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Payroll & Tax in Malta

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Malta payroll & taxation

As already mentioned, in 2015 Malta made starting business easier by creating an electronic link between the Registrar of Companies and the Inland Revenue Department to facilitate issuance of a tax identification number.

Your Payroll Options in Malta

Remote Payroll

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Malta. Under Maltese Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.

Local Payroll Administration

In some cases, a company will register their business in Malta under one of the forms available: Limited liability company, Partnership en nom collectif; and Partnership en commandite; but prefer to have another company administering its payroll.  This can be accomplished through a payroll provider.

It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Malta may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a Maltese payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Maltese employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Malta to a GEO, like Shield GEO. This is possible for both foreign workers and Maltese nationals. This is the easiest, fastest and safest way to payroll staff in Malta.

Shield GEO manages all aspects of payroll for workers in Malta, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Malta

Information Explanation
Currency ?

EURO

Corporate Income Tax Rate

35% on taxable profits

Sales Tax

VAT: 18%

Withholding Tax

Interests 35%;

Royalties and other payments 35%

Other Tax

Capital Gain Tax: 7% (provisional tax) or 12% (final tax), calculated on sales price

Tax Figures

Information Explanation
Corporate Income Tax ?

35% on taxable profits

Income Tax Rate ?
Grossed income Tax Rate (%)
8,500 0
8,501 - 14,500 15
14,501 - 60,000 25
60,001 and over 35%

Income Tax rates depend on income level and family situation. Take into account any tax allowances and deductions that employees are entitled to for certain types of expenditure.
The employer deducts income tax and social-security contributions from employees’ wages, daily allowances or other remuneration.

The following individuals do not have to file a tax return: Maltese residents whose total annual income consists solely of income from which tax was deducted at source and individuals who are not taxable.
These two categories of people will receive a tax statement, which can be challenged within 30 days of receipt. All other people must file a return by <strong>30 June</strong>.

Sales Tax ?

VAT: 18%

Withholding Tax ?

Interests 35%;

Royalties and other payments 35%

Employee Social Security (EE SS)

10% calculated on gross salary (withheld)

Employer Social Security (ER SS)

10% calculated on gross salary

Malta

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