Understanding Malta's corporate social security tax

7 months ago   •   .7 min read

.By İlayda Birol
.Table of contents

In the previous few articles published on the wamo blog we’ve explored everything tax-related about doing business in Malta. So far we’ve covered company tax rates, Value Added Tax (VAT) and corporate income tax. It feels like a lot to grasp, but our handy guides have everything you need to know to feel comfortable doing business in Malta. Today’s article will uncover everything you need to know about Malta’s corporate social security tax.

Corporate social security tax is a contribution that businesses in Malta are obliged to make to support the country’s social welfare system. Regular corporate taxes, that we’ve looked at in previous posts, contribute to general government revenue. Corporate social security tax, on the other hand, is allocated to fund crucial services including healthcare and pensions.

What sets this tax apart is its distinct purpose—it's not just about financial obligations; it's about actively participating in enhancing society. Businesses of all sizes, through this tax, play an integral role in creating a safety net for citizens and contributing to the overall well-being of the nation.

Let’s take a closer look at corporate social security tax in Malta, its implications for businesses, and the recent developments that have shaped its landscape.

Which businesses need to contribute to corporate social security tax?

If you’re doing business in Malta you need to understand which companies need to pay the corporate social security tax, and which are exempt. This tax is applicable to a wide range of businesses operating within the country's borders. Generally, all registered companies, including sole proprietorships, partnerships, and corporations, fall under its scope. This inclusivity ensures a collective contribution towards growing and maintaining Malta's social welfare programs.

As with anything, this tax doesn’t have a one size fits all approach. Certain exemptions and conditions apply. Smaller businesses, for instance, might enjoy thresholds or reduced rates, given their scale and financial implications. Larger corporations that exceed certain revenue thresholds could be subject to higher tax rates.

Corporate social security tax isn't limited to specific industries or sectors. It includes a broad spectrum of businesses, emphasising the nation's shared responsibility for societal well-being.

How do you calculate corporate social security tax?

To better understand how to calculate the corporate social security tax let’s look at a practical example. Our hypothetical business is a medium-sized company in Malta.

Let’s say Company XYZ, which operates in the manufacturing sector, reported a taxable income of €500,000 for the fiscal year. Based on the prevailing tax rates and thresholds, the calculation could be as follows:

Determining taxable income: Starting with the reported taxable income of €500,000, this forms the foundation for the calculation.
Applying tax rate: Assume that for a company of this size and sector, the applicable corporate social security tax rate is 10%.

Taxable Income: €500,000
Tax Rate: 10%
Corporate social security tax: €500,000 * 0.10 = €50,000

Therefore, Company XYZ would be responsible for a corporate social security tax of €50,000 for the fiscal year. This money would go directly towards supporting social services such as healthcare and pensions.

Tax rates, thresholds, and calculations will vary based on factors such as company size, industry, and legislative changes. Make sure to seek advice from tax professionals and check official resources to stay on top of all your corporate social security taxes.

Reporting and paying your corporate social security tax

Reporting requirements

If your business is required to pay the corporate social security tax you’ll need to submit reports for this. They should be comprehensive with all relevant financial data and employee information. Your report should give a transparent overview of all necessary information including employee contributions. This will allow the authorities to verify accurate tax assessments.  As with all the tax we’ve previously mentioned, it’s super important to submit accurate reports, and on time! If you miss deadlines or report inaccurately you might be subject to penalties or legal repercussions.

Forms and deadlines

The forms you’ll need to submit are often available online via relevant authorities. Make sure to add all necessary information such as financial reporting and employee details, and submit them on time. Once again, to avoid penalties and any legal implications, you should always follow submission deadlines.

Payment methods and penalties

Corporate social security tax payments can usually be made via online platforms or through traditional banks. Late or incomplete payments can result in financial penalties that may compound over time.

Ensuring accurate reporting

Accurate reporting requires maintaining organised financial records and documentation. The data reported to authorities should align with the company’s actual financial performance. Working with a trusted accountant and bookkeeper is an invaluable investment for your business. The records you keep serve as valuable references during audits or assessments. These minimise the risk of discrepancies.

