Payroll & Employment Guide Malta

Employers in Malta can issue both oral and written employment contracts, although written ones are recommended for more clarity and transparency. Contracts should outline the most important terms of employment, such as wages, working hours, leave entitlements, notice periods, and similar.

Notice periods: From 1 to 12 weeks.

Termination of employment: Termination due to just cause and redundancy.

Employers in Malta must provide mandatory employment benefits in line with the country’s labour law. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.

• Mandatory benefits: Healthcare, pension.
• Common perks: Meal vouchers, transport reimbursements.
• Leave policies: Paid annual leave, sick leave, maternity leave.

Malta has a well-structured tax system that applies to both employers and employees. Employers are required to deduct personal income tax and social security contributions from employees’ salaries and submit them to the tax authorities. Additional tax regulations apply to corporate profits, dividend income, VAT, and others.

Personal income tax rate: From 0% to 35%.

VAT: 18%

Tax allowances: N/A

Additional tax reliefs: Applied for via individual tax returns.

Salaries in Malta are typically paid on a monthly basis and must be submitted in line with the minimum wage requirements set by the law. Salary amounts and other related terms must be outlined in the employment contract.

Salary payment deadline: Date specified in the employment contract.

Taxes and contributions payment deadline: Monthly through the FS5 form.

Payroll declarations deadline: Monthly (FS5 form), yearly - by February 15th of the following year (FS7 form), and upon termination (FS3 form).

Payroll currency: EUR

Malta’s employment laws are primarily governed by the Employment and Industrial Relations Act (EIRA) and are aligned with EU directives to foster fair employer-worker relations. Such regulations include provisions regarding contract types, minimum wage, working hours, probation periods, termination policies, and similar.

Total employment cost:

• Employer’s social security contributions: 10%.
• Employee’s social security contributions: 10%.

Minimum wage: EUR 961.10 per month

Probation period: Up to 6 months

Foreign citizens who want to live and work in Malta must obtain the appropriate visas and work permits. The process, permit type, and costs are different depending on the applicant’s nationality, job role, and length of stay.

Types of permits: The Key Employment Initiative (KEI) permit

Process length: Up to 2 months

Process cost: Starts at €2700

With EOR services, you can legally employ individuals in Malta without setting up your own entity there. The EOR will take over the responsibilities of an official employer for your team, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

With PEO services, you can get the necessary HR and admin support while you remain the legal employer for your team in Malta. PEO services can be of benefit to employers who have legal entities in the country, but need:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adapted to local labour laws in over 85 countries. With our calculator, you can easily estimate net and gross salaries, social security contributions, and other mandatory deductions in Malta.