On 4 April, the Revenue has published a notice with clarifications on the tax and payroll implications of the COVID-19 wage supplement. In summary:

• The wage supplement is the Government’s contribution to the employer.
• The wage supplement is not taxable as income nor deductible as an expense in the hands of the employer.
• For payroll purposes, the employer will record paying the gross salary amount paid to the employer including the COVID-19 wage supplement. Such gross amount is taxable in the hands of the employee.
• Government will pay the COVID-19 wage supplement (€800 or less according to eligibility) to the employer for each employee and will retain 10% as prepaid employees share of social security contribution (SSC). 
• On the monthly FS5 form, the employer will calculate the total amount due to Government (i.e. the employer’s and employees’ share of SSC plus maternity contribution plus tax) and deduct therefrom the 10% SSC withheld by Government on the COVID-19 wage supplement.
• The wage supplement paid by the employer to the employee will be reported in the annual FS3 forms.
• The annual FS7 form will be modified to show the amounts paid to employers and the SSC withheld from the wage supplement.

Should you have any queries or wish to discuss further, please send an email to covid@kpmg.com.mt.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.