Benefits and social services

It’s useful to know more about Malta’s corporate social security tax beyond understanding the financial implications and obligations. The corporate social security tax is there to nurture the well-being of citizens in general as well as businesses. Now we’ll take a look at the more tangible benefits of contributing to this tax and how they benefit businesses and society.

Contributing to social services

The core purpose of the corporate social security tax is to fund essential social services that enhance the quality of life for all residents of Malta. Essential services funded through this tax include healthcare, pensions, unemployment benefits, and disability support. By contributing to the corporate social security tax, your business becomes an important partner in creating a healthier and more secure society.

Accessible healthcare

Part of the corporate social security tax revenue goes into sustaining a robust healthcare system. Employees and their families have access to this care when needed. This also means that your business will benefit indirectly from having a healthier workforce. Employees are also less likely to be sick from work for long periods of time, which is great for your business too!

Retirement security

With funds directed towards pensions, employees are offered a safety net once they retire. This security breeds a sense of stability within the workforce, which can have positive effects on the overall well-being of your employees and their families.

Strengthening the workforce

The availability of unemployment benefits mitigates the potential adverse impacts of economic downturns. This, in turn, stabilises the labour force and preserves the skilled workforce that businesses rely on.

Employee satisfaction and loyalty

We all want to hang around people who are kind, caring and generous, right? It makes us feel good and want to be better. The same goes for companies. Employees will view companies that actively and positively contribute to their communities in a positive light. If your company is paying the corporate social security tax, you’re in turn benefitting the people of Malta. This is likely to enhance morale amongst employees and contribute to their job satisfaction. This should increase loyalty and help in creating a harmonious work environment, which can also potentially reduce staff turnover rates.

Long-term business advantage

When your company supports social services, you’re not only fulfilling your societal responsibilities, you’re also investing in the long-term sustainability of your operations. A thriving community with access to essential services fosters a favourable business environment.

Learn how Malta's corporate social security tax works and what it means for your business in our comprehensive blog post on wamo Blog.

wamo's 1% cashback campaign for corporate social security tax

We’ve got an exciting opportunity for you that merges financial responsibility with rewards while you explore Malta’s corporate tax landscape. The wamo cashback campaign is tailored to provide businesses with an added incentive to meet their corporate social security tax obligations.

How the wamo cashback campaign works

The mechanics of the wamo cashback campaign mirror simplicity with rewarding outcomes. When you fulfil your corporate social security tax payments using your wamo debit card, you not only meet your tax obligations but also earn cashback rewards. This cashback represents a percentage of your qualifying corporate social security tax payments, delivering an immediate financial advantage.

Introducing wamo’s cashback campaign for Maltese businesses
Don’t miss wamo’s cashback campaign, a game-changer for Maltese businesses.

Exclusive wamo Offers Await Maltese Enterprises

1% cashback opportunity for your tax payments in Malta using the wamo business debit card. wamo presents a unique chance for businesses in Malta to not only meet their tax obligations but also earn valuable rewards. With this exclusive campaign, your business can enjoy a 1% cashback on various tax payments, encompassing income tax, VAT, Social Security contributions, corporate taxes, and more.

Participating in wamo's new cashback campaign is a straightforward process:

  1. Register a business account with wamo.
  2. Complete your onboarding.
  3. Create your visa debit card within the app.
  4. Follow our step-by-step guidelines to complete your payments here.

All businesses registered in Malta will receive a standard 1% cashback when making payments with their wamo business debit card.

Besides being attractive financially, the cashback earned through the wamo campaign is a potential springboard for business growth. Whether you choose to reinvest it in your operations, allocate it strategically, or enhance liquidity, the cashback serves as a resource to fortify your financial standing. With wamo, your payments become opportunities to earn.

As you start to better understand all the intricacies of Malta's corporate tax environment, the wamo cashback campaign stands as an added bonus. When you use your wamo debit card for corporate social security tax payments, you're not just fulfilling your obligations—you’re also earning rewards that will strengthen your company financially.

We hope these insights into Malta’s corporate tax landscape in 2023 have given you everything you need to know to help your business thrive! By understanding the benefits of contributing to the corporate social security tax as well as how to use wamo’s cashback campaign, you should be feeling excited and confident about the road ahead.


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