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Malta – Employer of Record

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Country Introduction – Malta

Capital – Valleta
Currency – Euro €
Population – 444,335 estimated as of November 2022
GDP – $15 Billion as of 2022
Languages – Maltese & English
Major Religions – Roman Catholic

Malta is an island country located in the central Mediterranean Sea. A small but strategically important group of islands, the archipelago has through its long and turbulent history played a vital role in the struggles of a succession of powers for domination of the Mediterranean and in the interplay between emerging Europe and the older Culturesof Africa and the Middle East. It was admitted to the European Union (EU) in 2004. A European atmosphere predominates in Malta because of close association with the Continent, particularly with southern Europe.

Malta has one of the most advantageous business legislations and taxations in Europe. Specifically, the low set up cost, favourable tax rates, tax incentives and human resource effectiveness. Apart from that, it has a low effective corporate tax. Hence, the benefits of setting up a business in Malta attract more foreign investors to start a business.

Additionally, other considerations why this country magnets numerous business opportunities are:

Low Incorporation and Maintenance Costs: The minimum share capital to open a company in Malta is €1.165, 20% of which should be paid up, with a total of €245 to be deposited. Registry fees are also low, making Malta a very attractive jurisdiction within which to do business.

Visa-Free Zone: as a member state of the Schengen Area, there are no travel restrictions between Malta and the remaining countries that befall the Zone

Contract of Employment

An Employment Contract in Malta must be legalised in a written document, stating the main information of both the employer and the employee.  Additional details should also be included such as: remuneration and overtime, working hours, place of work, role, scope of work and benefits. The following are the major types of contracts materialized in Malta:

1. Indefinite, Open-ended 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.

2. Fixed-term Contract: This can be renewed up to a maximum of 4 years. 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 Period

Probationary period is usually 6 months unless a shorter period is agreed upon between the employer and employee. For roles set for the upper management, a year of probation can also be possible.


Indefinite term contracts may only be terminated by the employer with good and sufficient cause or by mutual agreement. Fixed term contracts require a compensation payment to be terminated. The compensation is set at 50% of the salary due for the remaining period of the contract. The notice period for termination is calculated on the employee’s continuous length of service, as seen in the table below:

Period of continuous employment Minimum notice
Not more than one month No notice
More than 1 month up to 6 months 1 week
6 months up to 2 years 2 weeks
More than 2 years up to 4 years 4 weeks

Longer periods may be agreed by the employer and employee in the case of technical or managerial posts. However, the established notice period cannot be extended.

Working Hours

The normal working hours are 40 per week. The working hours cannot exceed an average of 48 hours over a 17-week reference period.


Contracts will generally include a clause specifying that a certain amount of money will be paid in respect of a certain number of hours worked over the normal weekly amount, which cannot exceed an average of 48 hours.

Annual Leave

The minimum entitlement to the employees is 26 days.

Sick leave

The employee is entitled to ten (10) days of sick leave at full pay per year. The first 3 days of any claim for sick leave are paid by the employer. In occasions of sickness, the employee needs to present a medical certificate from a recognized medical institution or a doctor to the employer.

Maternity and Paternity Leave

A pregnant employee is entitled to a maternity leave for an uninterrupted period of 18 weeks. The first 14 weeks are paid by the employer but the weeks beyond this will no longer be covered. The remaining 4 weeks are optional and unpaid by the employer.

The employee must notify her employer in writing of the date when she intends to avail herself of such entitlement at least four weeks before its commencement, in so far as is reasonably practicable. The employee is obliged to avail herself of 6 weeks of the total entitlement immediately after the date of confinement. Another 4 weeks are to be taken immediately before the expected date of confinement, unless agreed otherwise between the employer and the employee. The remaining balance of entitlement to be availed of, in whole or in part may be taken, either immediately before or immediately after the periods, as the employee may decide.

On termination of maternity leave, the employee has the right to resume work in the post formerly occupied on the commencement of the maternity leave and if such post is no longer available, to a related post.


The standard VAT rate for goods and services in Malta is 18%.

Income Tax

Income tax ranges from 0% up to 35%.

Married resident taxpayers

Taxable income (EUR) Rate (%) Deduct (EUR)
From To
0 12,700 0 0
12,701 21,200 15 1,905
21,201 28,700 25 4,025
28,701 60,000 25 3,905
60,001 and above 35 9,905

Single resident taxpayers (or married couples opting for a separate computation)

Taxable income (EUR) Rate (%) Deduct (EUR)
From To
0 9,100 0 0
9,101 14,500 15 1,365
14,501 19,500 25 2,815
19,501 60,000 25 2,725
60,001 and above 35 8,725

Parent rates

Taxable income (EUR) Rate (%) Deduct (EUR)
From To
0 10,500 0 0
10,501 15,800 15 1,575
15,801 21,200 25 3,155
21,201 60,000 25 3,050
60,001 and above 35 9,050

Employer/Employee Contributions

Employer Payroll Contribution:

10% Social Security. A flat rate of 48.05 EUR is added for annual income over 24,986 EUR.

Employee Payroll Contribution:

10% Social Security. A flat rate of 48.05 EUR is added for annual income over 24,986 EUR.

Public Holidays

There are 14 holiday days in total.

9 Public Holidays and 5 National Holidays annually.

January 1 – New Year’s Day
February 10 – Feast of St. Paul’s Shipwreck
March 19 – Feast of St. Joseph
March 31 – Freedom Day
April 15 – Good Friday
May 1 – Worker’s Day
June 7 – Sette Giugno
June 29 – Feast of St. Peter and St. Paul
August 15 – Feast of the Assumption
September 8 – Feast of Our Lady of Victories
September 21 – Independence Day
December 8 – Feast of the Immaculate Conception
December 13 – Republic Day
December 25 – Christmas Day

Severance Pay

There is no legal severance pay or redundancy compensation other than the compensation in lieu of notice relating to redundancies.

Work and Residence Permits (Expatriates)

National Long-Stay Visa, or D Visa: The D visa allows foreign nationals to stay in Malta for more than three months. This is the visa foreign employees will need to live and work in Malta for an extended period. Individuals who are traveling to Malta to study will need a D visa as well.

In addition to a long-stay visa, foreign employees will need a work permit. In Malta, this permit is known as an employment license. It is the employer’s responsibility to apply for an employment license on behalf of any foreign workers. The employer should submit the relevant documents to the Employment and Training Corporation in Malta and pay any applicable fees.

Upon approval of both applications, the employee may travel to Malta and begin working.

 The requirements for a Maltese employment license include:

–  Completed application form
–  Applicant’s CV
–  Applicant’s visa if already in Malta
–  Cover letter from the applicant’s employer
–  One passport photo
–  References and testimonials of the applicant’s qualifications
–  Medical certificate
–  Vacancy report demonstrating that the company searched for qualified Maltese nationals to fill the position

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