Malta Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Malta generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Malta Visas, Work Permits and Migration

Expanding into a country or hiring a workforce abroad can lead your business to great profits, but unfamiliar laws and regulations can counteract your company’s goals and plans. Companies targeting Malta for their next global move face unravelling the red tape surrounding work permit, visa, and immigration laws if they intend moving existing staff into their new territory.

What Types of Work Visas, and Permits for Malta are there?

Citizens from the European Union (EU), European Economic Area (EEA) and European Free Trade Association (EFTA) do not require an entry visa or permission to work in Malta although, regardless of the purpose or length of stay, they must register with the Department for Citizenship and Expatriate Affairs within three months of arrival.

Documentation to Work in Malta:

  • Employment License
  • National D Visa
  • Residence Permit
  • Employment License: This is required by all Third Country Nationals (TCNs) to live and work in Malta – with a few exceptions but typically not applying to most employees; this license, previously known as the Work Permit in some cases is still referred to as such. It is applied for by the prospective employer before the employee enters the country. It is attached to one employer and for one job and is non-transferable and for one year, renewable annually.

NOTE: As of March 2021, those foreigners / TCNs who have long residence status i.e., residing in Malta for a period of five years, do not require to apply for an Employment License. Legal Notice No.84 2021. EU Directive 2003/109/EC.

Visas

Short-Stay Visa, or C Visa allows foreigners to enter and travel within the Schengen area. Single, double, or multiple entries visas can be applied for with validity of one, three or five years. Holders can stay for up to three months in any 180-day period.

National Long-Stay Visa, or D Visa is needed by foreign employees to live and work in Malta for an extended period and is also necessary for those traveling to study. This is the visa they will need to apply for to enter Malta.

Residence Permits

The Single Permit is a joint Employment License and Residence Permit and is now known as a ‘Maltese e-Residence Card’. This is handled through Identity Malta alongside Jobsplus, who will run a labor market test to confirm the position has been offered to EU and Maltese citizens first. A valid visa is needed to apply for the permit if the applicant is in Malta.

Generally, employees apply from outside Malta through a local embassy or consulate in their home country. In this case the employer will apply for the Single Permit through Identity Malta and if approved will receive the authorization. Please note:

  • An employment contract is required
  • It can take two to three months
  • E-Residence Card is connected to one employer and one position and is not transferable. Duration of one year – renewable
  • Employee will need to submit documentation

The Key Employee Initiative (KEI) allows highly specialized Third Country Nationals (TCNs) to work in Malta as managerial staff or high positioned technicians. KEI can also cover entrepreneurs and start-up schemes that have been officially recognized by Malta Enterprise. The application is for a Single Permit which includes the Employment License and Residence Permit but provides a fast-track route into Malta.

For instance:

  • An employment contract is needed
  • It can take five working days
  • A gross salary over €30,000 (US$34,346) per annum has been offered
  • Applicants must complete Form C5 with all the relevant documents.
  • Employment license is part of the Single Permit application and needs to be endorsed by the employer. This will be an internal arrangement between Jobsplus and Malta Identity
  • Applicants will need to be qualified for the position
  • Declaration by employer the qualifications of applicant fit duties assigned

The EU Blue Card is dependent on applicants’ skill level and educational qualifications. It is available to TCNs who have applied for a highly skilled position – also:

  • There is an employment contract
  • Employer applies for an employment license
  • Been offered a salary one and a half times the average in Malta
  • Been accepted after labor market testing
  • Have the required qualifying certificates and experience

Maltese Tax Laws

Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Malta is no exception with a multi-layered system applying to personal income tax rates.

