Module 3 – Payroll Accounting & Control

Module 3
Accounting and Control
Noel Agius – March 2025

DISCLAIMER

Although every effort to ensure that the information in this Information presented by Noel Agius Rules, rates and practices apply to
presentation was correct at the time of address, Noel Agius is expressed in own personal the basis year 2025
and Lead Training , do not assume and hereby disclaim any capacity, and in no way treated as
liability to any party for any errors or omissions. Contents professional advice or endorsement
are deemed as correct and valid on date presented. This of past, present or future employers.
presentation is only intended as a guide based on practices
and law enacted up to the date of address.

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Module 3 – Payroll Accounting & Control

YOUR REFLECTIONS SO FAR

….Is the Course meeting your expectations?

 Comments
 Concerns
 Suggestions

OBJECTIVES

 Ability to determine required data for payroll

purposes

 Understand necessary payroll calculations

 Set up cross-check procedures

 Knowledgeable of electronic services

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Module 3 – Payroll Accounting & Control

CONTENTS

In relation to employment:

 Data Requirements

 Computations:
FSS Main, Part Time, Other Emoluments,
Special Tax Regimes,
Fringe Benefits

 Online Services
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DATA REQUIREMENTS

- Employer (Payer)
- Employee (Payee)

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Payroll Accounting and Control

• Employer (Payer) Name

Individual/Company/Other Body of Persons

• Contact Details
Address / Telephone Number / Email Address CLIENT
• Reference Numbers
PE Number / Income Tax Number /
Jobsplus Reference Number /
Registration of Company Reference (ROC)

• Paypoints
12 / 13 / 26 / 52 DATA
• Number of active employees
(considerations relating to payroll software)

Payroll Accounting and Control

PERSONAL DETAILS
DATA
• Unique Employee Number EMPLOYEES
Normally System Generated

• Employee (Payee) Full Name

Surname, Name

• Contact Details
Address / Telephone Number / Email Address

• Gender

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Payroll Accounting and Control

PERSONAL DETAILS
DATA
EMPLOYEES
• Civil Status
Spouse Reference (if applicable): ID/Income Tax Number

• Unique Reference Numbers

ID / Income Tax Number (issued by Maltese Authorities)
Social Security Number (where ID reference ends with an ‘A’)

• Date of Birth

Payroll Accounting and Control

EMPLOYMENT DETAILS DATA

• Start date EMPLOYEES
• End Date

• Occupation / Profession / Grade

• Department / Unit / Section

• Employment Type
Whole Time / Whole Time Reduced / Part Time / Other

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Payroll Accounting and Control

SALARY SETTINGS
DATA
EMPLOYEES
• Wage
Basic Weekly Wage / Hourly Rate

• Hours per Week

• Overtime Rate
1 : 1.5,
1 : 2,
or any other extra hours
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Payroll Accounting and Control

SALARY SETTINGS
DATA
• Pre-Tax Adjustments EMPLOYEES
• Post-Tax Adjustments

• Allowances / Bonuses

• Fringe Benefits
Cat 1, Cat 2, Cat 3, NTCCA

• Donations
Philanthropic Institutions / Union Fees etc...

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Payroll Accounting and Control

TAX / SOCIAL SECURITY /

DATA
MATERNITY FUND CONTRIBUTIONS SETTINGS
EMPLOYEES
• Tax Treatment
Main Cumulative Deduction Formula (Single/Parent/Married) /
Part Time Rate / Non-Resident Rates /
Other Fixed Rate (Other Emoluments or Special Tax Regimes)

• Previous Main Income Within Same Year

Main Emoluments and Main Tax

• Tax Arrears
Only on instructions from the Commissioner for Revenue

• Social Security Contributions

• Maternity Fund Contributions
• Voluntary Occupational Pension Scheme contributions or payments
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Payroll Accounting and Control

ENTITLEMENTS
DATA
• Vacation leaves, Public Holidays EMPLOYEES

• Sick Leaves
Full Pay / Half Pay

• Injury Leaves

• Special Leaves
Marriage / Maternity / Bereavement / Jury etc...

