Self-Employed Taxes in Malta (2026): Class 2 NI, Income Tax and Registration
Self-employed persons in Malta pay Class 2 National Insurance (NI) based on prior-year net earnings, and income tax on net business profit using the same single, married or parent computation tables as employees. Class 2 NI for persons born on or after 1 January 1962: Category SA flat EUR 34.70/week; Category SB 15% of annual net earnings divided by 52; Category SC flat cap EUR 79.84/week. NI is charged weekly and is not deductible from the income tax base. Verify all obligations with the Commissioner for Revenue (CFR) or a qualified accountant.
Overview of self-employment tax obligations in Malta
A self-employed person in Malta -- whether operating as a sole trader, freelancer or professional -- has two main tax obligations: 1. Income tax: levied on net business profit using the same income tax computation tables (single, married or parent) as for employed persons. The formula tax = rate x chargeable income - subtraction applies, with the same band boundaries and subtraction constants described in the income-tax-explained guide applied to self-employment profit. 2. Class 2 National Insurance: a separate weekly NI contribution assessed on the basis of prior-year net earnings, with its own category structure (SA, SB, SC) that is distinct from the Class 1 NI paid by employees. Unlike employed persons, self-employed individuals do not have tax withheld at source. They are responsible for registering with the CFR, maintaining proper business records, computing their own liability, and making advance payments (provisional tax) during the year, with final settlement on the annual income tax return. Self-employed persons who also have employment income in the same year must aggregate all income sources for income tax purposes. Class 1 NI covers employment income and Class 2 NI covers the self-employment income -- both run independently. Always register with the CFR promptly on commencing self-employment, and verify your obligations with the CFR or a qualified accountant.
Class 2 NI: categories SA, SB and SC for the self-employed
Self-employed persons pay Class 2 NI rather than Class 1. The Class 2 category is determined by the prior tax year's net earnings (total business receipts minus allowable expenses from the previous year). For persons born on or after 1 January 1962, the 2026 categories are: Category SA (flat rate -- lower earners): Weekly NI = EUR 34.70 per week (flat amount regardless of exact earnings within the band). Applies when prior-year net earnings fall below the Category SB threshold. Category SB (percentage rate -- middle earners): Weekly NI = 15% of the annual net earnings / 52. The prior-year annual net earnings figure is divided by 52 to obtain a notional weekly figure, and 15% of that amount is the weekly NI contribution. Category SC (flat cap -- higher earners): Weekly NI = EUR 79.84 per week (flat cap). Applies when the SB percentage calculation would exceed this cap. Because the category depends on the PRIOR year's net earnings, a newly self-employed person or one whose income changed significantly should verify which category the CFR has assigned for the current year. Unlike Class 1 NI, there is no employer match for Class 2 -- the self-employed person bears the full contribution without an equal payment from a separate employer. All figures should be verified with the CFR or a qualified accountant, as category boundaries and rates are reviewed periodically.
Income tax for the self-employed: net profit on single, married or parent bands
Self-employed persons pay income tax on net business profit -- total business receipts minus allowable deductible business expenses -- using the same computation tables as for employees. The applicable computation depends on personal circumstances: - Single computation: bands 0%, 15%, 25%, 35% with subtraction constants as described in the income-tax-explained guide. - Married computation: wider 0% band (to EUR 15,000 for 2026), benefiting married taxpayers. - Parent computation: widest 0% band (to EUR 22,500 for 2026), for taxpayers with two or more qualifying dependents. Allowable deductions include business-related expenses: direct costs of generating revenue, equipment used for business purposes, professional fees, business premises costs and similar items supported by valid documentation. Personal living expenses are not deductible. Verify the specific list of allowable deductions with the CFR or a qualified accountant. Note: Class 2 NI is not deductible from the income tax base. Both NI and income tax are calculated on or by reference to the same business income without either reducing the base for the other -- the same principle that applies to employees under Class 1. Self-employed persons pay income tax via the provisional tax system: advance payments during the year (typically in April and August) based on estimated liability, with a final balance settled on filing the annual return. Always verify provisional tax payment dates and amounts with the CFR or a qualified accountant.
Registering as self-employed and filing obligations
A person commencing self-employment in Malta must register with the CFR. Registration entails notifying the CFR of the new self-employment activity, obtaining a tax registration number if not already held, and registering for Class 2 NI with the Department of Social Security. Annual income tax return: self-employed persons file an annual income tax return with the CFR. The deadline is announced each year by the CFR (historically June or July for the prior tax year); always confirm the exact date with the CFR. Provisional tax payments: advance payments are typically made in two instalments during the tax year, based on either the prior year's liability or an estimate for the current year. The balance due is settled when the annual return is filed. If advance payments exceed the final liability, a refund is due; if they fall short, interest may apply. VAT registration: self-employed persons with taxable annual turnover above EUR 35,000 must also register for VAT under Article 10 of the VAT Act. See the vat-explained guide for details. Those below EUR 35,000 may apply for the Article 11 small-undertaking exemption. Record-keeping: maintaining proper business records -- invoices, receipts, bank statements -- is a legal requirement and is essential for computing taxable profit and claiming allowable deductions. Late filing and late payment attract interest and administrative penalties. Engaging a qualified Maltese accountant from the outset is strongly recommended. Always verify current registration requirements, deadlines and return formats with the CFR or a qualified accountant.
FAQ
How is Class 2 NI different from Class 1 NI in Malta?
Class 1 NI is paid by employees and their employers; it is calculated weekly on current gross wages with categories B (flat EUR 21.35), C (10%) and D (flat cap EUR 53.23). Class 2 NI is paid by the self-employed and uses different categories (SA flat EUR 34.70, SB 15% of prior-year net earnings / 52, SC flat cap EUR 79.84) determined by prior-year net earnings rather than current-week gross wages. There is no employer match for Class 2. Verify your assigned category with the CFR or a qualified accountant.
Can a self-employed person in Malta deduct business expenses from income tax?
Yes. Income tax is calculated on net business profit -- gross receipts minus allowable business expenses. Expenses must be wholly and exclusively incurred in the production of business income, must be revenue in nature (not capital), and must be properly documented. Examples include cost of goods sold, professional fees, business travel and relevant equipment costs. Personal and dual-purpose expenses are not fully deductible. Confirm the specific allowable expenses for your activity with the CFR or a qualified accountant.
Does a self-employed person in Malta need to register for VAT?
Yes, if taxable annual turnover exceeds EUR 35,000, registration under Article 10 of the VAT Act is mandatory. Persons below EUR 35,000 may apply for the Article 11 small-undertaking exemption, which means they do not charge VAT but also cannot recover input VAT on business costs. Even exempt persons must monitor turnover and register promptly when the threshold is reached. Verify the current threshold and registration procedure with the VAT Department or a qualified accountant.
How does provisional tax work for the self-employed in Malta?
Self-employed persons pay income tax in advance through the provisional tax system: two advance payments are typically made during the tax year (historically in April and August -- confirm exact dates with the CFR each year), based on estimated liability for the current year or a percentage of the prior year's assessed tax. A final settlement is made when the annual return is filed. If advance payments exceed the final liability, a refund is due. Always confirm the provisional tax schedule with the CFR or a qualified accountant.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.