages

This list highlights why employers moving into Malta use Employer of Record (EOR) providers to handle their payroll. Outsourcing payroll is a cost-effective, time-saving and simple method of paying employees, filing tax returns and fulfilling social security obligations in full and on time. Bradford Jacobs provide a complete service to remove the anxiety and stress for what would otherwise be a major commitment by your company.

What is required to set up Payroll in Malta?

A foreign company launching a subsidiary in Malta and running their own payroll must register with relevant tax and social security authorities, after first initially deciding which form of company to open.

The most popular choice is a limited liability company, which protects the owners from liability but comes with additional paperwork, such as yearly audits and two named shareholders on the registration documents. The registration process includes:

  • The Company Memorandum and Articles of Association must be lodged with the Registry of Companies. These documents detail the role and limitations of company directors and are best composed with expert advice
  • Showing minimum share capital of €1,200 to cover initial costs, although only 20% needs to be deposited and will be held separately by the bank until registration is complete
  • Registering the company with the Financial Services Authority, producing the Memorandum and Articles of Association with a bank receipt proving deposit of share capital
  • Obtaining a business license from the Maltese Commerce Department, which must be renewed annually
  • Obtaining a Tax Identification Number (TIN) online for completing mandatory annual tax returns. Professional support is advisable for submitting tax returns
  • Register for Value Added Tax (VAT). This is administered by the Maltese Ministry of Finance. Companies with a turnover above €35,000 must register for VAT, but registration is optional for turnover between €7,001 and €35,000. It is best to seek advice on the options regarding VAT
  • Limited liability companies must obtain a PE number, online from the Inland Revenue’s website, to be able to withhold and remit taxes and national insurance
  • Register with the Employment and Training Centre (ETC, also known as Jobs Plus). A form must be completed for every employee engaged, and further forms must be completed and filed on termination
  • Data protection. Companies must take steps to guard data, as theft or loss can result in huge fines. Malta is in the European Union and companies must comply with General Data Protection Regulations (GDPR)

These stringent regulations make payroll outsourcing for Malta the sensible alternative to establishing a subsidiary, avoiding the mass of red tape and possible sanctions and fines. Bradford Jacobs’ success as global payroll service providers for a host of companies will ensure you comply with every step of the payroll registration process. Expanding your worldwide presence is your priority – managing all your compliance issues is ours. Contact Bradford Jacobs today.

What Entitlement / Termination regulations apply to Maltese Payroll?

  • The employee has the option of working the notice period or being paid half the salary due for the unexpired period. If the employer ends the contract during the notice period they must pay 50% of the wages due
  • Compensation due is waived when there is a justifiable cause, such as disciplinary action or medical condition
  • Fixed-term contracts can be ended during probation without a reason, but one week’s notice applies for either party if employment exceeded one month
  • Without a justified reason after the probation term, the party breaking the contract must pay one-half of full wages that would have accrued
  • With redundancy, fixed term contract employees have the same ‘last in/first out’ rights as employees on indefinite contracts.
  • With indefinite contracts, notice is given by either by either party in cases of redundancy. Notice is calculated on the employee’s continuous length of service.  
  • Malta also uses the ‘Guarantee Fund’ to cover unpaid wages to employees whose contract is terminated due to the employer becoming insolvent.

Other entitlements and termination rights include:

  • • On termination where employment exceeds a month, the employee is entitled to request a certificate stating the nature and duration of employment, the reason for termination and salary
  • • Employees should receive all entitlements and remuneration including wages, overtime payments, statutory bonuses, notice pay and settlement of outstanding holidays. If the employer refuses, the Department of Industrial and Employment Relations can take action

Contact Bradford Jacobs’ Global Payroll Experts

Companies who plan to launch their own subsidiary will need a thorough understanding of employees’ guaranteed rights and entitlements. This daunting task, and the risks that go with failing to comply, can be avoided by partnering with Bradford Jacobs. We have the specific experience to remove the burden of dealing with these issues of Maltese payroll. As the Employer of Record for your employees we deal with every aspect of salary, social insurance, registration, withholding tax, allowances, bonuses, entitlements and termination matters while you concentrate on building your business in a new territory.