Malta Payroll and Benefits Guide
What global businesses need to know about payroll in Malta
For a lot of international businesses, it’s easy to see why Malta ticks all the boxes. This collection of islands in the middle of the Mediterranean is one of the smallest independent countries in the world, making up just 316 square kilometers, and with a population of just over 500,000. But for political, economic and geographical reasons, it punches well above its weight.
Understandably for a country of its size, its economy is largely service-based, especially around the tourism industry that serves huge numbers of sun-seeking vacationers each year. But Malta is also known as a major maritime and shipping hub, and the Malta Freeport is one of the busiest ports in Europe.
However, there are some things to bear in mind from payroll and employment perspectives when doing business in Malta. The corporation tax is high and income tax thresholds are highly variable, while the minimum wage rate is revised at the start of every year and the influence of collective bargaining is strong. This guide sets out the key facts.
Getting Started
Malta is a relatively straightforward country in which to set up a business, and the process should take no more than two weeks.
The first step is to prepare the Memorandum and Articles of Association, and open a Maltese bank account. Within that bank account, you will have to deposit at least 20-25% of your minimum share capital: the minimum rates are €1,164.69 (approx. £1,000, $1,350) for a private company, and €46,587.47 (approx. £40,200, $53,800) for a public company. All your relevant documents can then be filed online through the Malta Business Registry, for which there is a fee of between €100 and €2,250, depending on the amount of share capital involved.
Up to ten days later, registration certificates are issued, after which you can obtain the relevant business licenses, gain a Permission to Employ number, and register for VAT.
Employment Considerations
Employee rights are typically outlined in their contracts, which are mandatory and must be done in writing. Malta’s Wage Regulation Orders (WROs) are important to understand, as they set industry-specific wage rates that are regularly adjusted, in industries including construction, retail, hospitality and hotels. Collective bargaining also has a heavy influence in Malta.
The standard working week in Malta is 40 hours across five eight-hour shifts. Anything above this counts as overtime, where the standard working week may be a maximum of 48 hours, averaged over 17 weeks, in line with the EU’s Working Time Directive. WROs can lead to variations in these limits, and employees have the right to voluntarily opt out.
Malta also has a system of ‘hour banking’, where employers can make their employees work more hours at normal rate at busier times of the year, offset against quieter times. This system is especially helpful for seasonal trade such as tourism, but is limited to a maximum of 376 hours a year.
Overtime is paid at 150% of normal salary, or 200% on Sundays and public holidays. Interestingly, the first €10,000 (approx. £8,600, $11,600) earned per year through overtime is only taxed at 15%.
Notice periods start at zero for employees in their first month, after which one week should be given, rising to two weeks after six months’ service and four weeks after two years’ service. These statutory notice periods continue to lengthen according to experience, reaching a maximum of 12 weeks for employees with at least ten years of service.
Probationary periods are at least six months, and should be a full year for technical or management staff earning more than double the national minimum wage. Probation periods for fixed-term contracts should generally be around one-third of the contract’s duration.
Compensation, Bonuses and Severance
The national minimum wage rate in Malta is normally increased on January 1 every year. For 2026, the rate is €229.44 per week (approx. £200, $265) for employees aged 18 or over; slightly lower rates apply for younger employees. Employees should also receive a ‘cost of living allowance’ of an extra €4.66 per week. The Wage Regulation Orders involved in collective bargaining often mean that these rates are increased on an industry-specific basis.
Employees in Malta are also entitled to statutory bonuses once every three months, paid by employers but with the rates set by the government. Employees should receive €121.16 (approx. £105, $140) at the end of March and at the end of September, and €135.10 (approx. £115, $155) at the end of June, and shortly before Christmas.
There is no statutory requirement for severance pay, although if a fixed-term contract is terminated early, employees should receive half of the total salary of the remaining duration of the contract.
Tax and Social Security
Malta is unusual in its income tax in that it has an American-style system where thresholds vary according to whether a taxpayer is single, married, or a parent.
A certain amount is exempt, and these amounts have been substantially increased in recent years. As of 2026, the exempt allowance varies between €12,000 per year (approx. £10,400, $13,900) for a single person, to €22,500 per year (approx. £19,400, $26,000) for a married person with at least two children. After this, rates of 15% and then 25% apply. For all types of taxpayers, the highest rate of 35% is applied on all earnings over and above €60,000 per year (approx. £51,800, $69,300).
Corporation tax in Malta is relatively high at 35%, but a refund system means large amounts of this tax can often be claimed back by shareholders. VAT is 18%, with a number of reductions, notably including a 7% rate on renting licensed tourist accommodation.
The social security system in Malta is one of the simplest around. If an employee earns more than €29,084 per year (approx. £25,100, $33,600), then employers and employees each contribute a flat rate of €55.93 per week (approx. £48, $65). If they earn less than this, then each party contributes 10%.
Holidays and Leave
Full-time employees get 24 days of paid leave each year. Employees should also get time off on Malta’s 14 days of public holidays, including days off in lieu for any holidays that fall at weekends.
Sick leave entitlement varies according to collective bargaining and Wage Regulation Orders. In cases where this doesn’t apply, the standard entitlement for medically certified sick leave is ten days per year at full salary from employers, after which social security kicks in.
Maternity leave entitlement is 18 weeks, starting four weeks prior to the due date. Mothers can return to work early if they wish, but they must take the six weeks after the birth off. Employers cover full salary for the first 14 weeks of maternity leave, and social security covers the last four weeks, if they’re taken. Paternity leave is ten days immediately post-birth, paid by employers at full salary.
All parents are also entitled to four months of parental leave. Only eight weeks of this is paid by social security: four weeks before a child turns four, two before a child turns six, and the last two before the child turns eight.
Payroll in Malta: a summary
Malta is an excellent place to do international business, but it isn’t without its own complexities, with the minimum wage rate rising year on year, and a complicated income tax system which can vary thresholds greatly from one employee to the next. Add in the influence of collective bargaining and Wage Regulation Orders, and there can be a lot for you to get your head around. Working with a global payroll partner that can connect you to specialist Maltese payroll expertise can put you on the right track.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.