- COVID Wage supplement: Payroll Implications
The wage supplement (€800 or less according to eligibility) is the government’s contribution to the employer to support the wages of the enterprise employees.
This income is replacing the normal wages of the employee hence it is taxable in the hands of the employee.
For Payroll purposes, this income will be added to any income received by the employee during the pay period and tax and social security contributions (including Maternity) will be calculated in the standard method.
The employer must record receiving the wage supplement (e.g. €800) and paying this gross to the employee so payroll requires no changes. The payslip will show the gross paid (i.e. €800 or the amount eligible).
The wage supplement paid to employers will not be treated as income or grant to the employer for Income Tax purposes, hence not taxable nor tax-deductible.
- SSC and Maternity Contributions
The government will give €800 (or less according to eligibility) to the employer for each employee though it will retain 10% SSC (€80 or less) as prepaid employees share of SSC.
The employer will then calculate what is due in totality to CFR i.e. the employers and employees share, Maternity Contribution and taxes) and deduct therefrom the amount of SSC prepaid to CFR.
On Form FS5 the total due to CFR less the SSC when the wage supplement is paid will be shown in box D5.
- FS7/FS3 Reporting
Malta Enterprise will provide the full details of the applications to the CFR. Thus, employers will report the wages-supplement paid to employees in the normal FS3 forms.
FS7 will be modified to show the amounts paid to employers and the SSC withheld from the wage supplement.