• Contract Renewal / Update

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Payroll Accounting and Control

MISCELLANEOUS
DATA
EMPLOYEES
• Licence renewals

• Direct Credit
IBAN / BIC /SWIFT

• Free Text Function

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CALCULATIONS
- Main Cumulative Tax Deduction Formula
- Part Time Tax Deductions
- Other Emoluments / Special Tax Regimes
- Fringe Benefits
- Cross-checks

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Payroll Accounting and Control

Main Cumulative Tax Deduction Formula

Total main emoluments to-date

Number of pay
Projected Annual
periods
Emoluments
within year
Current pay period number

with the Projected Annual Emoluments calculate the Projected Annual Tax from tax
bands

Projected Annual Tax

Current pay Tax already
period deducted
Number of pay periods in year

TAX TO-DATE

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Payroll Accounting and Control

Case Scenario
A single person (Tax Status) is paid €2,000 gross salary in January
(assuming a 12 pay-point period)

Total main emoluments to-date

Number of
Projected Annual
pay periods
Emoluments
within year
Current pay period number

€2,000
12 €24,000
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Payroll Accounting and Control

Case Scenario
A single person (Tax Status) is paid €1,000 gross salary in January
(assuming a 12 pay-point period)

Projected Annual Tax

Current pay Tax already
period deducted
Number of pay periods in year

€2,600
1 €0
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= THIS PAYROLL TAX DEDUCTION €217

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Payroll Accounting and Control

Main Cumulative Tax Deduction Formula

Online resource : FSS with FBT Spreadsheet

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FSS with FBT Spreadsheet

• re-calculates on change in tax status

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Payroll Accounting and Control

FSS with FBT Spreadsheet

• compensates for previous emoluments / tax

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Payroll Accounting and Control

Deduction (income from employment) Rules

S.L.123.149

• income from employment,

• employee not a director,
• income does not exceed €12,050 annually,
• does not derive any other income.

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Payroll Accounting and Control

Part Time Tax Calculations

• Effective rates:

1. 0% where income will be brought to charge with ‘Main’,

2. 10% where income will be deemed as final and withholding.

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Payroll Accounting and Control

Part Time Tax Calculations

• Case scenario ‘1’ where:

Individual whose tax status is ‘Married’ earns €12,500 from

main employment, and a further €2,000 annually from a
secondary part time qualifying employment.

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Payroll Accounting and Control

Part Time Tax Calculations

• Case scenario ‘1’

€12,500 (main employment)

€ 2,000 (part time, tax option 0%, or 10%)
€14,500 (total income falls below the ‘married’ tax threshold)

• In this case, 0% choice proves more beneficial.

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Part Time Tax Calculations

• Case scenario ‘2’ where:

Individual whose tax status is ‘Married’ earns €32,000 from

main employment, and a further €2,000 annually from a
secondary part time qualifying employment.

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Payroll Accounting and Control

Part Time Tax Calculations

• Case scenario ‘2’

€32,000 (main employment) tax liability of €3,519

€ 2,000 (part time), tax deduction at 10%, € 200
€34,000 (total tax) €3,715

• In this case, if 0% was chosen instead of 10%, the total tax charge would
have been €4,019.

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Other Emoluments Calculation

• Where emoluments are neither ‘Main’ nor ‘Part Time’ qualifying,

• Rates are either:

i) 20% (Prescribed rate), or
ii) higher than 20%, or
iii) lower than 20% (pensioners, students or on approval by the
Commissioner for Revenue).

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Payroll Accounting and Control

Other Emoluments Calculation

• Case scenario where:

Individual whose tax status is ‘Single’ earns €25,000 from main

employment, and a further €5,000 annually from a
remuneration in the form of Director’s Fees.

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Other Emoluments Calculation

• Case scenario

Formula: Total Tax less Main Tax

Secondary Income

(30,000x0.25)- (25,000x0.25)-
3,400 3.400

4,100 – 2,850
25%
5,000

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SPECIAL TAX REGIMES

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Special Tax Regimes – payroll treatment

Scheme Rate Chapter, Act
Deduction (income from employment) Rules 0% 123.149, Art2
0%
Persons Returning to Employment 123.81
(avail of max.€5k one year credit)
10%
Entertainer’s tax (non-resident rates if 15 days are 123 Art56(18A)
exceeded)
Income from Sports 7.5% 123, Art26(26)
15%
Overseas Employment 123, Art56(17)
(on income earned abroad)
Highly Qualified Persons 15% 123.126
Qualifying Employment in Aviation 15% 123.168
Qualifying Employment in Innovation & Creativity 15% 123.141
Repatriation of Persons established in Field of
15% 123.142
Excellence
123.148
Residence Programmes 35%
123.160
Progressive Rates charged as second
Returned Migrants 123, Art56(11)
part of income.
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FRINGE BENEFITS

