Taxes and payrolls: the labour market in Malta
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the labour market in Malta.
General data about the Maltese labour market
| Minimum wage | 192.73€/week for employees over 18 (approx 771€ monthly) |
| Payment basis | Monthly |
| Payment | Must be paid by the 25th day of the month |
| Maximum working hours a week | 40h |
| Maximum overtime hours a week | 8h |
| Working hours compensation | At 150% of the regular pay rate |
Payroll taxes in Malta
Social Security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
Both employers and employees (and self-employed) pay a 10% contribution to social security if the annual salary goes up to 26,831€. If the salary is over that amount, there is a flat rate per week of 51.6€. Which represents 2,683.2€ every year.
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
The income tax depends on whether the taxpayer is single, married or a parent. In all three cases, it is 35% when salaries are above 60k€.
Example of net salary in Malta
As a reference, we use the average salary of a software engineer. In Malta, on average, software engineers earn annually 48,000€.
| Employer | Employee | |
| € | € | |
| Gross salary (annually) | 48,000 | |
| 2,683.2 | 2,683.2 | |
| Total | 2,683.2 | 2,683.2 |
| Income tax* if single taxpayer | 8,173.55 | |
| Net salary (annually) | 37,143.25 |
The employer contributes 2,683.2€ to social security and the employee 2,683.2€.
After paying the income tax, the employee has a net salary of 37,143.25€ coming from a gross salary of 48,000€.
Unemployment regulation in Malta
The amount of notice required is dependent on the length of service and reason for termination, as follows:
| Time worked | Notice period |
| Between 1 and 6 months | 1 week |
| Between 6 months and 2 years | 2 weeks |
| Between 2 and 4 years | 4 weeks |
| Between 4 and 7 years | 8 weeks |
| Between 7 and 8 years | 9 weeks |
| Between 8 and 9 years | 10 weeks |
| Between 9 and 10 years | 11 weeks |
| More than 10 years | 12 weeks |
A definite contract needs to have a duration period. Its maximum duration is 12 months.
Different kinds of leaves in Malta
Annual paid leave is 24 days. And 14 public holidays.
The first 10 days of sick leave are paid by the employer. And from there are paid through Social Security.
There is also bereavement leave, marriage leave, court witness leave, jury service leave, injury leave, and birth leave.
Paid parental leave
Maternity leave in Malta is 18 weeks and starts 4 weeks before the expected due date and an employee must take a minimum of 6 weeks after the birth. The first 14 weeks are paid at a 100% pay rate by the employer. And from there, it is paid by Social Security.
There is no paternity leave in Malta. However, parents are entitled to 4 months of paid paternal leave for the birth of a child, adoption, fostering, or general care until the child reaches the age of 8.
Other common Maltese benefits
| Benefit | % of companies with this benefit |
| Professional Development | 20.1 |
| Free Snacks | 19.8 |
| Health Insurance | 19.7 |
| Casual Dress Code | 19.7 |
| Gym | 19.7 |
How to employ a Maltese worker
The moment you start employing people to your business, you are required to present an Employer Registration Form to the IRD. Ensure that you address your application to the Employment Section of the IRD. Once you are done filling and submitting this application, you will receive an employer’s PE Number.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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