Overview of Taxes in Malta

  • Personal tax rates 2021:
    Single rates:
    – (Tax-free allowance of €9,100)
    – Four rates from €9,101 (US$10,420) to €60,001 (US$68,702) and over – 15% to 35%Married tax rates 2021:
    – (Tax-free allowance of €12,700)
    – Four rates from €12,700 (US$14,541) to €60,001 (US$68,702) and over – 15% to 35%Parent tax rates 2021:
    – (Tax free allowance of €10,500)
    – Four rates from €10,501 (US$12,022) to €60,001 (US$68,702) and over – 15% to 35%Non-resident tax rates for 2021:
    – (Tax-free allowance of €700)
    – Three rates from €701 (US$801) to €7,801 (US$8,932) and over – 20% to 35%
  • Social Insurance Taxes:
    – Employer and employee contributions from employees’ salary – 10%
    – Self-occupied and self-employed from the previous year’s net profit – 15%
  • Corporate Income Tax (CIT): Standard rate – 35%
  • Value Added Tax (VAT): Standard rate – 18%
  • Other taxes: Malta has no capital gains tax. Income tax is imposed on any gain made from shares, securities, intellectual property, partnerships, or trusts. Malta imposes no taxes on inheritances, estates, or gifts, though stamp duty may apply in some cases.

Malta Individual Tax – Single, Married

Individuals living in Malta for more than 183 days a year are taxed on their income earned in Malta and worldwide income that is received in Malta, but not taxed on income earned abroad that is not paid into Malta. Individuals married to a person who is resident and domiciled in Malta are liable for taxation on their worldwide income. Non-residents are taxed only on income and capital gains received in Malta.

Married couples or those with an authorized civil partnership have a joint obligation to file returns and decide which is to be the registered taxpayer, with the decision being effective for five years. The couple’s registered taxpayer can still elect to have their partner taxed separately; in which case they are taxed at single payer’s rates.

Single personal tax rates for 2021

  • A tax-free allowance of €9,101
  • €9,101 (US$10,420) – €14,500 (US$16,602) – 15%
  • €14,501 – €19,500 (US$22,328) – 25%
  • €19,501 – €60,000 (US$68,701) – 25%
  • €60,001 and over – 35%

Married rates 2021

  • A tax-free allowance of €12,700
  • €12,701 (US$14,543) – €21,200 (US$24,274) – 15%
  • €21,201 – €28,700 (US$32,862) – 25%
  • €28,701 – €60,000 (US$68,701) – 25%
  • €60,001 and over – 35%

Parent rates 2021

  • A tax-free allowance of €10,500
  • €10,501 (US$12,023) – €15,800 (US$18,091) – 15%
  • €15,801 – €21,200 (US$24,274) – 25%
  • €21,201 – €60,000 (US$68,701) – 25%
  • €60,001 and over – 35%

Non-resident rates 2021

  • A tax-free allowance of €700
  • €701 (US$802) – €3,100 (US$3,549) – 20%
  • €3,101 – €7,800 (US$8,931) – 30%
  • €7,801 and over – 35%

Employee Social Insurance Taxes

  • Employee contributions remitted from salary – 10%
  • Self-occupied and self-employed from the previous year’s net profit – 15%

Maltese Entity Set Up

Global expansion into Malta generally means that you need to set up an in-country entity. However, by partnering with us you create the possibility to bypass this process and utilize our expertise. By using our PEO service we take care of the complicated paperwork.

Expanding into a new country is always an adventure, but we believe this adventure should be exciting instead of frustrating and time-consuming. Therefore, we have been supporting companies in over a hundred countries with their expansion plans.

How to set up a Maltese Subsidiary

Foreign companies moving into the Maltese economy will typically choose between a branch and a limited liability subsidiary. The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Malta as a local company.

The subsidiary is regulated by the Companies Act and Malta welcomes foreign investment, but beware – the World Bank ranked Malta only 88th out of 190 nations for ease of starting a business in their latest global assessment.

The subsidiary is a 100% local Maltese entity with full independence from the parent company and follows the same incorporation procedure as any company in Malta. A Maltese subsidiary can also benefit from taxation concessions, while the foreign parent company has no liability for its activities or any debts.

