Malta’s Commissioner for Revenue has released tax-related guidance for self-employed taxpayers receiving the COVID wage supplement.

The wage supplement (EUR800 or less, according to eligibility) is the Government’s contribution to self-employed persons whose businesses have been negatively affected by the COVID-19 pandemic.
This supplement is intended to replace or supplement the normal income of self-employed persons and is taxable in the hands of the recipient.

From payments to taxpayers, the Government will retain 10 percent social security contributions from the payment, withholding no more than EUR80 for the maximum payment. This amount will be creditable against their social security contributions for the year.

The guidance further explains how persons subject to Class 2 rates should account for the wage supplement.

Certain employees may be liable to pay Class 2 rates even though they are employed persons, such as certain directors. According to the guidance, the employer may be eligible for the wage supplement grant on behalf of these persons. In such case, the 10 percent SSC should be retained and treated as prepaid.

The emoluments earned and tax paid are required to be declared on the Final Settlement System forms, the guidance states. However, the SSC (being Class 2) should be omitted from such forms “in line with the usual procedure,” the guidance concludes.