- Category 1: Vehicles
- Category 2: Property
- Category 3: Other Benefits

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Payroll Accounting and Control

Fringe Benefits Rules S.L.123.55

• Part A : General (Definitions)

• Part B : Category 1 (Vehicles)

• Part C : Category 2 (Property)

• Part D : Category 3 (Other Benefits)

• Rule 39 : Exemptions

• Part E : Miscellaneous (further Rules)

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Payroll Accounting and Control

Fringe Benefits Guidelines

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Fringe Benefits Formulas

1. Category 1 : Motor Vehicles
 Private Use of a Vehicle
 Car Cash Allowance

2. Category 2 : Use of Property

 Immoveable Property
 Moveable Property

3. Category 3 : Other Benefits

 General Formula
 Specific Formulas
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Payroll Accounting and Control

Private Use of a Vehicle

Reminder from Module 2:

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Private Use of Vehicle

• Case Scenario ‘A’

Vehicle registered in 2020, whose original value

was €25,000. Fuel is provided by the employer.
Vehicle Use Value 17% of vehicle value (<6yrs)

Maintenance Use Value 3% of vehicle value (<28k)

Fuel Value 3% of vehicle value (-do-)

Personal Use Percentage 50% (vehicle price in table)

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Private Use of Vehicle

• Case Scenario ‘A’

Vehicle registered in 2020, whose original value

was €25,000. Fuel is provided by the employer.
Vehicle Use Value 17% of 25,000 4,250

Maintenance Use Value 3% of 25,000 750

Fuel Value 3% of 25,000 750

Personal Use Percentage 50% of sum 5,750 (sum) €2,875

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Private Use of Vehicle

• Case Scenario ‘B’

Vehicle registered in 2010, whose original value

was €33,500. Fuel paid by beneficiary and not
reimbursed.
Vehicle Use Value 10% of 33,500 3,350

Maintenance Use Value 5% of 33,500 1,675

Fuel Value n/a 0

Personal Use Percentage 55% of sum 5,025 (sum) €2,764

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Car Cash Allowance

• Case Scenario

Car allowance of €250

added to the monthly
salary as specified in the
Contract for Service of
an employee. Assume
that all other criteria
permitting a NTCCA are
applicable:
Employment Income
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Payroll Accounting and Control

Use of Property
Reminder from Module 2:

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Payroll Accounting and Control

Immoveable Property
• Case Scenario ‘A’
Free use of an accommodation, owned by the
employer, where:
a) Market Value is estimated to be €240,000 while
b) Cost was of €95,000 (including embellishment) and
c) Utility Bills fully covered by provider = €1,200

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Payroll Accounting and Control

Immoveable Property
• Case Scenario ‘B’
Lease to beneficiary of an accommodation owned by
the employer, where:
a) Market Value is estimated to be €240,000 while
b) Cost was of €95,000 (including embellishment) and
c) €18,000 rent paid by the beneficiary

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Payroll Accounting and Control

Moveable Property
• Case Scenario ‘C’
Free use of heavy machinery by beneficiary where the
employer is the owner of such moveable property:
a) Market Value is estimated to be €12,000 while
b) Cost was of €60,000, and
c) Period of use, 1 month.

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Payroll Accounting and Control

Moveable Property
• Case Scenario ‘D’
Free use of heavy machinery by beneficiary where the
employer is the owner of such moveable property:
a) Market Value is estimated to be €12,000 while
b) Cost was of €60,000,
c) Property was acquired by owner 10 years ago
d) Period of use, 1 month.

