Do I Need a Local Entity to Hire in Malta?

In Malta, a "local entity" typically refers to a recognized business presence, such as a subsidiary or branch office, that can act as the employer. This setup allows you to be recognized locally and fulfill payroll and employment obligations. Without a local entity, you can't effectively manage employer responsibilities, including payroll registration, tax remittance, and compliance with local labor laws.

For companies looking to hire in Malta without the complexities of establishing a local entity, an Employer of Record (EOR) can be a practical solution. An EOR acts as the legal employer, handling all compliance and payroll responsibilities while you focus on your business operations.

What is Required to Employ Someone in Malta?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (registration with the Inland Revenue Department is mandatory)
• Withholding/tax remittance required? Yes (employers must withhold income tax and social security contributions)
• Social contributions required? Yes (mandatory employer and employee contributions to social security)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (includes vacation leave, sick leave, and social security)
• Works council/collective agreements considerations? Sometimes (depends on the sector and employee count)

Best Options If You're Hiring in Malta

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

While hiring contractors in Malta doesn't require a local entity, you must ensure that the contractor operates independently. Misclassification can lead to legal issues if the contractor is deemed to be functioning as an employee. Authorities may scrutinize the relationship, especially if the contractor is integrated into your business operations.

• Ensure the contractor has multiple clients and isn't solely dependent on your business.
• Limit control over how the work is performed to maintain independence.
• Be cautious if the contractor's role is core to your business, as this increases misclassification risk.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Malta, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated €300–€600 per month ($350–$700)
• Payroll provider: Estimated €20–€50 per employee per month ($23–$58)
• Employer registrations and recurring compliance: Estimated €1,000–€2,000 per year ($1,160–$2,320)
• Corporate tax filings and annual reporting: Estimated €1,500–€3,000 per year ($1,740–$3,480)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions, typically around 10% of gross salary)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Malta

Hiring in Malta can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Malta quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.