The most notable legislative sources include the Constitution of Malta, the Employment and Industrial Relations Act (EIRA), the Employment Commission Act, the Employment and Training Services Act and EU Regulations and Directives.
Regulations made under the EIRA include Wage Regulation Orders which represent administrative regulations which regulate certain conditions of employment for specific sectors. At present, there are 31 different WROs in force.
There are several key areas to be aware of within the Maltese employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.
Maltese Labour Law is essentially based on the contractual agreement between employer and employee, provided that the statutory conditions of employment are respected. Thus, whereas certain conditions of employment are strictly regulated as a matter of law, other conditions are left entirely up to the parties to agree upon, as long as these are also considered to be objectively reasonable.
If the period of employment exceeds one month and the employee’s working hours exceed eight hours per week, the employer is bound to give the employee within 8 working days from the commencement of employment, either (i) a written contract of employment, or (ii) a written statement of minimum conditions, namely:
Contracts of employment may be signed for a fixed term or for an indefinite term. A fixed term contract can be successively renewed up to a maximum period of 4 years after which the employee is considered to be under a contract of indefinite duration.
The exception occurs when the employer has justifiable reasons for retaining the employee on a fixed term contract. An employee whose fixed term contract has expired and is retained in employment will also be considered to be under an indefinite contract if the employer does not produce a new contract of service within 12 days following the expiry of the previous contract.
|Statutory Working Hours ?||
48 hours are the legal maximum. (The eight additional hours have to be paid for in overtime compensation). Daily office hours in the private sector are usually between 08:00 or 08:30 and 17:00 or 17:30.
|Medical Leave ?||
The amount of sick leave varies substantially according to the relevant Wage Regulation Order that regulates the specific sector of industry. Where the type of activity of work is not regulated by any W.R.O., the sick leave entitlement of an employee amounts to two working weeks per year (calculated in hours). In occasions of sickness, a medical certificate has to be presented to the employer.
If the absence from work is not covered by a medical certificate, other arrangements (like applying for leave) have to be sought. The employer is only required to issue wages for the amount of sick leave entitlement provided by law. If an employee remains sick after having exhausted all the sick leave entitlement, s/he will only continue to receive the Sickness benefit from the Social Security to which s/he may be entitled.
|Annual Leave Accrual Entitlement ?||
By law, an employee working 40 hours per week is entitled to 192 hours of paid annual leave (that is at least the equivalent in hours of four weeks and four working days calculated on the basis of a 40-hour working week, and an 8-hour working day).
If the average normal hours (excluding overtime) calculated over a period of 17 weeks is below or exceeds 40 hours per week, the vacation leave entitlement in hours should be adjusted accordingly.
|Maternity Leave in Malta ?||
Both male and female workers have the individual right to be granted unpaid parental leave in case of birth, adoption, fostering or legal custody of a child to enable them to take care of that child for a period of four months until the child has attained the age of eight years. Parental leave can be availed of in established periods of one month each.
An employee must have at least 12 months continuous service with his/her employer to be eligible to apply for Parental Leave, unless a shorter period is agreed to.
The employee’s balance of parental leave is transferred to the new employment. The employee is not entitled to a fresh parental leave entitlement.
|Termination of Employment ?||
Dismissal and the rights and obligations of the respective parties are matters which are subject to very strict regulation.
The Employer may only terminate a contract of employment on the basis of:
The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason.
Where the employer or employee are terminating a contract of employment of an indefinite term, the advance notice to be given by the terminating party to the other party is calculated according to the period for which the employee has been in the employment of the same employer continuously.
|Probation Period ?||
The first 6 months of each employment contract constitutes probation, unless the parties agree to a shorter term. By way of exception to this rule, in the case of contracts of service, or collective agreements in respect of employees holding technical, executive, administrative or managerial posts whose wages are at least double the applicable minimum wage, such probation period is of 1 year unless a shorter period is agreed upon in the contract of service or in the collective agreement.
