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BASIC COUNTRY FACTS

Republic of Malta

Valletta

  • Maltese
  • English
  • Italian

0.493

Euro

.mt

+356

Euro

STATUTORY LABOR REQUIREMENTS

Probation Period

  • Probationary period is of six months, unless a shorter period is agreed upon between the employer and employee.

Annual Leave

  • Workers are entitled to paid annual leave of at least equivalent in hours of four weeks and four days on the basis of a 40-hour working week and 8-hour working day (24 days of annual leave).

Public Holidays

  1. New Year's Day (1st January)
  2. Feast of St. Paul's Shipwreck (10th February)
  3. Feast of St. Joseph (`19th March)
  4. Freedom Day (31st March)
  5. Good Friday (10th April)
  6. Worker's Day (1st May)
  7. Sette Giugno (7th June)
  8. Feast of St. Peter and St. Paul (29th July)
  9. Feast of the Assumption (15th August)
  10. Feast of Our Lady of Victories (8th September)
  11. Independence Day (21st September)
  12. Feast of the Immaculate Conception (8th December)
  13. Republic Day (13th December)
  14. Christmas Day (25th December)

Maternity Leave

  • Maternity leave is 126 consecutive days (18 weeks). 
  • Of these 126 days, 42 days (6 weeks) is the compulsory entitlement and is taken after birth.

Paternity Leave

  • Fathers are entitled to 10 days of paternity leave

Sick Leave

  • Employees are entitled to 15 days’ sick leave on full pay and an additional 36 days’ sick leave on half pay calculated in hours less sickness benefit in every calendar year. 
  • The first 3 days of any claim for sick leave shall be paid by the employer.

Work Hours

  • The working week in Malta has 40 hours on the average
  • Daily office hours in the private sector are usually between 08:00 or 08:30 and 17:00 or 17:30.

Overtime

  • If your job or sector is not covered by a Wage Regulation Order (WRO), then the default overtime rate is 1.5 times your ordinary pay and will apply to any hours worked over 40 per week.
  • Overtime cannot exceed 48 hours per week

Notice Period

  • When terminating employment during a probationary period, a one-week notice applies if the length of service is longer than one month.
  • In case of indefinite contracts which extend beyond the probation period, notice has to be given prior to the termination of employment. 
  • Notice is to be given either by the employee, or by the employer in cases of redundancy. 
  • Notice is calculated on the employee’s continuous length of service, as follows:
    • Not more than one month - No notice
    •  More than one month and up to six months - One week
    • More than six months and up to two years - Two weeks
    • More than two years and up to four years - Four weeks
    • More than four years and up to seven years - Eight weeks
    • More than seven years and up to eight years - Nine weeks
    • More than eight years and up to nine years - Ten weeks
    • More than nine years and up to ten years - Eleven weeks
    • More than ten years - Twelve weeks

Severance

  • No severance payment is guaranteed by the law. 
  • However, a collective agreement may provide for redundancy pay in the event of collective redundancies.

13th Month Salary in Brazil

  • Yes (Mandatory)
  • There is a statutory requirement to pay the 13th and the 14th month salary there are also two more bonuses.
  • The total bonuses required are four at approximately 135 Euros in June and December ; and approximately 121 Euros in March and September.

 INCOME TAX

  • Malta taxes individuals who are both domiciled and ordinarily resident in Malta on their worldwide income.
  • Any person who is ordinarily resident in Malta but not domiciled in Malta is taxable only on income arising in Malta and on any foreign income remitted to Malta, i.e. on income and chargeable gains arising in Malta and on income outside Malta that is received in Malta. 
  • Such persons are not taxable in Malta on income arising outside Malta, which is not received in Malta, and on capital gains arising outside Malta, regardless of whether they are received in Malta, or otherwise.
  • However, persons who are married to an individual ordinarily resident and domiciled in Malta, are subject to a worldwide basis of taxation (and not on a source and remittance basis).
  • A non-resident individual is taxed only on income and chargeable gains arising in Malta.
  • Income is taxable at graduated progressive rates, ranging from 0% to 35%. 
  • For year of assessment 2020 (year of income 2019), in the case of single individuals (including married individuals opting for separate computation) there is a tax liability of EUR 12,275 on the first EUR 60,000 of income (individuals earning up to EUR 19,500 will save up to EUR 90 tax per annum). 
  • Married individuals will be liable for EUR 11,095 tax on the first EUR 60,000 of income (couples earning up to EUR 28,700 will save up to EUR 120 tax per annum). 
  • For amounts exceeding these thresholds, the tax rate is 35% for both single and married individuals. 
  • Subject to certain conditions, the married rates also apply to single parents, widows/widowers and separated parents.

