Persons Returning to Employment
One of the Government's incentives to encourage more persons to return to the labour market is the tax credit available in certain cases. Once employees return back to work, provided certain conditions are met, they may benefit from the tax credits highlighted below.
There are two forms which can be submitted, each representing a different tax credit; the RA7 form and the RA9 form.
The RA7 form became applicable from 1st January 2008 and is submitted in cases where a person (before retirement) returns to work after having not worked for a minimum of five years before returning to work. The person would need to have been, prior to the period not working, previously employed for a consecutive period of 24 months. To qualify, the person cannot, during the time not working, be on the unemployment register established by Jobsplus. The maximum tax credit in this case is of €2,000 to be set-off against taxable income from employment (employee or self-employed).
The RA9 form is applicable to:
- Women who have a child or children under sixteen years of age, who return to work from 1st January 2008, after having not worked for a minimum of five years before returning to work.
- Women who have a child or children born after 1st January 2007 who continue in or return to employment on or after 1st January 2007.
The tax credit in this case is of up to a maximum of €5,000.
These forms have to be filled in and submitted the year after the employee returns to work. The forms are submitted along with the Income Tax Return, the deadline of which is on the 30th June of the following year. In certain cases where the employee is a non-filer of tax returns, they must request that the Commissioner for Revenue (CfR) sends an Income Tax Return form to submit the RA7 or RA9 form to be able to benefit from this incentive.
Furthermore, a recent legal notice has brought about an amendment to the rules in that the tax credit relating to the RA9 form does not only apply to women who give birth, but also to women who adopt a child or children. Furthermore, the tax credits mentioned are granted once in respect of each child.
It is important to note that when an employee utilises the 14 weeks of paid maternity leave by the employer and the 4 weeks of maternity leave paid by the Government, the employee is then obliged to work for a continuous period of six months upon her return to work as stated by The Employment and Industrial Relations Act (Chapter 452). If the employee fails to return to work, or fails to return for at least six months, the employer is entitled to request payment from the employee for a refund of payments made to her during the maternity leave.
Employers' Maternity Leave Trust Fund Claim
Another Government incentive is the Maternity Leave Trust Claim. The Maternity Leave Trust Fund was set up in Malta with effect from 1st July 2015 through the Legal Notice 257 of 2015. These Maternity Leave Trust Fund contributions are paid by employers into a special fund, which is eventually used to refund the employers for the 14 weeks maternity leave paid to the employee.
Below are the rates for year 2021:
| 1: Basic Weekly Wage € | 2: Weekly Rate Payable € | |||||
| Category | From | To | by Employee | by Employer | Total | Maternity |
| A | 0.10 | 181.08 | 6.62 | 6.62 1 | 3.24 | 0.20 |
| B | 0.10 | 181.08 | 18.11* | 18.11 | 36.22 | 0.54 |
| *Or if the employee chooses, 10% of the basic weekly wage. This rate of contribution entitles the contributor to pro-rata contributory benefits. | ||||||
| Persons born up to 31st December 1961 | ||||||
| C | 181.09 | 372.35 | 10% | 10% | n/a | 0.30% |
| D | 372.36 | n/a | 37.24 | 37.24 | 74.48 | 1.12 |
| Persons born from 1st January 1962 onwards | ||||||
| C | 181.09 | 485.73 | 10% | 10% | n/a | 0.30% |
| D | 485.74 | n/a | 48.57 | 48.57 | 97.14 | 1.46 |
| E | n/a | n/a | 10% Max.4.38 | 10% Max.4.38 | n/a | 0.3% Max.0.13 |
| F | n/a | n/a | 10% Max.7.94 | 10% Max.7.94 | n/a | 0.3% Max.0.24 |
| 1: Basic Weekly Wage or the weekly equivalent of
the basic monthly salary 2: For percentage rates, the weekly rate payable is calculated to the nearest cent |
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The Maternity Leave Contribution is to be paid by employers on behalf of all employees for whom the Class 1 Social Security Contributions are paid, and for all employees (including part-timers) who are not eligible to pay Social Security Contributions but who are eligible for Maternity Leave according to the Employment and Industrial Relations Act (Chapter 452).
The following employees are exempt from having the Maternity Leave Contribution paid on their behalf:
- Employees over 65 years of age who are exempt from paying Social Security Contributions, but are still considered to be in an employment relationship;
- Directors who are liable to pay Class 2 Social Security Contributions (as self-employed/self-occupied);
- Employees on unpaid leave for whom no Social Security Contributions are being paid;
- Casual employees for whom no Social Contributions are being paid;
- Expatriate employees for whom no Social Security Contributions are being paid in Malta;
- All self-occupied persons who are not entitled to Maternity Leave.
The following employees are not exempt from having the Maternity Leave Contribution paid in their respect:
- Part-Time employees who are not due to pay Social Security Contributions on such employment given that they are already paying from another full-time employment;
- Persons with Disability who are registered as disabled with the Commission for the Rights of Persons with Disability (CRPD) and who are in employment;
- Persons (mostly interns) engaged on definite 6 monthly contracts;
It is also important to note that the Maternity Leave Contribution should still be paid according to the basic weekly wage for employees on half-pay. Furthermore, it should also be paid for part-timers working on irregular hours, and this is to be calculated according to the basic weekly wage.
There is no specific deadline which imposes a date by when the claim form needs to be filled and submitted after the employee has returned back to work and the form is to be filled online on www.servizz.gov.mt. The person filling the form needs to have a valid e-ID account credentials in order to access the form.
The following documents are needed in order for the form to be processed by the Social Security Department:
- A copy of 3 FS5 receipts issued by the Inland Revenue Department, that is one receipt for each trimester of the employee's pregnancy indicating the payment of the maternity leave contributions;
- A copy of payslips showing the gross basic salary paid by the employer to the employee during the fourteen-week period of maternity leave;
- A copy of the company's Jobsplus list of employees;
- The employee's FS3 (if the employee who took maternity leave was in the company's employment during the previous year).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