During the probation period employment can be terminated by either party without assigning any reason, provided that at least 1 week’s notice of termination is given by the terminating party to the other party where the employment relationship has exceeded 1 month.
|Pension Requirements ?||
Entitlement to contributory benefits, apart from any other statutory conditions, depends upon a contribution test.
a) A Two-thirds Pension – an insured person needs to have at least 1 contribution paid after 21st January 1979.
b) A Retirement Pension – an insured person needs to have paid 1 contribution before the 16th January 1979.
The test is an arithmetical calculation of the yearly average of contributions paid by or credited to the insured during a certain period (as specified by the Social Security Act Cap. 318). Normally this period can vary from 35 years in the case of a Two-thirds Pension up to 42 years in the case of a Retirement Pension. For further details on the method of calculation see 6 and 7 below.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
Shield GEO does not operate in Malta.
|Income Tax Rates||
Taxation in Malta for individuals with residence and domicile in Malta applies to worldwide income. In the case of persons which are either resident or domiciled in Malta, taxation focuses only over income obtained in Malta or remitted to Malta and on capital gains obtained in Malta. Income obtained outside Malta not remitted to Malta and the capital gains obtained outside Malta, irrespective of being remitted or not to Malta are excluded.
The tax rate is a progressive rate, the maximum being 35%.
|Tax Returns Supplied||
Shield GEO does not operate in Malta.
|Employers Social Security and statutory contributions||
10% calculated on gross salary
|Employees Social Security and statutory contributions||
10% calculated on gross salary (withheld)
In 2015, Malta made starting a 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.
|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 ?||
Shield GEO does not operate in Malta.
|Corporate Income Tax ?||
35% on taxable profits
|Income Tax Rate ?||
|Sales Tax ?||
|Withholding Tax ?||
Royalties and other payments 35%
|Other Tax ?||
Capital Gain Tax: 7% (provisional tax) or 12% (final tax), calculated on sales price
|Time to prepare and Pay Taxes ?||
|Time required to start a Business ?||
Foreign workers are required to have the proper visas and work permits in Malta, as established by immigration laws. Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Maltese market.
Work permits in Malta are employer-specific (although there can be exceptions), occupation-specific, and location-specific, and are normally valid for one year.
A worker from a non-EU country must first obtain a visa to enter Malta and then apply for the residence/work permit once in Malta.
The Employment and Training Corporation is at present the entity that processes applications for the issue of employment licenses (previously known as work permits) with regards to foreign nationals to be employed in Malta. ETC was delegated this responsibility in August 2005.
If you are not a citizen of an EU country, you need an employment license in order to be able to work in Malta. EU nationals [except citizens of Croatia], EEA and Swiss nationals do not require an employment license to work in Malta.
If you are an EU National that would like to work in Malta, whilst not requiring an employment license, we would recommend that you contact the EURES advisors in order to discuss with them any requirements that there might be. You can either send an email on: firstname.lastname@example.org or call the free-phone number 8007 6505. You can also chat to Maltese advisors online via the EURES portal – www.eures.europa.eu.
Non EU National
Employment licenses must be applied for by the employer and not by the jobseeker.
Third country nationals who are eligible for the Single Permit Application still require an employment license, which process is conducted by means of internal arrangements between ETC and the Department for Citizenship and Expatriate Affairs, some of the documentation indicated in the contents below still applies in their respect.
In the case of an application for a new employment license for a third country national, the process is as follows. The employer, unless it is a single permit application must fill in an application form and submit it to the Employment Licenses Unit by hand or by mail.
The following documentation needs to be provided at application stage:
(a) Application form;
(b) Curriculum vitae;
(c) Position description;
(e) One passport photo;
(f) Copy of travel document;
(g) Copy of valid visa (if third country national is in Malta);
(h) Copy of qualification certificates and accreditation/recognition;
(i) Covering letter by employer indicating site of work;
(j) The fee;
(k) Evidence of search for EEA/Swiss/Maltese nationals through a detailed vacancy report.
