What You Need to Know About Malta Payroll Tax

Every employer in Malta must navigate a payroll system that combines 10% social security contributions from both sides, a 0.3% Maternity Fund levy, and income tax withholding under the Final Settlement System. With monthly FS5 filings due to the Commissioner for Revenue, missing a single deadline can trigger penalties that add up quickly. This guide walks you through the rates, forms, and timelines you need to manage payroll with confidence.

1. What is payroll tax?

Payroll tax in Malta refers to the deductions an employer must withhold from employee wages and remit to the government. These include income tax under the Final Settlement System (FSS), social security contributions (SSC), and Maternity Leave Fund contributions. The system is administered by the Commissioner for Revenue (CFR) and the Department of Social Security.

Key rates for 2026:

Social Security Contributions (SSC): 10% from the employee and 10% from the employer, based on basic weekly wage
SSC cap: EUR 55.93 per week (for employees born on or after 1 January 1962) when weekly wages exceed EUR 559.31. The annual maximum is EUR 2,908.36 each for employer and employee
Maternity Leave Fund: 0.3% of the basic weekly wage, capped at EUR 1.68 per week for high earners
Income tax: Withheld at progressive rates based on the employee's tax status (single, married, or parent)

2. Who does it apply to?

This usually applies to:

Employers of any size operating in Malta
Employees earning a salary or wages in Malta
Company directors receiving remuneration
Part-time workers and casual employees
Self-employed individuals (who pay 15% SSC on net income)

3. Why does it matter?

Understanding payroll tax helps you:

Stay compliant with Malta's Final Settlement System
Avoid penalties and late fees from the CFR
Keep proper records of all employee deductions
File and pay correctly every month
Plan your cash flow better by budgeting for employer contributions

4. How does it work?

Here is the basic process:

Register as an employer with the Commissioner for Revenue (CFR)
Determine each employee's tax status (single, married, or parent) and applicable tax brackets
Calculate income tax withholding using the FSS tax tables published by the CFR
Calculate social security contributions at 10% of basic weekly wage (both employer and employee share)
Calculate Maternity Fund contribution at 0.3% of basic weekly wage
Deduct the employee's share from their gross pay
Add the employer's share on top of the gross pay cost
Submit the monthly FS5 form and pay all withheld taxes and contributions to the CFR by the due date

5. What forms are involved?

FS5 (Monthly Payroll Submission) - Filed monthly with the CFR. Declares total income tax withheld, social security contributions, and Maternity Fund contributions for all employees
FS3 (Employee Statement of Earnings) - Annual statement issued to each employee showing gross earnings, deductions, and tax paid during the year
FS7 (Annual Reconciliation Statement) - Annual summary reconciling all monthly FS5 payments against total payroll for the year. Submitted to the CFR alongside the FS3 forms

6. What information do you need?

Before handling payroll tax, make sure you have:

Each employee's tax identification number
Each employee's FSS tax status (single, married, or parent)
Employment start and end dates
Gross salary or wage details (weekly or monthly)
Records of fringe benefits provided
Any tax credits or deductions claimed by the employee
Social security number for each employee
CFR e-ID for online submissions

7. Important deadlines

Filing frequency: Monthly (FS5)
Payment deadline: The FS5 return and payment are due by the end of the month following the payroll month. For example, January payroll is due by the end of February
Year-end requirements: FS3 and FS7 must be submitted to the CFR by 15 February of the following year. If you have more than 9 employees, electronic filing is mandatory

8. Common mistakes to avoid

Using incorrect FSS tax tables or outdated tax brackets
Forgetting to update SSC caps at the start of each year (rates are revised annually)
Not including fringe benefits in the taxable income calculation
Missing the monthly FS5 deadline and incurring penalties
Failing to issue FS3 statements to employees by the February deadline
Not reconciling FS5 monthly totals against the annual FS7
Overlooking the Maternity Fund contribution (small but mandatory)
Treating self-employed contractors as employees without proper classification

9. Simple example

You employ one full-time worker in Sliema with a monthly salary of EUR 2,000 (EUR 461.54 per week).

Employee deductions (per month):

Income tax (FSS): Approximately EUR 195 (based on single status, no deductions)
Social security (10%): EUR 2,000 x 10% = EUR 200
Maternity Fund: Not deducted from employee

Total deducted from employee pay: EUR 395 Employee net pay: EUR 2,000 - EUR 395 = EUR 1,605

Employer costs (per month):

Employer social security (10%): EUR 200
Employer Maternity Fund (0.3%): EUR 6

Total employer cost on top of salary: EUR 206 Total cost to employer: EUR 2,000 + EUR 206 = EUR 2,206

Total remitted to CFR via FS5: EUR 195 (tax) + EUR 200 (employee SSC) + EUR 200 (employer SSC) + EUR 6 (Maternity Fund) = EUR 601

10. FAQ

Q: When do I need to register as an employer with the CFR? A: You must register before you hire your first employee. Registration is done through the CFR e-Services portal.

Q: Are social security contributions capped? A: Yes. For 2026, the weekly cap is EUR 55.93 each for employer and employee when the weekly wage exceeds EUR 559.31. The annual maximum is EUR 2,908.36 per party.

Q: Do part-time employees pay social security? A: Yes. Part-time employees pay SSC at the same 10% rate on their actual earnings, subject to the same annual cap.

Q: What happens if I pay the FS5 late? A: The CFR charges penalties and interest on late payments. Repeated late filing may trigger an audit or further enforcement action.

Q: Can I file the FS5 online? A: Yes. The CFR requires electronic filing through the e-Services portal. You need an e-ID to access the system.

11. Final takeaway

Malta payroll tax requires monthly FS5 filing, 10% social security from both employer and employee, 0.3% Maternity Fund, and income tax withholding under the FSS system.

Caption

What you need to know about Malta Payroll Tax: Employers must withhold income tax and 10% social security from employees, contribute a matching 10% plus 0.3% Maternity Fund, and file the FS5 monthly with the CFR.

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