MALTA GUIDE

EMPLOY IN MALTA WITH EASE

  • Access and hire global talent & deploy them anywhere in the world
  • Remove restriction from only hiring from local markets
  • Enter any international market without the requirement of opening a local entity
Home » Countries » Europe » Malta

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Expanding to countries such as Malta – which is characterized by a skilled and international workforce, favorable employment and tax laws, a durable infrastructure network that prides itself on being a strong maritime link between Europe, African, and Asian markets, with leading sectors in tourism, electronics, construction, and information technology services – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

Quick Links

Malta – The Economy

Malta has an open market economy, which is highly industrialized, and service based. It has been classified as both a high-income country (World Bank, 2015), and innovation-driven economy (World Economic Forum, 2014).

Geographically, Malta is ideally placed in the Mediterranean Sea, act as a crossroads between Europe, Africa, and the Middle East. It’s strong infrastructure includes a world-renowned reputation as a flag of quality for its ports.

The manufacturing sector also holds strong, contributing to around 10% of the country’s GDP, and is the second-largest employer on the island. This sector has diversified with operations such as automotive components, medical devices, and electronic components. This diversification also involves a high research and development component.

The country has its eyes on the future, embracing innovation, sustainability, and digitalization – the administration is increasing investments in attracting opportunities in information technology, financial services, tourism, and manufacturing to the archipelago.

Small and Medium-Sized Companies

Small and Medium-Sized Businesses (SMEs) have a significant role to play in Malta’s economy.

In was recorded that in 2018, SMES generated 81.8% of the value added as well as 77.7% of the country’s employment, exceeding the respective EU averages of 56.4% and 66.6%.

Maltese SMEs also employ an average of 3.7 people, which is very close to the EU average of 3.9.

CountryMalta
CapitalValletta
No. of States/Provinces3 – Malta, Gozo, and Comino
Principal CitiesValletta, Sliema, St. Julians, Paceville, Gzira, Mosta, St. Paul’s Bay, Bugibba, Marsaxlokk
Language(s)Maltese, English
Local CurrencyEuro
Major ReligionChristianity
Date Formatdd/mm/yyyy
Time ZoneGMT +1
Country Dial Code+356
Population525, 285 people
Border CountriesIn the middle of the Mediterranean Sea, with the closest countries being Italy, Tunisia, & Libya
Tax Year1st January – 31st December
VAT %18%
Minimum WageEUR 784.08 (per month)
Taxpayer Identification NumbersTax Number (Same as Maltese ID)
Social Security Number (SSN)
VAT Number (for businesses)
Leading SectorsTourism, construction, electronics, ship building and repair, construction, food and beverages, pharmaceuticals, clothing, financial services, information technology services
Main importsMineral fuels, oil and products, electrical machinery, aircraft and parts, machinery, mechanical appliances, plastic and other semi-manufactured goods, vehicles, and parts
Main exportsMachinery and mechanical appliances, mineral fuels, oils and products, pharmaceutical products, printed books and newspapers, aircraft and parts, toys, games, and sports equipment
Main trading partnersGermany, France, Italy, Hong Kong, Singapore, Japan, United States, Libya, Philippines, Hungary, United Kingdom
Government TypeUnitary Parliamentary Republic
Current Prime MinisterRobert Abela/George Vella

The Main Sectors of the Maltese Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

  1. Tourism – The tourism sector is among the primary contributors to Malta’s GDP. Tourism accounts for about 27.1% of Malta’s GDP, which is significantly higher compared to Europe’s 10.3%. This sector also employs about 3/5 of the country’s workforce.

    The sector follows a seasonal pattern, with June-October being the peak season. This sector also has a major impact on Malta’s natural environment of the Maltese islands, with plans for the government to promote ecotourism.
     
  2. Manufacturing – the manufacturing sector has been long-established since the country’s days as a British colony. Before independence, the sector mainly revolved around local beverages, food, and furniture. However, after gaining independence, the country re-established itself as a low-cost manufacturing hub in order to attract foreign investors.

    Manufacturing accounts for 11% of Malta’s employment and 10% of Malta’s GDP with electronics, and food and beverages being dominant in the sector.

    Most manufacturing companies are located in the country’s industrial parks where they benefit from subsidized production costs such as cheap electricity and tax incentives on raw materials.
  3. Financial Services – The fastest growing sector of the Maltese economy. Malta is also internationally recognized as a world-class center for blue chip banks, investment houses, and fund managers.

    The financial services sectors accounts for 12% of GDP and employs over 10,000 people.
  4. Electronics and ICT – Malta ranks the country as 12th out of its 28 member states in ICT adoption. It is also the only country in the EU that is entirely covered by an ultra-fast internet network. The sector also employs over 10,000 people.
  5. Maritime – Since Malta is placed in the center of the Mediterranean, only a few miles off one of the busiest global shipping lanes. It also boasts one of the largest merchant ship registers and a solid reputation as a flag of quality.

