What global companies should know about Malta’s payroll

Being an astounding Island, Malta is popularly known as a tourist destination. Tourism alone along with manufacturing and foreign trade sum up to the Nations GDP of $9,5 billion. Nonetheless, over the years Malta has proved to be more than just a tourist attraction but a great investment destination as well. 
To attract a lot of investors, the Maltese government offers tax deductions for investors investing in new operations. Despite the Maltese jurisdiction being rather very friendly compared to its other European counterparts, it's very strict when it comes to evaluating how employees are being treated in the country. Maltese officials regularly assess how employees are treated on an annual basis. In order to maximise your profits without compromising employee laws, you should stay au courant with the Maltese payroll laws and regulations.
5 basic business steps you shouldn’t miss 

  1. The first key element in the formation of a company is the registration of the entity. The Maltese Registry of Companies is responsible for the registration process. 
  2. After this, you will have to open an in-country bank account.
  3. The next step is to get a Tax ID number and a trade License. The Tax ID number is also issued by the Registry of Companies but the Trade license you will be issued by the Trade License Directorate. 
  4. With these two the company can then register for VAT at the VAT department and for an employee’s identification number at the Inland Revenue Department.
  5. Finally, the company can register for data at the Employment Training Cooperation agency, the office of information and Data Protection Commissioner.

Maltese Employers and Embloyees
To ensure a fair business environment, Malta mandates an equal
balance for all workers and a standard work week of 40 hours. The overtimes are a maximum of 8 hours per week. The rights of the employees are usually stated in their contracts. The contract should state the details of what both the employees and employer expect from each other.
Employee compensation 
Malta ensures that in any case of standard inflation, the employers must
increase employment allowances. A bonus or raise is discussed preceding the signing of the contract. Early termination of a fixed contract leads to a payment penalty from the employer to the worker. 
Tax Requisites and Withholding
All companies operating in Malta are mandated to withhold income tax and social security tax. The specific values of these taxes might vary depending on the nature of the business.  Although on paper the percentage tax for foreign entities might appear to be high, in reality, the entrepreneurs pay far less tax due to Malta’s refund system. All merchandise and facilities have a standard VAT of 18%. This altogether attracts foreign investors to do business in the nation.
Time off and Paid leave
In case of an emergency or sickness, Malta’s employees have at least 24days
o paid time off and 20 days off of extended illness. At least six weeks off for
new mothers are granted but this can extend to 126 days of paid leave of which the employer is required to pay for the first 14 weeks.
Professional Assistance
Malta’s greatest concern is to balance the employees and employers. For more details and assistance reach out to our well-informed and friendly team at SIGTAX. Our team of experts, lawyers, accountants, and consultants will give you invaluable insights into the Maltese payroll system so that you can leverage your profits without crossing the law.


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