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Payroll Accounting and Control

Other Benefits
• Loans

• Meals

• Airline or sea transport

• Transfer of property or service

• Share option grants

• Payments or reimbursements of private expenses

Employment Income
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Payroll Accounting and Control

Beneficial Loan Arrangements :

 loans (in any form – amount owed by a person to another) granted at

beneficial terms where no interest is payable or interest is less than
the benchmark rate;

 Benchmark rate determined by Commissioner is 6.5% per annum;

 Benchmark rate for banks and financial institutions licensed to

lend money =
Main Refinancing Operations as applied by the Central Bank
of Malta

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Payroll Accounting and Control

• Beneficial Loan Arrangements :

 Annual value =

interest payable
computed with benchmark rate, or,
main refinancing operations as applied by the Central Bank of Malta
(whichever applicable) ‘minus’

interest payable computed with beneficial rate ‘minus’

in-house benefit (when applicable)

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Payroll Accounting and Control

Beneficial Loan Arrangements where employer is a bank

or financial institution
[Link]

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Payroll Accounting and Control

Beneficial Loan Arrangements where employer is a bank

or financial institution

As from 01/01/2024 – in case of home loans only…

The average rate on loans to residents of Malta for the purchase of a house,
calculated by reference to the interest rates prevailing at the end of each
month during the twelve (12) month period ending on 30 September of the
previous calendar year, as published by the Central Bank of Malta in the
statistics database on interest rates and other key financial market rates
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Payroll Accounting and Control

• Case Scenario, where:

An Employee is granted a loan by his employer where the

rate of interest is approved at 5%. Assume that the
employer’s business is not licensed to grant loans to the
general public.

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Payroll Accounting and Control

• Case Scenario:
interest @ 6.5% beneficial interest
month debt benchmark @ 5% difference
1 5,500 358 275 83
2 5,000 325 250 75
3 4,500 293 225 68
4 4,000 260 200 60
5 3,500 228 175 53
6 3,000 195 150 45
7 2,500 163 125 38
8 2,000 130 100 30
9 1,500 98 75 23
10 1,000 65 50 15
11 500 33 25 8
12 0 0 0 0

Total Gain, Taxable Fringe Benefit 498

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Payroll Accounting and Control

• Free or Discounted Meals:

 the provision of a free meal or at a discounted price;

 value of benefit is price of meal ‘minus’

the price paid (if any) ‘minus’
in-house benefit (hotel or catering establishment);

 benefit has no value if:

i. Employer is a hotel or catering establishment and employees are
served in a staff-restricted area,
ii. Any employer who serves meals in a canteen generally to staff.

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Payroll Accounting and Control

• Free or Discounted Airline or Sea Transport Tickets:

 the provision of an airline/sea transport ticket/fare at no
consideration or at a discounted price;

 value of benefit is price of paying public ‘minus’

discounted price paid;

 if benefit is provided by an operator in the sector:

Actual cost incurred by the provider, or, Less in-house

Higher of
20% of an economy ticket sold to public reduction

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Payroll Accounting and Control

• Free or Discounted Transfer of Property and Provision

of Services:

 the transfer/provision of property/service and use of consumables

at no consideration or at a lesser price than the value of such
property/service;

 value of benefit is cost or market value ‘minus’

discounted price paid ‘minus’
in-house reduction (if applicable);

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Payroll Accounting and Control

• Free or Discounted Transfer of Property and

Provision of Services:

 Benefit has no value if:

i. Directed as such by the Commissioner ( in relation to issue
of vouchers, coupons or tokens under a particular scheme),

ii. In-house property/service provided on a working day and

consumed/availed of on employer’s premises.

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Payroll Accounting and Control

• Share Option Scheme Benefit:

 when an employee exercises the option to acquire company shares

and the price of the shares in the open market is higher than the
option price of the same shares;

 Tax Value of benefit is 15% of difference between

Open Market Price and
Option Price

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Payroll Accounting and Control

• Case Scenario

A Company granted to employees the option to acquire company shares at

a given price of €5 per share. Such option was valid up to 6 months.

At the near of the expiry of such scheme, a particular employee exercised

the option to acquire 1000 shares. However, by such time, the Market
Value of each share increased by €0.80.

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Payroll Accounting and Control

share price at time of subscription € 5.00

market price at time acquired € 5.80
beneficial amount per share € 0.80

beneficial amount €0.80 x 1000 = € 800.00

tax on fringe benefit 800 x 15% = € 120

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Payroll Accounting and Control

• Payment or Reimbursement of Expenses

Incurred for Private Purposes:

 Payment/Reimbursement amount = Fringe Benefit

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Module 3 – Payroll Accounting & Control

E-SERVICES
- Cross-check Tools
- Electronic Identity
- Set-up Process
- Jobsplus online services
- CfR online services
- Submitting FSS End-of-Year Data

Payroll Accounting and Control

FSS with FBT Spreadsheet

Cross-check tools

SSC Calculator

Payroll Software

Timesheets
Manual payroll
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Payroll Accounting and Control

