Persons and companies must pay various taxes in Malta, depending on the income they obtain. While companies are subject to the corporate tax, employees will be levied with the personal income tax to which social security contributions apply.
Social security contributions in Malta are levied under two different classes which imply specific rates. This occurs because self-employed individuals must also pay such a tax.
Below, our specialists explain how the local authorities apply the social security tax in Malta. You can rely on payroll support from our accountants in Malta, as such a service also implies computing and paying social security contributions.
Table of Contents
The Maltese Social Security Law
When it comes to social security contributions in Malta, it should be noted that they are levied under the law with the same name which defines insurable employment as the main reason for which such contributions must be paid. In order to pay such contributions, a person must have one of the following contracts:
- of service;
- of apprenticeship;
- of employment.
The following categories of social security contributions apply in Malta:
- that of employed and self-occupied people;
- that of self-employed persons.
The main difference between self-occupied and self-employed people in terms of the Social Security Law refers to the fact that self-occupied persons obtain income from a skill or trade they perform themselves, while self-employed persons earn money from investments, rentals, or other passive income, such as interests.
This is one of the main reasons there are several social security rates in Malta.
Our accounting firm in Malta can offer various services, including those related to the contributions that need to be paid as social security.
Who must pay the social security tax in Malta?
It should be noted that in Malta people can start working at the age of 16 under special conditions, which is why they can contribute to the social security system at this age. The retirement age is 65, and persons up to this age will pay the social security levy while they are employed or make income subject to this tax.
The contributions must be paid on a weekly basis which implies 53 or 53 payments that will be recorded in the payee’s record.
A person’s record will be made of 3 credits classes:
- Class 1 which is paid by persons who are employed by Maltese companies;
- Class 2 which is paid by self-occupied individuals;
- Class 3 which is paid by self-employed individuals who are subject to a few more requirements.
There are 3 social security contribution types:
- the Underage (UN) type for persons who pay the tax before they turn 18 years old;
- the Standard (ST) type for persons who pay the tax after turning 18 years old;
- the 5C type for Maltese citizens who worked abroad and who applied with the Social Security Department to have their contributions paid in Malta.
Our specialists can offer updated information on the social security rates in Malta. They can also advise companies on their obligations related to the social security system.
Our auditors in Malta are also at the service of companies who need audit services.
How are social security contributions paid in Malta?
The social security tax in Malta is withheld by the employer in the case of employees. However, it is also worth noting that employers must also contribute to the social security system.
Due to the fact that the personal income tax is levied at progressive rates and depends on the marital status of the taxpayer, as well as if the person paying the levies has children or not, the payment of social security contributions in Malta must be carefully considered.
Here are the main personal income tax rates applicable in Malta:
- a 0% rate applies to income ranging from 0 to a maximum of 12,700 euros per year;
- a 15% rate applies for incomes of 9,100 to 21,100 euros;
- a 25% rate applies for incomes from 14,501 to 28,700 and up 60,000 euros;
- a 35% rate applies to incomes surpassing 60,000 euros.
We remind you that we can provide you with complete accounting services in Malta.
Rely on our Maltese accountants for social security payments
The social security tax in Malta is one of the most important levies when it comes to natural persons as it implies the establishment of the pension a former employee will obtain upon retirement. Due to the fact that payments must be made weekly, using the services of our accounting firm can reduce the pressure of employers and self-employed and self-occupied when it comes to its levy.
If you need more information on social security contributions in Malta, do not hesitate to contact our local accountants for support. We are at your service with various accounting services.