Opening a company in Malta can be very easy for foreign investors if they meet all the requirements of the Commercial Code and benefit from assistance in drafting the documentation needed for the incorporation. Once the trade name is approved and the memorandum and articles of association are filed with the Companies Register, the company is almost ready to start operating. However, before that one must also check if any special licenses are required. The last steps imply registering for taxation and for VAT with the Inland Revenue Department. Also, if intending to hire personnel a Maltese company must register as an employer and obtain a PE number.
Our Maltese lawyers can offer detailed information on how to register a business for employment purposes. You can also rely on us for guidance in obtaining a Maltese employer number.
Legislation on employment in Malta
Under the Employment Law in Malta, both the company hiring workers and the employees have rights and obligations. The labor relations between the two parties must be established through an employment contract. Additionally, certain tax obligations arise from these relations. The employer must register with the tax authorities in order to pay the social security contributions. The employees must also be registered for the same purpose.
The Social Security Law is the main law providing for Maltese companies and self-employed persons who need to obtain employer numbers, respectively self-employer numbers.
The law provides for the following:
- any employment contract whether signed for a determined or undetermined period of time is subject to this law;
- contracts of apprenticeship or service are also regulated by this law and the incomes earned through them are subject to social contributions;
- there are three categories of employment insurances, those of employed persons, self-occupied and self-employed persons;
- all individuals residing in Malta and are at least 16 of age and maximum 65 of age are subject to social contributions if they fall under one of the 3 categories above;
- there are two classes of social contributions, the class 1 which refers to employees, and class 2 which refers to self-occupied and self-employed persons.
Our attorneys in Malta can offer detailed information on the National Social Security System and the obligations of obtaining employer numbers in this country.
What is the Maltese PE number?
The PE number must be obtained by Maltese employers in order to be able to retain and pay the taxes related to the national insurance for their employees. These payments are established under the final settlement tax reporting procedures. The final settlement tax (FSS) is also used to deduct the taxes paid by an employer at the end of the fiscal year.
The contributions to be withheld by Maltese companies for insurance purposes fall under the Social Security Act of 1987. These contributions have been divided into Class One and Class Two contributions. The Maltese employer number is a 6-digit reference.
Our lawyers in Malta can provide you with information about the Social Security Act and the national insurance contributions to be withheld by employers.
How to obtain an employer number in Malta
It is quite easy to obtain an employer number in Malta, however, it must be noted that different application forms need to be submitted with the Internal Revenue Department (IRD) based on the type of employer.
Maltese companies must register for taxation purposes during the business registration procedure and the employmer number will be issued by the tax authorities through Jobplus or Business First, depending on the type of structure chosen.
Maltese companies and sole traders can file their applications online, in person (through a representative in the case of companies) or through the national postal services. The tax identification number, respectively the employer number is issued in a few days.
In the case of foreign citizens setting up sole traders, the Expatriates Registration Form must be filed with the Commissioner for Revenue based on their Maltese residence permits.
Our law firm in Malta specializes in business registration matters and those interested in setting up companies here can benefit from full services which include obtaining employer numbers.
Applying for an employer number in Malta
Maltese companies can file for an employer number online or directly at the Inland Revenue Department. The documents to be submitted are:
- – the tax identification number;
- – the VAT number;
- – a prescribed application form.
The company must also provide information about the number of employees, the date of their employment and information about the business. It takes about three working days for the Inland Revenue Department to process the PE number application.
Once the employer number has been issued, the company must register its employees with the Employment Training Corporation.
Social security contribution classes in Malta
One of the most important aspects related to employment in Malta are related to paying the social security contributions with the tax authorities. Those who have obtain Maltese employer numbers are required to comply with the legislation in this sense which implies withholding the necessary contributions and paying them with the IRD.
There are two social security contribution classes applicable in Malta. The Class 1 contribution addresses employed persons who occupy a full-time job in a Maltese company. The Class 2 contribution addresses self-employed and self-occupied individuals.
The following regulations apply to Maltese employmer number holders:
- – a rate of 10% is imposed on Class 1 contributors to monthly income of employees (the income must be at least the minimum wage imposed the by the law);
- – self-occupied persons must earn at least 910 euros per year in order to pay social contributions;
- – in the case of self-employed persons, the social contributions will only be paid for pension purposes;
- – the rate for Class 2 contributors is 15%, however, different requirements apply to self-employed and self-occupied persons;
- – the contribution must be paid on a monthly basis in the case of employees and every 4 months in the case of the other two-categories of payers.
It is important to know that foreign citizens who have moved to Malta for employment purposes must also register for social contributions. Only self-employment and self-occupied persons must obtain employer numbers in Malta.
In the case of Maltese citizens or residents working abroad, the social contributions must be paid in accordance with the Class 1 contribution, however, in this case the employer will be exempt from paying these contributions.
If you need assistance in registering a business or applying for an employer number, do not hesitate to contact our law firm in Malta.