Key Takeaways

  • Employers and employees each contribute 10% of gross wages to national insurance, subject to an annual ceiling reviewed by the Department of Social Security each year.
  • Income tax is applied under the Final Settlement System (FSS) with progressive rates of 0%–35%, reported and remitted monthly via FS5 forms to the Commissioner for Revenue.
  • The national minimum wage includes an annual Cost of Living Adjustment (COLA), making it essential to verify and apply the updated rate each January.
  • The Employment and Industrial Relations Act (EIRA), Cap. 452, governs employment relationships, supplemented by EU directives on working time, parental leave, and GDPR.
  • Outsourcing payroll to a Malta-specialist provider ensures compliance with both domestic law and EU employment regulations, reducing the risk of penalties and tribunal proceedings.

Malta is a small island nation in the central Mediterranean and a full member of the European Union since 2004. With a population of approximately 550,000, Malta punches well above its weight as a financial services, iGaming, technology, and tourism hub. Its advantageous EU membership, English-speaking workforce, and favourable corporate tax regime attract international businesses from across Europe and beyond. However, employing staff in Malta means complying with EU employment directives, local income tax law under the Final Settlement System (FSS), and national insurance regulations that require careful management.

Malta payroll outsourcing offers international employers a streamlined route to full compliance. By working with a provider familiar with the Commissioner for Revenue, the Department of Social Security, and the Employment and Industrial Relations Act (EIRA), businesses can manage payroll accurately without building an in-house Maltese payroll function.

This guide explains what payroll outsourcing involves in the Maltese context, walks through the country’s regulatory framework in detail, and helps you decide whether outsourcing is the right approach for your organisation.

What is Payroll Outsourcing in Malta?

Payroll outsourcing in Malta means delegating responsibility for salary calculation, income tax (FSS) withholding, national insurance contributions, Maternity Fund payments, payslip generation, and regulatory submissions to a qualified third-party provider. This includes compliance with the Commissioner for Revenue (CFR) and the Department of Social Security.

For companies without a legal entity in Malta, payroll outsourcing is often combined with an employer of record in Malta, which acts as the legal employer while you retain operational management of the workforce. This model is popular among iGaming companies, financial services firms, and technology businesses expanding into the EU market.

A specialist provider manages CFR registration, social security enrolment, and all monthly and annual filing obligations, ensuring accurate deductions and timely submissions in Euro (EUR).

Malta Payroll Regulatory Framework

Malta’s payroll environment is governed by the Commissioner for Revenue for income tax, the Department of Social Security for national insurance, and the Department of Industrial and Employment Relations (DIER) for employment standards. As an EU member state, Malta’s labour framework also incorporates EU employment directives on working time, parental leave, and data protection (GDPR), creating a layered compliance environment that requires specialist knowledge.

Governing Bodies

The Commissioner for Revenue (CFR) administers Final Settlement System (FSS) income tax collection, employer registration, and monthly and annual filing requirements. The Department of Social Security collects national insurance contributions and administers Malta’s social security system. Jobsplus, the national employment authority, oversees job placement, training, and employer obligations around recruitment. The Department of Industrial and Employment Relations (DIER) enforces employment standards under the Employment and Industrial Relations Act (EIRA), Cap. 452.

The European Commission’s Malta country page provides useful context on EU labour law requirements applicable to employers operating in Malta, including directives on transparent and predictable working conditions.

National Insurance Contributions

Malta’s national insurance (NI) system requires both employer and employee contributions. The employer contributes 10% of the employee’s gross weekly wage, while the employee contributes 10% of their own gross weekly wage, both subject to an annual ceiling reviewed each year. National insurance must be remitted to the Department of Social Security monthly, alongside FSS income tax. Employers are also required to contribute 0.3% of gross wages to the Government Employees Scheme Maternity Fund.

There is no separate mandatory occupational pension beyond the national insurance framework in Malta, though private pension schemes are increasingly common among employers in competitive sectors such as iGaming and financial services.

Income Tax (FSS)

Malta applies a progressive income tax system under the Final Settlement System (FSS), with rates ranging from 0% to 35%. The applicable rate depends on the individual’s tax status — single, married, or parent rates apply. Employers are legally required to calculate, withhold, and remit FSS payments to the Commissioner for Revenue monthly using FS5 forms, due by the end of the month following the pay period. For a detailed breakdown of current tax bands and thresholds, consult the CFR directly or refer to our Malta payroll tax and compliance guide.

The national minimum wage in Malta as of 2025 is €213.54 per week (€925.01 per month), following the annual Cost of Living Adjustment (COLA). COLA is reviewed each year by the Malta Council for Economic and Social Development (MCESD) and applied automatically to all wages. Employers must monitor and apply the current COLA rate each January.

Employment Contracts and Labour Law

The Employment and Industrial Relations Act (EIRA), Cap. 452, governs employment relationships in Malta. Written contracts are required for employees working more than one month and must specify the employer and employee details, commencement date, job description, working hours, salary, leave entitlements, and notice provisions. Contracts may be in English or Maltese.

