The 7.5% tax rate for football players playing in Malta

7th September 2014

As part of the process to maintain good communication with our members and discuss the new tax measures being charged to footballers as from the 1st January 2014, a meeting was held between the MFPA and the Inland Revenue Department. We are pleased to report that this was a very positive meeting where mainly the new tax rate of 7.5%, which is to be charged on all football income earned by footballers, was discussed together with the procedures relating its implementation.

The measure is intended to regularise the tax position of players and we strongly welcome all members to adhere to this new opportunity. It gives all peace of mind and certainty and hence MFPA will make an effort to ensure this measure is applied. Not using this measure correctly will mean that any football income is added to player’s income and taxed at the standard rates.

The following are the main points regarding this new measure:

  • The 7.5% tax rate will apply to both full-time and part-time professional players.
  • All football income earned which may include salaries, any allowances, bonuses and fringe benefits, will be taxed at the rate of 7.5%.
  • Full-time footballers and students can either use the normal tax rate system or else to make use of the new 7.5% tax rate depending on their particular circumstances.
  • The first step to ensure you benefit from the measure is to fill in an FS4 (Payee status declaration) document and send it to the Inland Revenue Department to make known that you will use this option. Forms can be downloaded from this link: FS4 Form - Payee Status Declaration
  • Clubs (employers) will have to provide their players (employees) with a signature on this form.
  • Clubs (employers) will have to provide their players (employees) with an FS3 form (Payee Statement of Earnings) by not later than the end of every January of each year.
  • Example: For earnings from football activity between the 1st of January 2014 and the 31st December 2014 clubs will have to provide their players with an FS3 form by not later than the 31st of January 2015. 
  • However, whenever a contract of employment is terminated prior to the 31st December of any year, the FS3 form must be provided to the individual within 7 days of termination.
  • Clubs will then have to submit the FS3 to the Inland Revenue Department by not later than the 15th of February 2015.
  • Clubs will be withholding the 7.5% from the player's wages so you don't need to do anything yourselves. The player just needs to keep a copy of the FS3.
  • If the club does not provide the player with an FS3 form, the player should report such case to the Inland Revenue Department as it is the responsibility of the player to declare all his income.

Unfortunately a salary capping still exists for both full-time and part-time football players. This was introduced in the early nineties and does not reflect today’s reality. In fact a part-time player playing in the Maltese Premier League can only earn a maximum gross salary of €350 per month while a full-time player can earn a maximum gross salary of €1200. The MFA President Mr. Norman Darmanin Demajo on the 11th of November 2013 stated that a committee has been set up within the MFA to review the outdated regulations and eventually change them. We still await a meeting with such committee.

The Malta Football Players Association is advocating a complete removal of the ceilings so that players can have a transparent agreement with clubs. The MFPA strongly recommends to all players to declare all income on the contracts to ensure their respect. This new tax measure provides for a very advantageous level of taxation on all such income so we encourage players to adhere to the same and indicate all income to be paid by clubs, even if for now is indicated as an allowance over and above the salary cap.

It is interesting to note that a salary capping existed also in England over 50 years ago. However on the 18th of January 1961 the salary capping for professional football players was abolished when the threat of a strike by professional footballer on January 14th 1961 effectively forced the Football League to abolish the maximum wage.

Do not hesitate to contact MPFA for further information.