Payroll Updates 2026
Up-Coming Deadlines
The Year-End Process covers the submission of an Annual Statement of Earnings (FS3) for each employee employed during the year, and the Annual Reconciliation Statement (FS7).
The FS3 is issued for each individual employee, showing the gross salary, along with any fringe-benefits, taxes, social security and maternity fund contributions paid. The FS7 is a reconciliation of the monthly taxes, social security and maternity fund contributions paid by the company each month through the FS5s.
The totals of all the FS3s issued by the company would be equal to the FS7 for the year.
The submission date for the above annual statements (FS7 & FS3s) covering 2025 is the 15th of February 2026.
Changes for 2026
- Cost of Living Adjustment
- Minimum Wage Increase
- Vacation Leave Entitlement
- Beneficial Tax Rates for Parents
- Updated Social Security Rates
COLA
The Cost of Living Adjustment (COLA) for 2026 is €4.66 per week, amounting to €242.32 per annum for full-timers. This is equivalent to €0.12 per hour for part-timers. All employers must increase employees’ salaries to reflect COLA. Salary increments cannot be lower than COLA.
Minimum Wage
As of 1 January 2026, the national minimum wage for whole-time employees is as follows,
For part-time employees, pro-rata of the above figures applies. For example, the hourly minimum wage for a person above 18 years of age is €5.74. The minimum wage is fully exempt from tax.
Source: Dier.
Vacation Leave Entitlement
The vacation leave entitlement is comprised of the basic leave entitlement being 192 hours and Public Holidays which fall on weekend.
In 2026, full-time employees are entitled to 216 hours of vacation leave (27 days). This is the 192 hours of basic leave entitlement plus 24 hours in respect of the 3 public holidays which fall on weekends.
Beneficial Tax Rates for Parents
New tax rates have come into effect on 1st January 2026, for families with 1 child and families with 2 or more children.
For all the following new tax rates, as is the case with the previously existing parent rates, children, refer to children who are not over 18 years of age (or not over 23 if in full-time education).
New Married Rates with 1 Child
New Married Rates with 2 or more Children
The new married rates for parents shall only apply where, besides fulfilling the condition that the married couple is resident in Malta,
- At least one spouse is a national of Malta or another EU/EEA member state; or
- At least one spouse is a long-term resident of Malta as defined the Status of Long-Term Residents Regulations and the child is born in Malta and is resident in Malta.
In the case of an EU/EEA married couple, where one spouse is non-resident, the above rates may apply if at least 90% of their worldwide income is derived from Malta and all other conditions are satisfied.
New Parents Rates with 1 Child
New Parents Rates with 2 Children
The new parent rates for parents shall only apply where, besides fulfilling the condition that the married couple is resident in Malta,
- The individual is a national of Malta or another EU/EEA member state; or
- The individual is a long-term resident of Malta as defined the Status of Long-Term Residents Regulations, and the child is born in Malta and is resident in Malta.
Unless the individual is the child’s parent, the new parent rates shall only apply where the claimant is married (including in civil union) to the parent of the child or has entered into a public deed of cohabitation registered in the Public Registry, with the child’s parent under the Cohabitation Act.
If the above conditions are not met, the current parent rates will continue to apply to resident individuals.
Source: MTCA
Social Security Contributions and Maternity Trust Fund Contributions
The below indicates the contributions applicable with effect from 1 January 2026. These are revised each year in proportion to the new minimum wage.
*Or if the employee chooses, 10% of the basic weekly wage. This rate of contribution entitles the contributor to pro-rata contributory benefits.
1 Or the weekly equivalent of the basic monthly salary.
2 For percentage rates, the weekly rate payable is calculated to the nearest cent.
*Students who are following a full-time course of studies or instruction under the Student-Worker Scheme, or other similar schemes involving distinct work and study periods for which they are receiving remuneration.
Source: MTCA
Our payroll team are here to assist with all of your payroll requirements, including but not limited to,
- Registering the company as an Employer with the relevant authorities,
- Registering of any new employees with Jobsplus and Tax Authorities,
- Calculating the monthly payroll, being payslips for employees and FS5s to be submitted and paid to the CfR,
- Preparation and submission of year-end FS7 and FS3s
- Leave management system for staff synced with our payroll software
- Payroll advisory services
Get in touch today on la@zampapartners.com!