Married Resident Taxpayers

Taxable Income

Rate (%)

Deduct (EUR)

From

To

0

12,700

0

0

12,701

21,200

15

1,905

21,201

28,700

25

4,025

28,701

60,000

25

3,905

60,001

And above

35

9,905

 

Single Resident Taxpayers

Taxable Income

Rate (%)

Deduct (EUR)

From

To

0

9,100

0

0

9,101

14,500

15

1,365

14,501

19,500

25

2,815

19,501

60,000

25

2,725

60,001

And above

35

8,725

Parent Rates

Taxable Income

Rate (%)

Deduct (EUR)

From

To

0

10,500

0

0

10,501

15,800

15

1,575

15,801

21,200

25

3,155

21,201

60,000

25

3,050

60,001

And above

35

9,050

DEDUCTIBLE EXPENSES

  • To be deductible, expenses of an employee must be incurred wholly and exclusively in the production of the income and must be necessarily incurred. 
  • Where the employer reimburses employees for expenses incurred on the employer's behalf, no tax liability should arise in the hands of the recipients unless a gain or profit accrues to them from the arrangement.
  • Certain allowances are available for business-related expenses in the case of persons exercising a trade, business, profession, or vocation. These include, inter alia, scientific research, bad debts, and losses carried forward.

Personal Deductions

  • Alimony payments paid by a taxpayer to an estranged spouse are allowed as a deduction, while the receipt of the alimony is taxable in the hands of the recipient. 
  • The receipt of a payment for the maintenance of children is not taxable in the hands of the estranged spouse and not deductible in the hands of the person making the payment. 
  • Certain deductions are allowable, which include:
    • fees paid to a named school in respect of a child with special needs for the services of a facilitator (capped at a maximum amount)
    • fees paid for childcare services for children below the age of 12 to a bona fidechildcare centre (capped at a maximum amount)
    • fees paid for residence in a private home for the elderly (capped at a maximum amount)
    • fees paid to named private school fees for children either in kindergarten, primary school or secondary education
    • fees paid in respect of children under the age of 16 years for certain sports activities (capped at a maximum amount), fees paid for the use of school transport (capped at a maximum amount)
    • fees for residency services in respite homes or centers or for community support services (capped at a maximum amount).

Deductible Expenses

Employment Deductions

  • To be deductible, expenses of an employee must be incurred wholly and exclusively in the production of the income and must be necessarily incurred. 

Business Deductions

  • These include, inter alia, scientific research, bad debts, and losses carried forward.

Personal Deductions

  • Alimony payments paid by a taxpayer to an estranged spouse are allowed as a deduction
  • fees paid to a named school in respect of a child with special needs for the services of a facilitator (capped at a maximum amount)
  • fees paid for childcare services for children below the age of 12 to a bona fidechildcare center (capped at a maximum amount)
  • fees paid for residence in a private home for the elderly (capped at a maximum amount)
  • fees paid to named private school fees for children either in kindergarten, primary school or secondary education
  • fees paid in respect of children under the age of 16 years for certain sports activities (capped at a maximum amount), fees paid for the use of school transport (capped at a maximum amount)
  • fees for residency services in respite homes or centers or for community support services (capped at a maximum amount).

 IMMIGRATION

  • To take up employment in Malta, a foreign citizen must obtain either a work permit (which would cover a residence permit) or employment license. 
  • Identity Malta Agency issues work and residence permits in Malta for both EU and non-EU nationals. 
  • From 2019, employment license applications for “service providers” are handled directly by Jobsplus (one of the stakeholders of Identity Malta) while employment license applications for intracorporate transferees (ICTs) are handled directly by Identity Malta. 
  • EEA and Swiss nationals and their third-country family members or dependents are required to apply for a work permit or an employment license to work in Malta. 
  • For non-EU citizens, work permits are normally granted only to individuals who are able to provide skills or expertise not available in the local market. 
  • Identity Malta issues a residence document on presentation of the residence application following the approval of the work permit or employment license (if the duration of the stay in Malta is longer than three months).
  • Applications for work permits are considered on a case-by-case basis. 
  • Work permits are generally valid for one year and are renewable. 
  • It takes approximately two to six months for a work permit to be issued and four to six weeks for an employment license to be issued. 
  • In 2017, the Maltese government introduced a new scheme, known as the Key Employee Initiative (KEI) scheme, which processes work permit applications for non-EU nationals within five working days. 
  • The application can be submitted while the applicant is still abroad. 
  • The KEI scheme applies to employees who satisfy the following conditions: 
  • They earn an annual gross salary of at least EUR30,000 per year. 
  • They provide certified copies of their relevant qualifications, warrants (certificates provided to accountants in Malta) or documents showing the necessary work experience. 
  • They provide a declaration by the employer stating that the applicant has the necessary credentials to perform the assigned duties. 
  • Other documentation is required to complete the application.