To incorporate a subsidiary in Malta, the parent company must comply with the Maltese Companies Act. Both private and public limited liability companies must produce a Memorandum of Association and Articles of Association, including the following information:

  • Company name and registered office address
  • The type of company and its business activities
  • Details of the shareholders
  • The amount of share capital
  • Numbers of shared distributed to each shareholder and shareholders’ rights
  • The company directors and company secretary’s information
  • Details of company’s legal representatives
  • A bank account must be opened to hold the minimum share capital of around €1,200 (US$1,374), of which only 20% need be initially deposited
  • The Memorandum of Association, which must be registered with the Registrar of Companies, which issues a registration certificate and number
  • The subsidiary must also register its employees for social security and insurance

The Maltese Institute of Accountants and Maltese Accountancy Board require:

  • Obtaining tax registration number from the Commissioner for Revenue Office
  • Providing office address of company keeping accounting records
  • Mandatory registration for Value Added Tax with turnover above €35,000; registration is optional for turnover between €7,001 and €35,000. Returns can be made on a quarterly basis

Benefits of setting up a Subsidiary in Malta

Specific advantages for a foreign company opening a subsidiary in Malta include not being responsible for the subsidiary’s debts or liabilities. The liability of the subsidiary’s shareholders is limited to their investment in shares.

The subsidiary can operate under a different company name while pursuing its own business interests. It operates under Malta’s Companies Law in the same way as local companies. It is taxed on its worldwide income and liable for the standard rate of 35% Corporate Tax on business profits, although the Maltese Government offers many tax incentives in addition to double tax treaties with many nations.

Through its subsidiary, the parent company has the advantage of exploring further afield among other Mediterranean countries and the European Union’s 27 member nations, in addition to enjoying access to North Africa and the eastern Mediterranean markets.

The Maltese Market

Foreign companies expanding into Malta are entering an economy ranked as one of the most dynamic in the Euro Zone, according to the International Monetary Fund. Unemployment was among the lowest in the European Union in 2021 at 3.6% and despite being the smallest economy in the EU, Malta boasts a skilled, flexible, multi-lingual, and cost-effective workforce.

However, incoming companies intending to set up a subsidiary will find these economic attractions balanced by a difficult employment market where some employee benefits are covered by laws, some by collective agreements and others a matter of individual contracts.

There are speedier and more cost-effective alternatives to launching a subsidiary, with Bradford Jacobs opening the door to a hassle-free route into Malta.

Starting a Business in Malta

The World Bank estimated industry represents around 12% of GDP, and manufacturing 7%. However, Malta’s economic strength lies in the services industry, and it is now one of the largest in the Mediterranean region in this sector, representing over 80%% of GDP and employing 80% of the workforce. The financial sector managed assets equivalent to 500% of GDP according to the World Bank. Malta was the first EU state to regulate online gaming. Being part of the EU, gives tariff-free access to the world’s third largest economy with nearly 500 million consumers.

The system for opening a company in Malta is well-structured but demands a clear understanding of the requirements. The World Bank ranked Malta 88th globally for ‘ease of doing business’ out of 190 nations in its most recent global assessment. But companies looking to open a subsidiary should beware – Malta ranks 152nd out of 190 when it comes to registering a property.

Foreign companies pressing ahead with plans to open a subsidiary must follow this procedure:

  • Reserve unique company name by checking availability via Registry of Companies’ website.
  • Draft Memorandum and Articles of Association through a registered corporate services provider.

Further procedures to start the business in Malta are:

  • Obtain Tax Identification Number (TIN) from the Companies Registry by providing confirmation of reserved company name, notarized Memorandum and Articles of Association, confirmation of deposited share capital, copies of the passports/ID of each shareholder, director, and company secretary.
  • Register for Value Added Tax, obtain the employer ‘Permission to Employ’ (PE) identification number and register employees with Jobsplus.

Expanding into Malta

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?

Drawing up an international expansion blueprint is not enough. Your business plan will have to answer all these questions.

Malta welcomes foreign investment, but the employment market is complicated by its mix of laws, supplementary statutes and collective agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices?

