Payroll & Workforce Management in Malta

What running payroll in Malta costs and requires

Malta taxes resident companies at a flat 35% on worldwide profit — the highest nominal corporate rate in the EU. The mechanism that makes this headline figure misleading on its own is the full imputation and refund system: once a company distributes dividends after paying the 35% tax, shareholders can claim a refund of 6/7ths of that tax for trading income (5/7ths for passive interest and royalties, 2/3rds for certain other categories), bringing the effective combined rate down to approximately 5% for most operating businesses. Since 2025, companies may instead elect the Final Income Tax Without Imputation (FITWI) regime — a flat 15% rate with no refund mechanism — a simpler alternative for companies that prefer not to navigate the refund claim process.

Operating in Malta means navigating a tax system that looks complex on the surface — three different refund fractions, an alternative flat-rate regime, substance requirements — but produces predictable, well-established outcomes for companies that document the refund claim process correctly and maintain genuine local substance.

What sits on top of gross salary

Fixed weekly amount, matched by employer — up to ~€50/week each (2026), not percentage-based — this is a direct cost the employer budgets on top of gross pay for every hire, not a deduction from it.

• Three distinct refund fractions — — 6/7ths for trading income, 5/7ths for passive interest and royalties, 2/3rds for certain other income categories — applying the wrong fraction is a common and costly filing error
• Increased substance scrutiny — for 2026 — Maltese authorities now require demonstrable evidence that commercial decisions are made in Malta, not just registered there, before processing refund claims
• FITWI as an alternative regime — — companies can elect a flat 15% rate with no refund mechanism since 2025, trading a higher headline rate for filing simplicity
• Tightened CFC and transfer pricing rules — , requiring more rigorous documentation of intercompany transactions at market value

The statutory floor for Malta

€994/month gross (2026). Underpaying the statutory floor exposes the employer to fines and back-pay claims, and should be checked against any role before an offer is made — thresholds are typically revised annually.

Standard cycle and documentation

Payroll in Malta runs on a monthly cycle, in arrears. Payslips must itemize gross pay, statutory deductions, and net pay — incomplete or incorrect payslips are exactly what a labour or social security audit checks first, so the format is a compliance requirement, not a formality.

Employer obligations and deadlines

Annual accounts filed with the Malta Business Registry within 10 months of year-end (42 days for filing after approval).

Employer registration runs through the Malta Business Registry (MBR), typically taking As little as 2–5 business days.

Frequently asked questions