How Do You Pay Remote Employees in Malta?

Step-by-Step Process for Paying Remote Employees in Malta

1. Verify that the worker is classified correctly under Maltese law as an employee or independent contractor, following guidelines from Jobsplus and the Department of Industrial and Employment Relations (DIER).
2. Register your company with the Malta Business Registry (MBR) to obtain a Company Registration Number if you plan to establish a local entity.
3. Obtain a PE number from the Commissioner for Revenue for tax withholding purposes and register for VAT if applicable.
4. Collect necessary employee documentation, including a signed employment contract, ID card or passport, and bank account details.
5. Set a compliant pay schedule according to Maltese employment law, typically monthly, and ensure adherence to minimum wage requirements.
6. Process payroll ensuring correct deductions for social security contributions (10% from both employer and employee) and income tax based on the employee's tax bracket.
7. Pay employees via compliant methods such as SEPA bank transfers in EUR and provide payslips detailing gross pay, deductions, and net pay.
8. Remit social security contributions and income tax to the Commissioner for Revenue by the 15th of the following month.
9. File monthly FS5 forms for tax and social security contributions and an annual FS3 form summarizing yearly earnings and deductions.
10. Issue annual FS3 forms to employees by February 15 each year and file copies with the Commissioner for Revenue.

What Are The Legal Ways To Pay Malta-Based Employees From Another Country?

Local Bank Transfer

• Best for: Employers with a registered Maltese entity paying employees via SEPA transfers in EUR.
• Pros: Cost-effective, fast settlement, and widely accepted by Maltese employees and banks.
• Limitations: Requires Maltese bank accounts and local payroll registrations; cross-border funding may introduce FX costs.
• Compliance note: Payroll must comply with Maltese tax and employment laws; wages must be paid in euros and reported under local systems.

Direct Payroll Services

• Best for: Companies with a Maltese entity that want to outsource payroll calculations, filings, and compliance.
• Pros: Ensures accurate tax withholding, automated filings with the Commissioner for Revenue, and reduces administrative burden.
• Limitations: Still requires entity setup, local registrations, and oversight of compliance with Maltese employment laws.
• Compliance note: Subject to Maltese tax regulations and social security contributions; no restrictions on paying in EUR, but strict reporting and deposit schedules apply. Playroll's Global Payroll services manage this end-to-end.

Employer of Record Platform Disbursement

• Best for: Foreign companies hiring Malta-based employees without establishing a local entity.
• Pros: The EOR becomes the legal employer, handling payroll, tax filings, benefits, and compliance with Maltese authorities.
• Limitations: Higher cost than direct payroll and less direct control over employment contracts.
• Compliance note: EOR providers manage registration, tax remittance, and reporting obligations with the Commissioner for Revenue and DIER. Explore Playroll's Employer of Record services.

Contractor Payment Platforms

• Best for: Paying Malta-based independent contractors for project-based or flexible work arrangements.
• Pros: Simplified onboarding, cross-border payments, and reduced administrative overhead.
• Limitations: Does not cover employee benefits, tax withholding, or labor law protections; higher misclassification risk.
• Compliance note: The DIER enforces strict classification rules; contractor platforms do not assume employer obligations. Explore Playroll's Contractor Management Platform.

What Taxes Do I Need To Handle for Malta Employees?

• Income Tax (Commissioner for Revenue): Withheld from employee wages based on progressive rates ranging from 0% to 35%.
• Social Security Contributions (Department of Social Security): 20% total split between employer and employee — 10% each, with a cap based on weekly wage bands.
• VAT (Commissioner for Revenue): Applicable if your company is VAT registered, standard rate is 18%.
• Final Settlement System (FSS): Monthly reporting and payment system for income tax and social security contributions.

Use Playroll's payroll tax calculator to estimate your total employer costs in Malta.

What Are the Biggest Compliance Risks When Paying Employees in Malta?

• Worker misclassification (DIER): Misclassifying employees as contractors can result in penalties and liability for unpaid benefits; the DIER uses specific criteria to determine classification.
• Payroll tax errors (Commissioner for Revenue): Incorrect tax withholding or late payments can incur penalties and interest charges.
• Permanent establishment risk (Commissioner for Revenue): Employing workers in Malta may create a taxable presence for foreign companies, triggering corporate tax obligations.
• Late filings and reporting penalties (Commissioner for Revenue): Missing deadlines for FS5 or FS3 forms can result in fines per form, escalating with the length of delay.
• Wage law violations (DIER): Non-compliance with minimum wage or overtime regulations can lead to back pay claims and penalties.
• Social security contribution errors (Department of Social Security): Incorrect contributions can lead to penalties and affect employee benefits.

Pay Your Remote Employees in Malta

Pay your remote employees compliantly in Malta, without the heavy lifting. We support local payroll where you have your own entity or for international hires with Playroll’s EOR services.

• Accurate payroll processing: Gross-to-net processing, compliant payslips, and on-time payments — aligned with Maltese pay frequency requirements and itemized payslip obligations under local wage laws.
• Taxes & contributions covered: Registrations, filings, and remittances to the Commissioner for Revenue and Department of Social Security across all relevant jurisdictions.
• Built for local compliance: We handle statutory obligations and year-end reporting, including FS3 and FS5 forms, as well as social security filings in Malta.

Book a demo to run payroll in Malta with confidence.