There is a simple alternative. By partnering a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Malta.

Malta Business Facts

  • Capital city – Valletta
  • Population – 520,000 estimated by end of 2021
  • Regions – Archipelago of Malta; Islands of Gozo and Comino
  • Official Languages – Maltese and English
  • Economy – US$16.7 billion GDP; Ranked 122 in the world by GDP
  • Leading sectors by GDP 2020 – services (76%); industry (13.4%); agriculture (0.6%). Largest industries include tourism, finance, manufacturing, IT, and communications.
  • Main exports – refined petroleum, electrical equipment, and machinery e.g., integrated circuits and semi-conductors, packaged medicines, toys, and books.
  • Main imports – petroleum, yachts, ships and aircraft, integrated circuits including computers, chemicals.
  • Main trading partners – EU, Singapore, UK, USA, S. Korea, and China.
  • Government – Democratic Parliamentary Republic.
  • Currency – Euro.

Advantages and Challenges of the Maltese Market

Advantages of expanding into Maltese market include:

  • Workforce: Malta has a multilingual, highly skilled, educated, and adaptable workforce. Many investors praise the work ethic of the Maltese who produce high quality work at a fraction of European and North American costs
  • Politics: Politically stable as a parliamentary republic, Malta has good relations with its closest neighbor nations
  • Sectors: Malta has maintained traditional economic sectors such as tourism, pharmaceutics, and manufacturing, but has developed new sectors in financial services, iGaming, and digital technology, while several leading aerospace companies have established subsidiaries there
  • Logistics: Malta’s location in the Mediterranean is economically beneficial for business with North Africa, the Middle East, and Southern Europe
  • Global Position: Malta’s successful integration into the European Union and the Schengen area and adopting the Euro as its currency has continued to propel the island’s economic growth
  • Economy: Malta is a free market economy with no restrictions on exchange controls and has few obstacles to trade and enterprise, although all dealings must be in line with EU directives

Challenges of operating in the Maltese market:

  • Labor: The relatively small workforce can create skill shortages in some sectors
  • Finance: The International Monetary Fund identified that anti-money laundering safeguards needed upgrading

Limited Company / Subsidiary or Branch Malta?

International companies targeting Malta for expansion will generally choose a private limited liability subsidiary. Subsidiaries can have a totally different name from the parent company, pursue different business activities and form their own contracts.

Branches, in comparison, are an extension of the parent company and are not a separate legal entity. Subsidiaries and branches have differences in how they are registered and operate.

A subsidiary must have minimum share capital of approximately €1,200 (US$1,374), whereas there is no such requirement for a branch. A branch is considered a permanent establishment under Malta’s double tax treaties, so the parent company could benefit from various tax deductions and exemptions. Branches and subsidiaries must both have registered offices in Malta.

Maltese Contracts

Foreign companies hiring employees in Malta must operate within a strict framework of legislation that relies on both federal laws, European Union (EU) directives and collective agreements that provide safeguards and entitlements for the workforce. These include:

  • Wage Regulation Orders (WROs) that outline conditions applying to individual sectors
  • The Employment and Industrial Relations Act (also known as the Labor Code)
  • The Employment Commissions Law
  • The Employment and Training Services Law
  • The Public Services Management Code

These considerations come into play during the first stages of hiring and onboarding – including drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to advise on this crucial element of recruitment.

Employment Contracts in Malta

Within one month of starting work, employees working with a company for more than one month and at least eight hours a week must receive from the employer either a written contract, or a written statement of the fundamental working conditions. The basic information should include such as: remuneration and overtime, working hours, place of work, role, and paid vacations.

