Working in Malta

Spending time working on Malta is very rewarding and offers the chance for total immersion in a unique melting pot of cultures. Malta’s small size means the traveller can find themselves caught up in the magical local atmosphere without difficulty.

All European Union nationals are free to work in Malta without the need of work permits or visas, although any worker has to be registered with the ETC.  Non-EU citizens require a work permit to work in Malta.

Such work permits are issued to employers wishing to engage foreigners for a determined period and for a specific purpose, only after it has been ascertained that every effort has been made to engage a suitable Maltese citizen.

The Employment & Trading Corporation (ETC) is the organization responsible for the issue of such permits.

The applicant must be in possession of a job offer from an employer in Malta and possess a specialist skill or qualification which is lacking in Malta.

A significant demand must exist in a particular sector e.g. construction workers, qualified nurses, tourist guides with particular language skills. Upon the request of a potential employer and on satisfying the above criteria, a work permit will be issued by the ETC.

The work permit should be applied for at least ten clear days before the start of employment and the application fee is of €60.

Work permits are normally issued valid for one year. Permits valid for up to three years may also be applied for at the express request of the employer and provided sufficient justification is given. Work permits may be renewed thereafter where a request to that effect is justified.

An extension of the work should be applied for one month before it is due to expire. The application fee for the processing of the extension to the work permit is €60.

Where a foreign national is an investor in the manufacturing or financial services sector and holds substantial shareholding (40%) in the enterprise, the relative licence may be issued indefinitely. Non-residents who have no job offer from an employer in Malta must first find a job. Only then will the immigration consultants be able to assist you with the application.

Job applications typically have an accompanying letter, curriculum vitae (CV), copies of certificates and references where applicable.  Application for jobs can be either typewritten or handwritten.  Copies of your educational attainments, employer recommendations and any other documents you consider useful should accompany your CV.

The application letter is a vital tool to give the employer information about career intentions, educational background, professional experience and availability.  The CV is usually up to two pages long.  It is recommended that the standard European Curriculum Vitae format is used. The CV should include the following elements: personal details, education, knowledge of languages, computer skills, particular areas of competence, career information, and hobbies.

Some employers provide their own application forms to be filled in by applicants. Certain forms are standard, while others ask more about previous work experience and use more unstructured questions.

The most common employment contracts are full-time contracts with an indefinite period, sometimes called a permanent contract. However fixed term, temporary employment contracts are becoming more common in Malta.

Latest trends in the employment market show that fixed term contracts are becoming more common in both higher managerial grades and in skilled labour for project contracts.

Job applications typically have an accompanying letter, curriculum vitae (CV), copies of certificates, and references where applicable. Application for jobs can be either typewritten or handwritten. Copies of your educational attainments, employer recommendations and any other documents you consider useful should accompany your CV.

The application letter is a vital tool to give the employer information about career intentions, educational background, professional experience and availability. The CV is usually up to two pages long. It is recommended that the standard European Curriculum Vitae format is used. The CV should include the following elements; personal details, education, knowledge of languages, computer skills, particular areas of competence, career information and hobbies.

Some employers provide their own application forms to be filled in by applicants. Certain forms are standard, while others ask more about previous work experience and use more unstructured questions.

The rates of tax for an individual are 15% – 35%. Reduced rates of taxation are in force for low income earners.  The taxation of an individual’s income increases with progressive income brackets.  The higher the income, the higher the tax rate.

Residents pay tax on income whether they are wage earners or self-employed. A person who meets the criteria of a permanent resident, usually resident for more than 183 days a year, will be taxed on his income in Malta and overseas. A foreign resident who is employed in Malta pays tax only on the income he earns in Malta.

The law stipulates that an employer is obliged to deduct at source, each month the amount of tax payable on a wage. Certain payments are deductible from the taxable income of an individual that are allowable for tax purposes. For dividends paid to Maltese residents there is an obligation to deduct tax at source at a rate of 15%. A dividend paid by a Maltese registered company to its shareholders confers a tax credit on its shareholders that is the equivalent of the tax paid by the company on the profits that represent the source of the dividend distributed.

The standard Value Added Tax rate applicable to purchase most goods and services is 18%. Every 3 months, a taxable person registered for VAT and providing Intra-Community Supplies from Malta is required to send to the VAT Department in Malta a Recapitulative Statement with breakdown of all the exempt supplies made in the course of the previous calendar quarter. This statement should include the VAT numbers of the customers from the other member states and the total value of Intra-Community Supplies made to each of these customers. There is a penalty for failure to submit this Recapitulative Statement in time.

Taxable persons are considered as those who carry on an economic activity, whatever the purpose or the result of that activity. Also exempt persons such as medical doctors or insurance companies, and persons operating below the established threshold for small undertakings are considered as taxable persons even though they are not obliged to charge and collect VAT.

Taxable, means taxable at:

• A standard rate of 18%
• A reduced rate of 5%

Supplies that are taxable at 5% are:

• Accommodation in a hotel or guest house
• Accommodation in any premises, where for the purpose of that accommodation, it is required that the premises be licensed in terms of the Malta Travel & Tourism Act.
• Supply of electricity
• Confectionery and other edible items
• Medical Accessories
• Printed Matters
• Items for the exclusive use of the disabled
• Works of Art, collector’s items and antiques.
• The rate for all other taxable supplies is 18%.

• Food
• Fuel
• Education services
• Local and international transport
• Pharmaceuticals
• intra-community supplies
• Exports
• Investment Gold

A company incorporated in Malta is treated as domiciled and resident in Malta and is subject to tax on its worldwide income and capital gains. A company that is not incorporated in Malta is resident in Malta if its management and control are exercised in Malta.

Like other taxpayers, a company that is resident but not domiciled in Malta is subject to tax on income and capital gains arising in Malta (at a rate of 35%) and on foreign income, but not foreign capital gains, received in Malta.

The test of management and control is usually applied by reference to the place where the shareholders’ and directors’ meetings are held and where the important decisions are taken. The fact that a foreign company has a branch in Malta does not, of itself, constitute residence.

A company that is not resident in Malta is taxable on income and capital gains arising in Malta.

Malta’s current social welfare system is the result of the development of a set of laws over several decades. National insurance contributions and benefits are the backbone of social welfare, aimed at reducing the financial hardships of sickness, disability, injury, old age and unemployment.

Malta’s social welfare is carried out by the Department of Social Security located in Valletta. National insurance is collected by the taxation department, but the fund is administered by the social security authorities. The health and housing divisions also play an instrumental role in providing medical care and housing support.

Employees are entitled to wages during illness according to Maltese law and collective agreements. The length of entitlement to sick pay depends on for how long a time the employee has worked for the employer. When the illness continues in the long tern the employer is no longer obliged to pay wages. The employee is entitled to sickness benefits from the Social Security. A national insurance number issued by Social Security Department is needed for social benefits payments.