    This sector is supported by a strong infrastructural base, which hosts one of the largest trans-shipment hubs in the Mediterranean (Malta Freeport) as well as a vibrant commercial harbor which hosts cargo operations, ship repair facilities, and a cruise liner terminal.
  6. Education – a sector with a strong foundation and great potential. Malta is known as a center for the teaching of English as a Foreign Language (TEFL). What most don’t know, however, is that Malta also has a strong presence of specialized institutions which provide training for the oil and gas sector and a number of international universities with a variety of services.

Compliance Highlights

  • The Commissioner for Revenue – previously known as the Inland Revenue Department, this office is in charge of collecting taxes from individuals and businesses in a fair, timely and efficient manner to ensure that there are funds available for Malta’s public services.
  • Tax Compliance Unit – a semi-autonomous specialized unit within Malta’s Finance Ministry that is aimed at addressing and tackling tax evasion and fraud. The role and functions of this unit complement and support the enforcement capacities of the Inland Revenue Department, the VAT Department, and Customs Department.
  • Department of Industrial and Employment Relations – the contact point for both people and employers on anything to do with Maltese employment. The main activities of this department are employment conditions, industrial relations (such as regulations between employment associations & trade unions), and international labor regulations (such as collaboration with the EU and other International Labor Organizations).

Labor Contracts Law

In Malta, contracts need not necessarily be in writing. However, under the Information to Employees Regulations a written agreement of basic details, must be presented to the employee no later than eight days after commencement, if employment is intended to last longer than one month with more than eight hours work per week.

Key factors include: 

  • Detailing whether the contract is permanent or fixed term and whether a probation period (not to exceed six months) is involved
  • Start date 
  • Remuneration and benefits, guaranteeing at least the National Minimum Wage 
  • Social conditions such as sick pay, maternity, and parental leave 
  • Notice periods, termination, and dismissal policy
  • Frequency of pay and overtime payments, which cannot exceed four weeks in arrears 
  • Working hours, job description and location of employment 
  • Procedure for breach of contract 
  • Annual paid leave 
  • Contracts must be signed by both parties, who must be over 18 years old
  • There is no legal requirement regarding language, but it must be understood by both parties

Also, there is no legal requirement for contracts to be in a particular language. Foreign workers should ask for a translation in their language if necessary to fully understand the contract’s terms.

Payroll – Tax Contributions and Benefits

Income Tax – Tax liability in Malta hinges on workers being domiciled (long-term involving a permanent home) or resident (short-term stay, maybe domiciled in another country). Individuals living in Malta are taxed on worldwide income. Those that are residents but not domiciled are taxed on income in Malta and on income arising outside Malta that is received in Malta.

Tax payments are made through the Provisional Tax System (PTS), the Final Settlement System (FSS) or by self-assessment. Due tax not paid during the earning year by either PTS or FSS must be paid by June 30 of the following year by self-assessment.

Social Taxes – Social Insurance:  Employers contribute the equivalent of 10% of each employee’s wages and remit them to the Commissioner for Revenue for the Directorate of Social Security.

Paid Vacations: In 2021, employees on a 40-hour working week received 216 hours paid leave, comprising 192 hours basic entitlement plus 24 hours for three public holidays falling on weekends.

In 2022, the total entitlement is 224 hours comprising an extra 32 hours in lieu of four public holidays falling on weekends, while in 2023 the total entitlement is 208 hours as only two public holidays are on weekends. By mutual agreement between employer and employee, leave can be taken in hours.

Under Organization of Working Time Regulations, if average working hours (excluding overtime) average less than or exceed 40 hours over 17 weeks vacations are adjusted accordingly. Only 50% of unused vacation can be carried forward to the following year. Employees who have worked less than 12 months have leave adjusted pro rata.

Annual vacation continues to accrue when an employee is on maternity leave and can be carried forward to the following year if it is not possible to take the vacation during the same year when the maternity leave commenced. 

Sick Leave: Entitlement varies according to the relevant WRO for the sector and where none is in force employee sick leave entitlement equals two weeks per year, calculated in hours. A medical certificate is required, in the absence of which the employee may need to apply for leave.

Employees receive benefit from the fourth day since the first three days are payable by the employer.  Sickness benefit is payable up to 156 days and may be extended up to 468 days over two years depending on the Medical Board’s decision. Amounts depend on social security contributions paid during the claimant’s employment. 

Maternity / Paternity / Parental Leave: Maternity leave totals 18 weeks, with eight weeks before the birth and six weeks post-natal. Six weeks is the compulsory period taken after birth, four weeks before birth with the remaining weeks taken as the employee wishes.
The employee should give a minimum four weeks’ notice she intends taking leave; after taking leave she has the right to return to her former or a related position if her former post is no longer open.
There is no statutory provision for paternity leave, beyond fathers being entitled to one day’s paid leave following the birth. Parents can take up to four months’ unpaid parental leave until their child is eight years old.

LOOKING TO EXPAND INTO MALTA?

For more information, download our free guide or get in touch with our consultants here