Navigating aviation payroll in Malta

Payroll in the aviation industry is rarely straightforward. Flight and cabin crew may live in one country, have a designated home base in another and perform duties across several jurisdictions. As a result, Maltese social security, income tax and payroll reporting must each be assessed separately.

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Social Security and the Crew Member’s Home Base

For flight and cabin crew, the social security assessment generally begins with the employee’s designated home base. Malta’s Department of Social Security specifically identifies crew whose home base is in Malta as a category requiring an assessment of whether Maltese Social Security Contributions apply.

The aircraft’s registration does not determine the position on its own. A crew member working on a Malta-registered aircraft may remain insured elsewhere, while someone working on a foreign-registered aircraft may fall under Maltese social security because their home base is in Malta.

Where Malta is the competent jurisdiction, an A1 certificate confirms that Maltese social security applies while the employee performs duties in other covered countries. It also helps prevent contributions from becoming payable in more than one country for the same work and period.

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Social Security and Income Tax Are Separate

Being insured in Malta does not automatically make the employee’s income taxable in Malta.

The tax position requires a separate review of the employee’s residence, place of work, employing entity, activities in Malta and any applicable double-tax treaty. Therefore, neither a Maltese A1 certificate nor the aircraft’s Maltese registration should be treated as conclusive evidence of the employee’s income tax position and this should be assessed on a case-by-case basis.

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Implementing the Position Through Maltese Payroll

If it is determined that Malta is the relevant jurisdiction for social security and/or income tax purposes, then the position must be reflected correctly through Malta’s Final Settlement System (FSS). The principal employer obligations include:

• obtaining or reactivating a Private Employer (PE) number;
• completing an FS4 for each engaged employee;
• submitting monthly FS5 forms and payments;
• preparing an FS3 for each employee; and
• completing the annual FS7 reconciliation.

Aviation remuneration may also include flight allowances, accommodation, transport, training costs, reimbursements and other benefits. Each item should be reviewed according to its actual nature to determine whether it represents taxable remuneration, a fringe benefit or a genuine business-expense reimbursement.

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Special Tax Treatment for Aviation Employees

Certain specialised aviation roles may qualify for preferential Maltese tax treatment, subject to the applicable conditions and formal approval requirements. Eligibility should be assessed under the applicable Tax Treatment of Highly Skilled Individuals Rules.

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To Summarise

Aviation payroll should not be approached as a one-size-fits-all exercise. The crew member’s home base, employment arrangement, residence and duties must be reviewed before determining the applicable social security and tax treatment.

Obtaining advice before crew members are engaged or added to payroll can help prevent incorrect deductions, and costly retrospective corrections.