Type of Visa/ Permit

Documentation

Validity

Eligibility

Work Permit

  • Application form
  • Curriculum vitae
  • Valid Passport
  • Visa
  • One passport photo
  • Copy of qualification certificates and accreditation/recognition
  • Evidence of search for EEA/Swiss/Maltese nationals through a detailed vacancy report.

1 year

  • EEA and Swiss nationals and their third-country family members or dependents are required to apply for a work permit or an employment license to work in Malta. 
  • For non-EU citizens, work permits are normally granted only to individuals who are able to provide skills or expertise not available in the local market. 

Key Employee Initiative (EU Blue Card)

  • CEA Form C (Non-EU)
  • Form ID 1A
  • Full copy of passport
  • CV
  • Work contract
  • Certified copies of relevant qualifications
  • Comprehensive health-insurance policy
  • Lease agreement or purchase agreement of property

1 year

  • High skilled employees
  • Employees who earn around EUR 30,000 per year

VALUE ADDED TAX

  • Whilst Malta follows the EU rules on VAT compliance, it is still free to set its own standard (upper) VAT rate.  
  • The only proviso is that it is above 15%.  
  • Suppliers of goods or services VAT registered in Maltese must charge the appropriate VAT rate, and collect the tax for onward payment to the Maltese tax authorities through a VAT filling.

Malta VAT Rates

Standard Rate

18%

Reduced Rate

7%

Reduced Rate

5%

Zero Rate

0%

 WITHHOLDING TAX

Dividends

  • Malta does not levy withholding tax on outbound dividends (except for certain untaxed dividends where a nonresident person is owned and controlled by, or acts on behalf of, an individual ordinarily resident and domiciled in Malta).

Interest

  • The rate is 0%, provided the recipient is not owned and controlled by, and does not act on behalf of, persons ordinarily resident and domiciled in Malta, and does not carry on a trade/business in Malta through a PE with which the interest income is effectively connected

Royalties

  • The rate is 0%, provided the recipient is not owned and controlled by, and does not act on behalf of, persons ordinarily resident and domiciled in Malta, and does not carry on a trade/business in Malta through a PE with which the royalty income is effectively connected

Technical Service Fee

  • The rate is 0%, provided such fees are not sourced in Malta (e.g. are not attributable to a PE of a nonresident in Malta)

WHT

Dividends

Does not levy WHT on outbound dividends

Royalties

0%

Interest

0%

Technical Service Fee

0%

TERMINATION

 

The employer may only terminate a contract of employment on the basis of:

    • a good and sufficient cause – a term which has no statutory definition and which constitutes the interpretational basis for each case of unfair dismissal brought before the Industrial Tribunal.
    • redundancy, or
    • the employee reaching retirement age.
  • Where an employer intends to terminate the employment of an employee on grounds of redundancy, he is required to terminate the employment of that person who was engaged last in the class of employment affected by such redundancy (“Last in First Out”), 
  • The employee, on the other hand, is free to terminate employment of employment of an indefinite term without assigning any reason.

STATUTORY BENEFITS

  • These are benefits as postulated by law
  • These include probationary period, public holidays, annual leave, sick leave, maternity leave, paternity leave, and notice period 
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Public Holidays

Annual Leave

Sick Leave

Maternity Leave

Paternity Leave

Notice Period

Social Security Benefits

 PAYMENTS AND INVOICING 

  • The year of assessment (tax year) is the calendar year. 
  • In the year of assessment, income tax is charged on income earned in the preceding calendar year (the basis year). 
  • Recipients of specified types of income are not required to file regular tax returns, but they receive a tax statement with respect to the basis year in question. 
  • The taxpayer needs to review the tax statement. 
  • If the taxpayer does not agree with the amount, a form attached to the tax statement must be completed and sent to the Commissioner for Revenue. 
  • Subsequently, the taxpayer may be asked to file a special tax return by 30 June of the year following the basis year.
  • All other individuals must file a self-assessment tax return and pay all tax due by 30 June of the year following the basis year
  • Tax liability for employees is paid through the Final Settlement System (FSS) of withholding on salaries and wages.

EASE OF DOING BUSINESS 

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Malta ranked 88th in the World in 2019 in terms of ease of doing business.

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