The main types of employment contract are:

  • Indefinite, Open-ended Employment Contracts: The most common type of contract. If no other arrangement has been agreed, the contract is deemed to be indefinite. Either party can terminate the contract, but must abide by contracted terms of notice, severance agreements and any collective agreements.
  • Fixed-term Employment Contracts: These can be renewed up to a maximum of four years, after which the contract is considered to be indefinite. If the employee is kept on after the fixed-term contract they will move to an indefinite contract unless the employer issues a new fixed-term, contact within 12 days of expiry of the previous agreement. If either party terminates before time, they must pay the other a sum equal to half the wages the employee would have earned for the remainder of the agreement.
  • Probation Periods in Employment Contracts: It is implicit that the first six months of contracts for new employees constitutes a trial period. Probation can be terminated by either party with one week’s notice if trial period has exceeded one month. One year’s probation applies to managerial or executive posts where salary is twice the minimum wage unless the contract agrees to a shorter period.

Other types of contracted employment in Malta:

  • Part-time permanent work: Entitles worker to pro rata benefits such as holidays and sick leave
  • Commission-based employment: Pay based on reaching targets
  • Apprenticeships and Traineeships: Usually fixed term for three to five years

What are the Employee Benefits in Malta?

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Malta might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Malta including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Malta, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.

Benefits and entitlements for Maltese employees are based on the Employment and Industrial Relations Act (the Labor Code), European Union (EU) directives and a framework of supplementary laws and statutes. Incoming foreign companies hiring employees in Malta must operate within this legislation that provides safeguards and guarantees for the workforce.

Minimum guaranteed benefits, either from legislation or collective agreements, include such as:

  • Minimum wages
  • Paid vacations
  • Working hours
  • Termination, notice periods and severance
  • Sick leave
  • Maternity allowances and benefits

The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations, however. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Malta?

The employer-employee relationship in Malta is based on the Employment and Industrial Relations Act (the Labor Code), European Union (EU) directives and various supplementary laws and statutes. Incoming foreign companies hiring employees in Malta must meet their obligations to employees.

The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation applies to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours, for example.

Drawing up contracts is tricky enough, but in Malta it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Do not take the risk of paying penalties for ignoring these responsibilities.

Compensation, entitlements, and benefits include:

  • National Minimum Wage: In 2021 the minimum was increased to €784.08 (US$906) per month or €9,416 (US$10,876) per year, based on 12 monthly payments for full-time workers aged 18 and over. Wage Regulation Orders (WROs) applying to different sectors take precedence over national minimum rates.The minimum wages of part-time employees are calculated pro rata with the hourly rate for full-time employees.
  • Working Hours and Breaks: Working hours for full-timers are based on 40 hours a week. Hours can exceed 40 but must not exceed a 48-hour average over 17 weeks. In sectors such as manufacturing and tourism the average period is one year.Employees must give written consent to average over 48 hours per week.Employees have a minimum 15 minutes’ rest after six hours. A minimum uninterrupted rest of 11 hours applies between workdays, with uninterrupted 24 hours’ rest every seven days, or 48 consecutive hours in 14 days.
  • Overtime: Where not covered by a WRO an employee is paid 150% of normal hourly rate for hours worked over 40 a week averaged over four weeks, or a shift cycle determined by the employer.Contracts not specifying rates of overtime contravene the Information to Employees Regulations.The Protection of Maternity (Employment) Regulations stipulate that regardless of any other laws, collective agreements or contracts a person cannot be asked to perform overtime during pregnancy or for 12 months either from the birth or adoption of a child. Since Malta’s 2020 Budget, 15% tax applies to income from qualifying overtime for full-time employees (not managerial) where the basic weekly wage does not exceed €375 (US$433).There are proposals to reduce the level of taxation in the 2022 Budget.
  • Termination and Severance: Termination, dismissal and severance are governed by the Employment and Industrial Relations Law (the Labor Code) but can vary contractually.Compensation is waived if there is a justifiable cause, such as disciplinary action or long-term medical incapacity. Employees on fixed-term contracts have the same ‘last in / first out’ redundancy rights as employees on indefinite contracts. With indefinite contracts, notice can be given by either party and is calculated on employees’ length of service.Malta’s ‘Guarantee Fund’ covers unpaid wages to employees whose contract is terminated due to insolvency. Employees should receive all entitlements and remuneration including wages, overtime payments, statutory bonuses, notice pay and settlement of outstanding holidays. If the employer refuses, the Department of Industrial and Employment Relations can act.
  • Notice Periods: This is calculated on unbroken years of service. Up to one month - no notice. One month to 6 months - 1 week; 6 months to 2 years - 2 weeks; 2 years to 4 years - 4 weeks; 4 years to 7 years - 8 weeks; 7 years to 8 years - 9 weeks.
    For more than seven years there is one extra week’s notice for each subsequent year up to a maximum of 12 weeks. Longer periods may be agreed between the parties in the case of technical, administrative, executive, or managerial posts.