The standard working week is 40 hours, with a maximum average of 48 hours per week over a 17-week reference period, in accordance with the EU Working Time Directive. Overtime is typically compensated at 1.5 times the regular rate, though sector-specific Wage Regulation Orders (WROs) may specify different rates. Probation periods are generally limited to six months for most employees, extendable to 12 months for professional or technical roles.

Leave Entitlements

Employees in Malta are entitled to a minimum of 192 hours (equivalent to 24 working days based on eight-hour working days) of paid annual leave per year, inclusive of public holidays. Malta observes 14 public holidays annually. Sick leave entitlements are set by applicable Wage Regulation Orders or employment contracts.

Female employees are entitled to 18 weeks of maternity leave at full pay, funded through a combination of employer contributions and government reimbursement under the Maternity Leave Act. Employees are entitled to 10 days of paid paternity leave. Parental leave of four months per parent (with two months non-transferable) is available in accordance with EU parental leave directives.

Employer Filing and Reporting Obligations

Employers in Malta must meet several registration and filing deadlines to remain compliant:

  • Register with the Commissioner for Revenue (CFR) as an employer and obtain an employer tax number before processing the first payroll.
  • Register all employees with the Department of Social Security for national insurance purposes.
  • Calculate and withhold FSS income tax and 10% employee national insurance from each pay period.
  • Remit the employer’s 10% national insurance and 0.3% Maternity Fund contribution alongside employee deductions each month.
  • Submit monthly FS5 forms to the CFR by the end of the month following the pay period.
  • File annual FS3 statements (employee income and tax deduction certificates) with the CFR by the end of February each year.
  • File the annual FS7 reconciliation return with the CFR.
  • Notify Jobsplus of new hires, job vacancies, and redundancies as required under Maltese employment law.

The European Commission’s EURES Malta portal provides additional guidance on employer obligations in the context of EU labour mobility and cross-border employment.

Penalties for Non-Compliance

The CFR enforces compliance through financial penalties and surcharges. Late FSS remittance attracts a penalty of 1.16% per month (or part thereof) on the outstanding amount, plus potential criminal sanctions for wilful non-compliance. Late national insurance contributions attract equivalent charges from the Department of Social Security and can result in enforcement action.

Employment law violations — including failure to provide written contracts, non-payment of the national minimum wage, or breach of working time rules — are investigated by the DIER and can result in fines and industrial tribunal proceedings. Malta’s adherence to EU employment directives means that serious non-compliance may also attract attention at the European level.

What are the Benefits of Payroll Outsourcing in Malta?

The primary benefit of outsourcing payroll in Malta is EU compliance certainty. Malta’s position as an EU member state means that payroll obligations are layered: domestic law (EIRA) sits alongside EU directives on working time, parental leave, and data protection (GDPR). A qualified provider navigates both layers simultaneously, reducing the risk of violations at either level.

Beyond compliance, outsourcing reduces administrative overhead. Providers familiar with Malta’s Wage Regulation Orders, annual COLA adjustments, and sector-specific employment terms can handle complex payroll scenarios quickly. For businesses also operating across the EU, a Malta payroll partner can help coordinate cross-border compliance strategies.

What are the Downsides of Payroll Outsourcing in Malta?

Outsourcing payroll means delegating control over sensitive employee data. Malta’s full implementation of GDPR means your provider must have robust data processing agreements, adequate technical security measures, and clear data retention policies in place.

For very small teams of fewer than five employees, the monthly cost of outsourcing may exceed manual processing. However, as headcount grows or as the complexity of Wage Regulation Orders and COLA adjustments increases, the case for outsourcing becomes increasingly compelling.

How to Choose a Malta Payroll Provider

Prioritise providers with specific experience in Maltese FSS submissions, national insurance processing, and EIRA compliance. Knowledge of sector-specific Wage Regulation Orders is particularly valuable for employers in hospitality, retail, financial services, and iGaming — all major sectors in Malta’s economy.

Other key criteria include: transparent fee structures, GDPR-compliant data handling practices, the ability to process salary payments in Euro (EUR), integration with existing HR or ERP systems, and references from other international employers operating in Malta or the broader EU region.

Payroll Outsourcing Alternative: Employer of Record in Malta

If your organisation does not have a legal entity in Malta and does not plan to incorporate one, an employer of record in Malta may be the most efficient solution. An EOR acts as the legal employer, handling not just payroll but also employment contracts, national insurance enrolment, Maternity Fund contributions, and full EIRA and EU directive compliance. This allows you to hire Maltese employees quickly without the cost and complexity of entity setup.

Get Started with Malta Payroll Outsourcing

Managing payroll in Malta requires navigating the Final Settlement System, national insurance contributions, Maternity Fund obligations, annual COLA adjustments, and a layered framework of domestic and EU employment law. For most international employers, outsourcing to a Malta-specialist provider is the most reliable path to full compliance. 

Contact RemotePeople for payroll outsourcing in Malta. Whether you need standalone payroll processing or a comprehensive employer of record solution, our team manages CFR filings, national insurance registration, and full EIRA compliance so you can focus on growing your operations in one of Europe’s most dynamic business hubs. Get in touch with our Malta payroll team today.