The following documents must also be supplied, depending on the case as indicated:
(l) A valid police certificate (if the foreign national is an asylum seeker or a person enjoying Subsidiary Protection/Temporary Humanitarian Protection Status and Refugee Status;
(m) Valid certificate issued by the Refugee Commissioner in the case of THP5 s/SPs, Refugees and Asylum Seekers;
(n) Proof of long-term residence status, or of relation to long-term resident, where applicable;
(o) Evidence from a medical specialist in the case of a home-based foreign career;
(p) A power of attorney signed and attested by a Notary, Advocate or Public official, when a person applies or withdraws an application on behalf of another, in the case of a home-based career;
(q) Birth certificates of children, if not born in Malta, if application is for nanny;
(r) Proof of relationship to diplomat, if application is for family member of diplomat;
(s) Approval of the regulatory body, in the case of applications for third country nationals to perform a regulated profession;
(t) Health clearance form in the case of third country nationals already in Malta;
(u) Proof of study in Malta, in the case of students;
(v) Proof of relationship with EEA/Swiss national in the case of TCN dependent on EEA/Swiss national;
(w) Power of attorney, if application is submitted on behalf of an elderly person or a person with disability.
Further information can be founded at this link
Processing Time: 2 weeks
Cost: Third country national Long-term Residents – €58
All other third country nationals – Payable on application € 150 / Payable on issue € 80
|Category||Description of Visa|
Schengen visa applications must be lodged at the diplomatic mission of the country which is the main destination of the visit. In the event, therefore, that an applicant intends to visit several Schengen Member States (with stays of approximately the same duration), the application must be lodged at the diplomatic mission of the country of first entry.
Visa applications must be in writing, giving all details required on the Visa Application Form which can be acquired free of charge from Malta’s diplomatic missions and consular posts or downloaded from accessing the Related Documents on the left hand side:
The Visa Application Form must be wholly and legibly completed, and signed by the applicant, and accompanied by:
• a valid travel document (passport) validity of which must not be less than three months;
• two (2) passport-size photographs, in color and taken against a white background, with face clearly visible;
• the visa fee (approx. €60)
Processing Time: Applications for Schengen short-stay visas can be lodged within 3 months prior to the planned trip.
|Short-stay “C” visa (Schengen)||
The validity period of a Schengen (short-term) visa is determined in accordance with the length of travel, for a maximum of 5 years. According to expected number of stays, Schengen (short-term) visa may be issued as follows:
• single entry – entitles to a single uninterrupted stay during the period stipulated in the visa, which may not exceed than 3 months;
Processing Time: Minimum 15 days
|National Long-stay “D” visa||
These visas allow the holder to stay in the territory of Malta for periods longer than three months (90 days). All third-country nationals who wish to enter Malta in order to work and/or study must be in possession of this type of visa.
Applications for long-term or “D” visas are not subject of representation arrangements and the applicants should contact the Central Visa Unit for further information as to which of Malta’s diplomatic missions and consular posts would accept their visa applications.
Processing Time: Minimum 15 days
When setting up a company you may want to consider these factors:
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.
Generally speaking, Malta’s comparatively low running costs, rent and wages and competitive telecommunication systems, serve to further enhance the Island’s attraction as an international business center.
In addition, the country does not impose restrictions on the importation of goods from other countries or groups of countries, although goods imported from non-European Union countries may be subject to import duties in addition to VAT (when applicable).
The main weaknesses in doing business in Malta, according to the World Bank, are in the areas of getting credit, dealing with construction permits, getting electricity and in enforcing contracts.
The national language of Malta is Maltese, but Malta has two official languages, Maltese and English.
Malta’s Companies Act is mainly disciplined by English Law and EU directives, and describes the type of Maltese corporate entities that may be established in the country. There are three main types of business available in Malta, namely:
Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Malta and the planned business activity.
A limited liability company incorporated in Malta may be either a public or a private limited liability company. The liability of the shareholders in a Malta Limited Liability Company is limited to the amount, if any, of unpaid on the shares respectively held by each of them.
The main differences between the private and public limited liability company is the fact that a private company must limited the number of its shareholders to 50 and it cannot offer its shares to the general public.
Reserve a unique company name
It is possible to check for a company name online through the website of the Registry of Companies or in person. The reservation confirmation will be sent by email.