Social Security in Malta

The Ministry for the Family and Social Solidarity and the Ministry for Health and the Department of Social Security administer the social security system. The main benefits cover health, retirement, disability, sickness, death, maternity, family, unemployment, long-term care, and workers’ compensation.

Deductions are divided into Class 1 and Class 2 contributions and vary for people over and under the age of 18, and for those born before December 31, 1961, and after January 1, 1962.

For workers aged over 18 and born before December 31, 1961, with a basic weekly wage between €181.09 (US$207.57) and €372.35 (US$426.81), both employers and employees contribute 10% of the weekly wage.

Contributions from both stay at 10% for workers born on or after January 1, 1962, applying to a weekly wage between €181.09 and €485.74 (US$556.78). In this category there is a flat rate of €48.57 (US$55.61) for salaries over €25,258 (US$28,921). Employers deduct contributions from the employee’s wage or salary and remit monthly on their behalf to the Commissioner for Revenue.

Class 2 contributions refer to self-employed or self-occupied workers whose contributions comprise 15% of the previous year’s net profit and are paid every four months. The maximum contribution for those born on or after January 1, 1962, is €72.68 (US$83.22).

Statutory Employer Costs in Malta

  • Employer Payroll Taxes for Social Security: Employer remits the equivalent of 10% of employee’s salary to the Commissioner for Revenue for the Directorate of Social Security.
  • Corporate Income Tax (CIT): Employers must pay CIT. The standard rate is 35% and includes worldwide income and certain capital gains. Malta’s tax refund system is attractive for international businesses taking advantage of the island’s proximity to Europe, North Africa and the Middle East and can leave entrepreneurial companies paying around only 5% corporation tax.
  • National Minimum Wage: This is a statutory cost as employers must comply with national minimum wages, even though contracts and agreements can allow for more than the base rate. In 2021 the minimum was increased to €784.08 (US$906) per month or €9,416 (US$10,876) per year, based on 12 monthly payments for full-time workers aged 18 and over.

Maltese Top Talent

Hiring the right talent in Malta to expand your company can result in a thriving business with numerous opportunities. However, the recruitment process can be complicated when you have no physical presence in Malta yet. Our PEO and EOR service can be the solution for your company.

Recruitment can be a tricky business, especially when a company is venturing into unfamiliar countries and exploring new markets. This is the perfect occasion to bring in a specialist to oversee the process for you.

The Recruitment Process in Malta

The recruitment process in Malta begins in the traditional way – preparing a job description, locating candidates, reviewing applications, conducting interviews, verifying references, selecting the employee, and drawing up contracts. Familiar options for employers are to post positions on job boards such as Jobs in Malta, Vacancy Centre and on the vacancies’ pages of their own websites.

Malta is a member of EURES, which brings together the public employment services of the European Union’s member nations with those of the European Economic Area and Switzerland. EURES facilitates the free movement of labor across the EU and assists both employers and jobseekers.

Recruitment is time-consuming, and difficult to achieve efficiently if your company is 5,000 miles away, without any physical presence on the island. The talent is there – but with Malta enjoying one of the lowest unemployment rates in the EU, you have to know where to find it.

This is where Bradford Jacobs adds our unrivalled experience of global recruitment. It is vital to know where to locate the finest talent to be a perfect fit for your company’s global expansion plans.

