Understanding Malta's Employer Tax Obligations

Malta's tax system for employers is characterized by its straightforward approach, primarily centered on social security contributions. Employers in Malta are required to contribute 10% of an employee's basic weekly wage to the social security system. This mandatory contribution funds Malta's comprehensive social benefits program.

Social Security Contributions: The Core Employer Responsibility

The social security framework in Malta operates under three contribution categories, with Class 1 contributions being the most relevant for employment relationships. Employers must calculate, deduct, and remit both employer and employee portions to the Department of Social Security (DSS) through the Final Settlement System (FSS).

Employee Basic Weekly Wage	Employee Age	Employer Contribution	Work-Life Balance Fund*
€0.10 - €213.54	Under 18	€6.62	€0.20
€0.10 - €213.54	18 and over	€21.35	€0.64
€213.54 - €423.07	Born before 1962	10%	0.30%
Over €423.07	Born before 1962	€42.31	€1.27

*The Work-Life Balance Fund supports employers during employee parental leave periods.

Voluntary Occupational Pension Scheme (VOPS)

Introduced in 2017, VOPS allows employers to contribute to employee retirement savings while receiving tax credits equal to 25% of contributions or €750 per employee (whichever is lower). This initiative demonstrates Malta's commitment to encouraging private retirement planning.

Employee Taxation in Malta: A Comprehensive Overview

Malta residents are subject to taxation on their worldwide income, while non-residents pay tax only on Malta-sourced income. The employee tax structure combines social security with progressive income tax rates.

Social Security Contributions for Employees

Employees contribute 10% of their basic weekly wage to social security, with specific amounts varying by age and income bracket. The FSS system ensures automatic deduction and remittance of these contributions.

Income Tax Structure and Rates

Malta's progressive income tax system offers different rates based on marital status and family circumstances:

Taxable Income (Single)	Tax Rate	Tax Credit
€0 - €9,100	0%	-
€9,101 - €14,500	15%	€1,365
€14,501 - €19,500	25%	€2,815

Tax Residency and Compliance

Individuals spending more than 183 days in Malta or maintaining a permanent residence qualify as tax residents. The FSS system streamlines tax compliance for employees through automated payroll deductions.

Additional Employee Considerations

Employees may encounter additional deductions for union membership, private healthcare plans, or voluntary pension contributions. Regular review of payslips ensures accuracy in all deductions.

Practical Implications for International Employers

Companies expanding to Malta must understand that while social security represents the primary statutory obligation, many employers enhance their compensation packages with voluntary benefits. SailGlobal's expertise in Malta employment compliance can help international businesses navigate these requirements effectively.

For organizations establishing operations in Malta, proper understanding of both employer and employee tax obligations is crucial for compliance and competitive compensation strategy development. SailGlobal's professional services ensure seamless adaptation to Malta's tax environment while optimizing your global workforce management.

Malta Employer and Employee Taxes 2024: Complete Guide to Social Security & Income Tax