One of the most important stages of opening a company in Malta
is employment. Malta has a strict employment legislation which provides for the conclusion of individual or collective work contracts and it also sets out the regulation related to the rights and obligations of both employer and employees.
One of the rights of Maltese employees
is to be remunerated for the work they supply which is offered under the form of a salary. Additionally, an employee can be rewarded with various bonuses. The processing of workers’ salaries is called payroll
and it is usually carried out by the human resources (HR) department in Maltese companies
Even if it may seem simple, using specific payroll services is recommended in Malta. Moreover, foreign investors can benefit from both HR and payroll services in Malta.
Registration of employees in Malta
In order to be able to pay the taxes on salaries
and the social contributions
related to each employee, a Maltese company
is required to register with the Inland Revenue Department (IRD) as an employer. On the other hand, the employees must register with the Employment and Training Corporation (ETC). When using the services of an accounting firm in Malta
, the payroll process
, including the registration with these two authorities can be handled by this firm.
Paying taxes for employees in Malta
The accounting of a company in Malta
will also mean paying the taxes related to employment, therefore payroll solutions
are usually included when hiring a specialized firm. Payroll in Malta
implies filing a monthly and an annual form with the IRD. Additionally, the employer must hand over a report with all the taxes paid during the year to each worker.
HR and payroll solutions in Malta
- drafting and registration of employment contracts;
- filing monthly and annual tax forms related to employment;
- monthly salary transfer to the employees’ accounts;
- preparation of annual leave documentation;
- income tax and social security deductions.
Payroll and the Employment Law in Malta
There is a very strong connection between the Employment Law and the payroll services a business owner can request in Malta. This is because the law provides for the rights and duties of both employers and employees, one of the most important ones being related to the remuneration of the workers for the job or position they fulfill in the company.
It is important to know that for taxation reasons, both the employer and the employee must register for social security contributions purposes, which is part of the payroll in Malta. If the registration for taxation and social security contributions co of the employees and employer can be completed by the HR department, the payroll is best to be outsourced to accounting firms in Malta.
With years of experience in taxation, our Maltese tax advisors can help you handle the payroll in your company through specialized services.
The taxes paid under payroll in Malta
Those who need payroll services must take notice of the following requirements when it comes to the income and withholding taxes to be paid in Malta. These are:
- the personal income tax which is imposed on the income generated by the employee and which is levied at progressive rates;
- the social security withholding tax which is levied at source from the employee’s salary;
- the social security withholding tax which is levied on the Maltese company acting as an employer;
- the benefits employees are entitled to can also be subject to certain taxes which need to be part of the payroll;
- the taxes imposed on incomes generated by the employee during work, such as overtime.
Business owners should know that the personal income tax levied on employees must be calculated based on their marital status, which is why it is best to solicit payroll services offered by accountants in Malta.
What are the main payroll services offered by our accountants in Malta?
With years of experience behind and always up to date with the latest tax and employment laws, our accounting firm in Malta can handle any request from small, medium and large companies, including the payroll.
Our payroll services in Malta include, but are not limited to:
assisting companies in registering themselves and their employees for social security contributions;
preparation of all the accounting documents required by the Inland Revenue Department;
generation of the payroll and payslips on a monthly basis and filing of the forms related to payroll;
filing the F5 form which is related to the monthly income, deductions, allowances, and bonuses of employees;
filing the FS7 and FS3s forms which refer to the annual gross salaries of employees, respectively the annual income tax deductions and contributions;
maintenance of annual leave records and termination of employment (where applicable).
As mentioned above, the registration for employment is mandatory and Maltese companies need to obtain an employer number in order to hire employees and pay the taxes related to employment. As part of our payroll services in Malta, this will be the first step for the correct setup of the payroll.
Setting up the payroll in a Maltese company
The payroll starts with the first employee a business hires. In Malta, creating the payroll of a company implies obtaining an employer number and then creating the records of payment which will include all the amounts paid as wages, salaries, bonuses, taxes and contributions paid on behalf of the employer and employee.
Payroll is usually set up by the accounting department of the company, however, Malta is known for hosting mostly small and medium-sized enterprises with an average number of 50 employees. However, for most of these companies, handling the payroll through their own accounting department is usually a burden which is why it is not uncommon to request the services of accounting firms in Malta.
With a vast experience in various fields of accounting, our specialists can offer payroll services based on the business profile and number of employees in a company.