Online Services:

• Efficient, faster, real-time feedback

• Environment friendly, less costs
• Accurate, assurance of data integrity
• Accessible anytime, anywhere

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Payroll Accounting and Control

E-ID
• Electronic Identity Account,
• Managed by Identity Management Office
(Identity Malta),
• Applicable to holders of a Maltese ID
Card or Residence Card,
• Form ID10 (application for a Maltese ID
Card), or Form ID1A (Expatriates)
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Payroll Accounting and Control

e-ID portal

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Payroll Accounting and Control

e-ID portal

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Payroll Accounting and Control

e-ID portal –
Secure Authentication

• User-Name (log-in : Malta ID number)

• Case-sensitive Password
• 2-Factor Verification

• Sign in with 2-factor verification

• Sign in with Electronic ID card

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Payroll Accounting and Control

Jobsplus Access – Service User

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Payroll Accounting and Control

Jobsplus Access - Administrator

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Payroll Accounting and Control

Jobsplus Services

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Payroll Accounting and Control

MTCA Services on-line Access – Service User

MTCA03 (former CFR03)

Registration as User for FSS and VAT Services

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Payroll Accounting and Control

MTCA Services on-line Access – Service User

Registration as Tax Representative MTCA02
MTCA01 (former CFR01)

Appointment of a
Registered Tax Representative

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Payroll Accounting and Control

MTCA Services on-line Access – Service User

FS5 online

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Payroll Accounting and Control

FS5 online

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Payroll Accounting and Control

online banking electronic payment gateway

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Payroll Accounting and Control

1. E-Mail acknowledgement on submission of FS5 online

From: IRD Services at MFIN
Sent: 18 November 2016 05:14
To: ***********
Subject: Submission of FS5 - Monthly Payment Advice

Submission of FS5 - Payer's Monthly Payment Advice

Inland Revenue acknowledges the receipt of form FS5 for:

PE Number: *****************
For Month: November 2016

Acknowledgement Ref: ********************

Your FS5 becomes valid when you effect payment for € 5.00 using the online banking facilities of either
BOV 24x7 ([Link] HSBC internet banking ([Link] Banif@ast Service
([Link] APS Bank Internet Banking ([Link] or Lombard Bank
Internet Banking ([Link] using payment reference number
********************.

Alternatively if you paid the amount of € 5.00 using the on-line facilities of the IRD website, your payment
will be acknowledged separately. If whilst paying on-line you encountered any problems you may still use
the above payment reference number to settle your amount from
[Link]

If you have any enquiries please send an e-mail to [Link]@[Link].

Thank you for using IR Services On-Line.

2. Manual receipt issued by post once payment is effected

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MTCA Online Services

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Payroll Accounting and Control

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Payroll Accounting and Control

Electronic Lodgement –
submission of End of Year Reconciliation Data
(FSS files)

>9 FS3 forms =

+ electronic data

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Payroll Accounting and Control

Electronic Lodgement –
submission of End of Year Reconciliation Data
(FSS files)

1. Generate lodgement files from payroll,

or,

2. Create data through FSS e-filing sheet

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Payroll Accounting and Control

Electronic Lodgement –
submission of End of Year Reconciliation Data
(FSS files)
1. Generate lodgement files from payroll,

[Link] [Link]

2. Create data through FSS e-filing sheet

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Payroll Accounting and Control

FS3 data-file

[Link]

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Payroll Accounting and Control

SSC data-file

[Link]

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Payroll Accounting and Control

Electronic Lodgement –
submission of End of Year Reconciliation Data
(FSS files)

Submission options:

Option 1:
Submission through e-Services or,

Option 2:
Submission through e-filing sheet
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Payroll Accounting and Control

Electronic Lodgement – Option 1:

online submission

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Payroll Accounting and Control

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Result:

Validation failure

Submission successful
89

Payroll Accounting and Control

Electronic Lodgement – Option 2:

FSS e-filing sheet

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Payroll Accounting and Control

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Payroll Accounting and Control

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Validation failure

Submission successful
93

Payroll Accounting and Control

Submission e-Mail confirmation

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Payroll Accounting and Control

Guidelines

[Link]

[Link]

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Taxation: [Link] ([Link])

Social Security: [Link]

Identity Malta: [Link]

Jobsplus: [Link]

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End of Module 3
Any Further Questions?

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