Then we step in to handle the next stage of the recruitment process – hiring and onboarding. Foreign companies opening a legal entity subsidiary must follow strict procedures to register and onboard employees, complying with Maltese law as well as any applicable European Union (EU) directives.

Procedures include:

  • Obtaining a Tax Identification Number (TIN) online is necessary for completing mandatory annual tax returns. Professional support is advisable for submitting tax returns.
  • Obtaining a Permission to Employ (PE) number, which can be obtained online from the Commissioner for Revenue’s website. The PE number is mandatory for companies operating in Malta to be able to withhold and pay the taxes and national insurance for their employees. These payments are established under Final Settlement System (FSS) tax reporting procedures.
  • Registering with the Employment and Training Centre (ETC, now known as Jobsplus). A form must be completed for every employee engaged, with further forms completed and filed on termination of employment.
  • Employment contracts must also be in place, either fixed-term or indefinite, full-time or part-time.

Legal Checks on Employees in Malta

  • Scope: As a European Union member, Malta has strong measures protecting employees against any form of discrimination, which also covers the questions that can be asked during an interview or included in a job description. Background checks are subject to the EU’s General Data Protection Regulation (GDPR) and Malta’s Labor Code.
  • Privacy: The employee’s right to privacy must not be unreasonably affected and the employer must have a legitimate reason to obtain the information.
  • Discrimination: The employer’s right to make checks cannot include references to racial or ethnic origin, religious beliefs, disability, age, or sexual orientation.
  • References: It is permissible for an employer to verify such areas as academic qualifications, and references from previous employers.
  • Criminal Records: If an employer has a valid reason for requesting a criminal record check, due to the nature of the employment, only the applicant can request a Conduct Certificate from the Criminal Records Office.

Basic Facts on Hiring in Malta

Companies hiring staff for expansion into Malta must comply with a framework of laws and regulations on employment and taxation. Apart from statutory laws, Wage Regulation Orders (WROs), collective agreements and European Union directives also come into play.

Companies moving their operations into Malta must comply with various basic requirements on hiring. These include:

  • Providing a contract that includes details of salary, overtime, notice periods, work schedule including breaks, payment cycle (which must not exceed four weeks in arrears), place of work and vacations, etc.
  • Where minimum contractual requirements are covered by law, only arrangements that are more beneficial to the employee are valid.
  • If employment is to be more than one month exceeding eight hours work a week, the employer must provide a contract or written agreement detailing terms within eight days from the start of work.
  • Most contracts are either open-ended / indefinite or fixed term, which can be renewed up to a maximum of four years.
  • Contracts should include full details of employer and employee, job type and location, vacations and other benefits, type of contract (permanent or fixed term for example), notice and termination details, any relevant trade union, or collective agreements.
  • Article 45 of the Constitution of Malta protects employees from discrimination on grounds including marital or social status, gender, sexual orientation, religious or political beliefs, trade union or other employment association memberships.
  • The constitution also ensures equal rights for men and women at work. It is supplemented by other employment legislation, including the Persons with Disability Act, the Equal Opportunities Act and the Equality for Men and Women Act.

After hiring and onboarding, employers must be aware of other considerations – minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments.

Work Culture

To succeed in business in Malta, it is vital for both employers and employees to have a strong understanding of the business culture.

As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Maltese work culture, we want to support your global expansion plans. Therefore, we will address all aspects of the work culture in Malta to start your expansion well-informed.

Malta has a dynamic, progressive, ‘go ahead’ economy – qualities recognized by the World Bank and the International Monetary Fund (IMF).

The IMF rates the Maltese economy as one of the most vibrant in the Eurozone, which Malta joined in 2008, four years after becoming a member of the European Union (EU). Unemployment was among the lowest in the EU at 3.6% in 2021 – another of the factors encouraging expansion from international companies.

Being part of the EU, gives tariff-free access to the world’s third largest economy with nearly 500 million consumers. A boon for any business.