Deposit the paid-in minimum capital
The Bank will open a company account the moment it receives reference letters from the signatories’ respective banks. In order to open a bank account it is necessary to provide the following documents:
– A duly filled in Know-Your-Client (KYC) form;
– A request to open an account specifying the type of account, the currency and the preferred mode of tax payment;
– Copy of the Memorandum and Articles of Association together with a certified copy of the Certificate of Registration issued by the Registry of Companies once the company is registered.
– Confirmation of the permanent address of the Directors through a completed identification statement certified by a Prime bank or Maltese Embassy in the country of residence. The bank also requires the authenticated identification documents for all the directors, signatories, beneficial owners and secretaries.
– A signed form by the directors of the company appointing the bankers.
Register at the Companies Registry
– Confirmation of name reservation
– Signed memorandum and articles of association
– Confirmation of deposit of share capital
– Copy of the passport/ID of each shareholder, director and company secretary.
Processing time: The Registry will take between 2 and 3 days to incorporate the company at which point the official memorandum and articles along with the certificate of registration bearing the registration number and registration date of the company are issued.
These documents are then uploaded to the website of the Registry of Companies. The Registrar of Companies provides then an alternative service for the registration of Companies. Registration may now be carried out online through the Registry’s portal. Prior to registration, an applicant must register for an account and obtain a personal Digital Certificate by registering for an e-ID. The MFSA would then vet the application within 5 working days.
Obtain a trade license
Businesses can obtain licenses from the Trade Licensing Unit Commerce Department. There are 2 main types of trading licenses depending on whether your business activity involves the handling of food and/or beverages and activities involving hairdressing, beauty treatment, fitness or physical well-being where a No Objection Declaration issued by the Environmental Health Directorate is required.
Documents required are:
– Notification Form.
– Copy of Passport or ID Card.
– Declaration of Shareholders or by Board of Directors in case the applicant is the legal representative of a partnership or company.
– Development Class Number allocated by MEPA (where applicable) and Building Permit Number issued by MEPA and date issued.
Obtain a company Tax Identification Number (TIN)
The company’s certificate of incorporation (and Registrar of Companies number), as well as a copy of the memorandum and articles of association, are needed in order to obtain the TIN number. The company founder can also log in to the electronic service of the Inland Revenue Department and retrieve the TIN. Through an automated interface with the Registrar of Companies (ROC), the TIN is automatically generated by IRD as soon as the ROC issues the ROC number. The TIN is available for retrieval within a day or two from the date of issuance of the ROC Number.
Register for VAT
To register for VAT, the entrepreneur submits the application form S.L. 406.09 “Value Added Tax (Forms) Regulations”, along with the company Tax Identification Number (TIN). Furthermore, a copy of the memorandum and articles of association, and a copy of the original certificate of registration including the stamp of the Malta Financial Services Authority (MFSA) should be produced.
Obtain a PE number (employer identification number) and register employees
Both the VAT number and the Income Tax number are required to obtain the PE number.
For PE number: the registration form is available, the entrepreneur can either complete it online or print it and send it to IRD. The entrepreneur has to provide: – The tax ID number – The number of employees – Details of the business – Date of first employment
Register the employees with Employment Training Corporation (ETC)
The entrepreneur must declare the company’s recruits to the ETC. The PE number is required.
Register for Data Protection
Such registration must be done before the company carries out any data processing operations. VAT and registration numbers are required according to the form to be submitted.
Cost: Between €1500 and 2000
Processing Time: Approx. 4 weeks
This form of commercial partnership has its obligations guaranteed by the unlimited, joint and several liabilities of one or more “general partners” and by the liability, limited to the amount unpaid on the contribution, if any, of one or more “limited partners”.
At least one of the general partners must be either an individual or a body corporate with its obligations guaranteed by the unlimited and joint and several liabilities of one or more of its members.
A company is formed by a memorandum of association, which must contain some mandatory details, namely:
– Registered office in Malta;
– Object of the company;
– Whether it is a private (Ltd) or public (PLC) company;
– Duration or term of the company;
– Shareholder details and their paid in capital;
– Amount of capital and any information about this (split, paid-in, preference shares etc.);
– Managers’ or Directors’ details.