Among the documents that need to be processed as part of the payroll, we mention the following:
The payroll and human resources departments can be outsourced to our accountants in Malta who will make sure to provide timely services so that you and your employees enjoy all the benefits of such a service.
Payroll administration and consultancy services in Malta
Among the payroll services provided by our accounting firm in Malta is payroll administration from the beginning of the business, which includes the creation of the bank account of the company from which all payments will be made and representation with the financial authorities in charge with receiving the social contributions and income tax payments.
We can advise on various payroll matters, such as creating compensation and benefit schemes for employees. You can also rely on us for assistance in the payroll of foreign employees and Employment Law consultancy services.
We are a team of accountants specialized in offering support and services in various accounting fields. You can benefit from our services in cities like Valetta and Birkirkara.
Monthly payroll services in Malta
is one of the services that need constant overseeing and management, as such a department needs to handle a large volume of work. With the help of our payroll services in Malta
, our accountants will pay the needed attention to all the changes in your company and will handle the monthly payroll which is one of the most soliciting works.
Through our monthly payment services, you can benefit from accurate data input into the payroll system, verification of the information introduced into the system and the issuance of the payroll statement and generation of payslips.
Our accountants will also handle the creation of monthly and quarterly payroll reports, as well as the preparation of annual statutory payroll statements and filing them with the Commissioner for Revenue in Malta
It is also important to note that our accountants in Malta
can prepare and file yearly settlements of personal income taxes on behalf of employees.
If you need to improve the accounting department in your business or simply want an overall picture of your financials in your company, our auditors in Malta
are at your disposal with audit services in various cities
in the country.
Employment and payroll regulations in Malta
According to the Labor Code in Malta, employees can work under various types of contracts, among which part-time and full-time employment agreements are the most popular. Based on the type of labor contract, employees must benefit from a minimum wage established by law. From this wage, the personal income tax is calculated, however, the social security contributions must also be taken into account and introduced into the payroll system.
Payroll implies the computation of various levies out of which at least the minimum net wage must be deposited in the employee’s bank account at the end of a working period.
You can rely on us for complete accounting services in Malta, among which payroll is one of the most requested because of various changes that appear in the taxation and employment regulations.
Provisions of the Labor Code in Malta
As mentioned several times in our article, payroll is highly related to the Labor Code as any information processed on behalf of employers and employees in Maltese companies must comply with the tax and labor legislation.
The Labor Code provides for the following:
- for the personal income tax to be calculated on a progressive scale;
- for employees to benefit from tax deductions and annual leave which must be remunerated;
- a minimum wage must be ensured based on the legal arrangements made by the government.
All these aspects need to be considered when setting up the payroll in Maltese companies. Even if the tax legislation does not change very often, the Labor Code is updated more often and those who need payroll services in Malta can rely on our accounting firm who is always prepared to act in accordance with the newest regulations in matters of taxation and employment.
Our accounting firm in Malta is made of professional accountants and auditors ready to comply with the requirements imposed by the law and with the needs of companies. If you decide to work with our Malta tax advisors you can also benefit from assistance in obtaining the subsidies, deductions and reductions offered by government agencies for meeting certain employment requirements.
Why choose our accounting firm in Malta?
Payroll is an important part of the management of a Maltese company, however, it is also a complicated one. Often changes in the legislation, many documents to prepare, file with the authorities and keep track of can be problematic for the staff of the company, which is why offer you complete payroll solutions. Apart from working with accountants authorized by the CPA in Malta, we will make sure all payroll documents reach you and the tax authorities in time, in order to avoid misunderstandings and penalties.
Taxation of employees in Malta
The taxation of employees in Malta is based on progressive rates, where the lowest one is 0% and the highest is set at 35%. Maltese companies are required to pay the corporate tax.
Here are the main aspects related to the taxation of employers and employees in Malta:
- social contributions of 10% of the gross salary of an employee must be paid by the employer;
- the employee’s social security contribution of 10% of the gross salary must be withheld by the employer;
- for a gross income of 8,500 euros, the personal income tax is 0%;
- for a gross income ranging between 8,501 - 14,500 euros, the income tax is 15%;
- for a gross income ranging between 14,501 - 60,000 euros, the income tax is 25%, while above this amount, the rate is 35%.
For full information on the accounting, including payroll
, and company registration services
available in Malta
, please feel free to contact us