The island of Malta has many attractions apart from its commercial potential for international businesses. A relaxed lifestyle, warm and sunny weather cooled by the Mediterranean, plus history and culture are ‘bonuses’ that companies can offer when recruiting and hiring talent.

Despite being the smallest economy in the Eurozone, Malta has among the most skilled, flexible, multi-lingual, and cost-effective workforces. It is time to ‘get down to business’ so here are a few tips on taking the right steps … and avoiding the pitfalls!

  • Language: Maltese and English are both official languages, but English tends to dominate in the business sector
  • Business Environment: The Maltese display a blend of teamwork, initiative and personal responsibility with individual roles clearly defined. Atmosphere tends to be relaxed, with communication polite but direct.
  • Negotiations: Discussions, including disagreements, are conducted diplomatically and politely. Do not interrupt while your counterpart is talking – rude! Negotiations tend to be lengthy; agreement can take a while.
  • Punctuality: Be on time to create a good impression. Plan meetings well ahead and confirm two or three days in advance. Phone ahead if delayed.
  • Greetings: Handshakes are normal at start and end of meetings. Address counterparts as ‘Mr./Mrs./Ms.’ then surname at first meeting and exchange business cards; engaging in ‘small talk’ is normal.
  • Dress Code: Tends to be formal for both men and women, with business suits the norm, but jackets come off in summer.
  • Gift-giving: Something modest and symbolic will be appreciated, but presents are not essential.

Maltese Minimum Wage

In January 2021 the minimum was increased to €784.08 (US$906) per month or €9,416 (US$10,876) per year, based on 12 monthly payments for full-time workers aged 18 and over and was fixed until December 2021.

Wage Regulation Orders (WROs) applying to different sectors take precedence over national minimum rates.

The 2017 National Agreement on the Minimum Wage decreed that after one year with the same employer, employees earning minimum wage receive a weekly increase of €3 (US$3.47) for the second year. The weekly increase becomes €6 (US$6.93) after more than three years with the same employer.

The minimum wages of part-time employees are calculated pro rata with the hourly rate of full-time employees.

Probation Periods in Malta

Probationary or trial periods allow for employers and employees to assess the position and either can terminate during the trial period without giving any reason for doing so. However, when the probationary period has been running for longer than one month, one week’s notice should be given.

The length of the probation is decided at the beginning of the contract and is paid at the agreed salary which cannot be lower than the minimum wage or any collective bargaining agreement to which the employer is committed. The same applies to the maximum duration of the trial period which is six months.

However, a shorter period can be agreed and written into the contract.

For white-collar managerial staff whose salary is twice the national minimum wage, the period can be extended to 12 months.

Working Hours in Malta

In the private sector, 40 hours a week between the hours of 8am till 5pm is considered ‘normal working hours’ and does not include overtime. For flexibility and in certain conditions, this can be extended to a maximum 48 hours over a 17-week period and in some sectors averaged over one year. Anything over and above this would require written permission from the employee.

During their working day, employees are entitled to at least one 15 minutes’ break after six hours and a minimum uninterrupted rest period of 11 hours between workdays. Employees must have 24 hours’ rest every seven days or 48 consecutive hours in 14 days or two 24-hour periods over a two-week period.

Overtime in Malta

Any hours above the agreed ‘normal working hours’ is defined as overtime, which should be included in the employment contract along with the hourly rate. There is no maximum hours which can be worked as long as it does not exceed the weekly 48 hours allowed over a four-week period. Employees cannot be compelled to work more than 48 hours without their written consent.

The overtime rates of pay are regulated by the Works Council through Wage Regulation Orders (WRO) by sector. For those not covered by a WRO, the rates paid are 1.5 times their normal hourly rate.

Regardless of any law, collective bargaining agreements or employment contracts, even if there is a written consent, the Protection of Maternity (Employment) Regulations prohibits overtime during pregnancy and for the first 12 months of the birth or adoption of a child.

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