The Partnership en Commandite accounts do not need to be audited, unless its capital is represented by shares, in which case auditors need to be appointed and its accounts organized in the same way as for a limited liability company.
The shareholders may simultaneously agree to the articles of association, governing the company’s internal workings of the company. The company can take any name that is accepted by the Companies’ Register and generally the Register will not object to any name as long as it is not being used by another company, is not easily confused with another company and is not offensive or undesirable in any way.
The company share capital must be deposited in a domestic bank account under the name of the company being formed, before registering it. Proof of deposit will be required at the time of registration.
If the company is a Public limited company (Plc), in addition to the memorandum of association, an additional document is required, which:
(a) gives an estimate of all the costs to be borne by the company until it is authorized to begin its activity, and
(b) describes any special advantage granted to anyone who has taken part in the formation of the company or in the process to gain authorization, before the company is authorized to begin its activity.
The registration certificate is issued within a few days after the papers have been submitted. The company can begin trading as soon as it is registered.
The Registration is subject to a fee which varies according to the share capital. If the share capital is later increased, fees will be levied on the difference.
A partnership en nom collectif (referred to as a “partnership” in the following provisions of this Part) may be formed by two or more partners and operates under a partnership name and has its obligations guaranteed by the unlimited and joint and several liability of all the partners.
On formation or at any time thereafter, a partnership becomes subject to the provisions of the Companies Act and shall, within fourteen days, deliver to the Registrar for registration a notice specifying that it is subject to this article and that it shall comply with the provisions laid down in this article.
When a partnership ceases to be subject to the provisions of the Maltese Company Act, the partnership shall, within fourteen days of such cessation, deliver to the Registrar for registration a notice specifying that it is no longer subject to this article and that the provisions of this article shall not apply to such partnership as from the date that it has ceased to be so subject.
An agreement to pay a share of the profits of a partnership to a person in total or partial remuneration for his services shall not, of itself, make him a partner.
A partnership shall not be registered by a name which:
Provided that the Registrar shall notify any refusal under this sub article without delay to the person requesting the registration.
Unless specifically provided in the deed of partnership, things contributed to the partnership shall be deemed to have been transferred in full ownership: Provided that, where any of the partners has contributed his own services only, the contributions made by the other partners shall, unless specifically provided in the deed of partnership, be deemed to have been made in usufruct.
A partnership shall not be validly constituted unless a deed of partnership is entered into and signed and a certificate of registration is issued under this Act in respect thereof.
The partners draw up the Deed of Partnership. A partnership shall not be validly constituted unless such Deed is entered into and signed and a certificate of registration is issued. The Deed of
Partnership must state:
The deed of partnership shall be delivered for registration to the Registrar who shall register it.
On the registration of the deed of partnership the Registrar shall certify under his hand that the partnership is registered and the partnership shall come into existence and shall be authorized to commence business under the partnership name as from the date of the certificate: Provided that, if registration is obtained before the date fixed in the deed of partnership for the commencement of the partnership, the certificate shall indicate such date, and the partnership shall come into existence and shall be authorized to commence business as from such later date.
A certificate of registration given in respect of a partnership is conclusive evidence that the requirements of this Act in respect of registration and of matters precedent and incidental to it have been complied with and that the partnership is duly registered, under this Act.
The registration of a partnership by the Registrar under this article shall be without prejudice to any other license or other authorization as may be required in respect of the activities to be carried on by the partnership under any other law.
Unless and until a certificate of registration is issued under this Act in respect of a partnership or until the date indicated in a certificate of registration as the date on which a partnership shall come into existence:
(a) any two or more persons carrying on business under a name falsely implying the existence of a partnership shall have, as against one another and limitedly to property acquired from such business, such rights only as are by law conferred on joint owners;
(b) any obligation contracted in favour of third parties in good faith under a name falsely implying the existence of a partnership shall be jointly and severally binding on those persons, who, if a certificate of registration had been issued, would have been partners carrying on business under that name.
Statutory costs payable to the Maltese authorities
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