Social Security Contributions in Malta

What are Social Security Contributions?

In simple terms, Social Security Contributions in Malta are mandatory payments from individuals who earn an income which is paid to the government, which later grant entitlement to receive a (contingent) future social benefit. Some of the benefits include unemployment insurance benefits and supplements, disability and survivors pension, family allowances, injury, accident, and sickness benefits, and more.

Who are these individuals?

  1. Employed Person – Any individual who works for different companies and establishments
  2. Self Employed Person – Any individual who earns an income from rents, bank interest, or financial institutions
  3. Self Occupied Person – Any individual who works independently and provides a service or vocational trade to others and earns more than €910 per year
  4. Person Employed Abroad – Any individual who works overseas but still maintains a home residence in Malta

Pro rated on one’s weekly basic earnings and dependent on age, income, and status, these Social Security Contributions are payable to The Department of Inland Revenue. In Malta, this type of tax system is also referred to as “National Insurance,” commonly abbreviated to N.I.

What are the rates?

Social Security Contributions in Malta are divided into two classes. The following indicates what type of Class Contribution gainfully employed people fall under, along with their applicable revised 2020 rates per individual.

If you are an employed person, then your contribution obligations fall under Class 1. The following rates apply: –

  • Persons under 18 years of age whose basic weekly wage does not exceed €179.33 – their applied Social Security Contribution is €6.62. Maternity Contribution is 0.20c
  • Persons over 18 years of age whose basic weekly wage does not exceed €179.33 – their applied Social Security Contribution is €17.93. Maternity Contribution is 0.54c
  • Persons born up to 31/12/1961 and whose basic weekly wage is €179.34 and does not exceed €365.72 – their applied Social Security Contribution is €36.57. Maternity Contribution is €1.08
  • Persons born on 01/01/1962 onwards and whose basic weekly wage is between €179.34 and does not exceed €480.49, 10% of whatever their basic wage is, whereas if it exceeds €480.50 – their applied Social Security Contribution is €48.05. Maternity Contribution is €1.44
  • Students who are receiving remuneration through their course study, their applicable Social Security Contribution is 10%.
  • For students under the age of 18 – their maximum Social Security Contribution is calculated to €4.38. Maternity Contribution maximum is 0.13c
  • For students over the age of 18 – their maximum Social Security Contribution is €7.94. Maternity Contribution is 0.24c.

The above-mentioned percentage weekly rates are also equivalent to the basic monthly salary and are calculated to the nearest cent. These contributions are deducted from one’s wage or salary and are paid out on your behalf by respective employers at the end of each calendar month to the Department of Inland Revenue. Additionally, the Employers contribute an equal amount of Social Security Contributions for each employee on their payroll.

If you are a Self Occupied or Self-Employed person, then your contribution obligations fall under Class 2. Class 2 Social Security Contributions in Malta are based on 15% of the annual net profit or income gained from the preceding contribution year. Farming is the only exception whose contribution rate is 10%. Unlike Class 1, Class 2 Contributions are paid every four months in April, August, and December.

For a Person Employed Abroad but still maintains a residence in Malta, these individuals fall under the Class 1 Contribution system. However, in this case, their employer is exempt from paying equivalent rates. Also, their contributions are not paid monthly, but every four months – same as in Class 2.

*Figures quoted at time of print of this article are as listed on the cfr.gov.mt website. For a more detailed breakdown of previous year rates or updates, please see the outline here.

Who is exempt from paying Social Security Contributions in Malta?

  • Full-Time Students
  • Unemployed Individuals
  • Pensioners — Retirement / Widowhood / Disability
  • Low-Income Earners who are in receipt of social assistance benefits
  • Third Country Nationals whose obligations fall under the legislation of their own home country

Individuals who would like to keep track of all their contributions paid to-date and Credits Class can obtain a Social Security Contribution History Sheet from the Department of Social Security.

Why pay Social Security Contributions?

The revenue generated by the Government from these contributions is re-distributed in various forms of benefits as needed to the citizens by the Department of Social Security. An example of, but not limited to, said benefits are: –

  • Children’s Allowance — For any parent or legal guardian with children under the age of 16
  • Maternity
  • Sickness / Occupational Injury
  • Retirement / Widowhood Pensions
  • Unemployed Individuals

Online Assistance

In keeping in line with modern technology, in 2017 the Department of Social Security launched an online Benefits Calculator. *Once the interested individual fills out the online form provided here, the calculator will tally up an unofficial estimate of monies to be received. This platform will enable the user to review different benefits that may apply without the need to call or visit the Government’s offices.

*Important — Any information in-putted by the user is not actual data linked to Governments E-Id.

In closing, paying social security contributions in Malta provides benefits to the community by enhancing day to day life for residents in need of financial assistance during unique situations, as mentioned above. By improving the quality of life for the countries residents, social security is there with you today and tomorrow, securing your future.

For further information, it’s recommended to contact a local adviser who can assist you based on your unique inquiry.

For any queries about SOHO Office, please do not hesitate to contact us at [email protected]

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