January marks the formal transition between payroll years in Malta. For employers, this period is defined by the closure of the previous payroll year, the preparation of statutory employment reporting, and the application of updated payroll parameters for the new calendar year.
This overview outlines the HR and payroll obligations that arise in January 2026, the documents involved, and how employment records connect with payroll reporting during this period.
Year-end Payroll Closure for 2025
Payroll for the 2025 calendar year must be fully closed before annual reporting can be finalised. This includes the completion of all payroll runs for the year and the consolidation of employee earnings, tax deductions, and social security contributions declared during 2025.
The year-end payroll position reflects:
- All employment periods active during the 2025 calendar year
- All new hires and terminations processed within that year
- All taxable earnings, deductions, and statutory contributions recorded through payroll
This consolidated position forms the basis for annual employee and employer reporting.
Annual Payroll Reporting Documents
Following the end of the calendar year, Malta’s payroll framework requires the preparation of two statutory documents.
FS3
The FS3 is the annual statement issued to each employee. It summarises gross income, tax deducted, and social security contributions for the year and reflects the employee’s full payroll position for 2025.
FS7
The FS7 is the employer’s annual reconciliation statement. It consolidates all FS3 figures and reconciles them with the amounts already declared and paid through monthly payroll submissions during the year.
The annual reconciliation aligns payroll software records with submissions made to CFR Malta over the course of the year.
Monthly Payroll Reporting Continuity
Payroll reporting in Malta operates on a monthly cycle. Payroll calculations are processed through payroll systems that are widely used in the Maltese market, such as Shireburn Indigo Payroll, Talexio, Interpay, and other locally adapted payroll software that support statutory tax, social security, and reporting requirements. These systems generate payroll data and produce the figures used for monthly submissions, while the monthly declarations and payments themselves are submitted through CFR Malta’s services under the Final Settlement System – FSS.
Each monthly submission contributes to the annual payroll position that is later reconciled through the FS7. January payroll reporting therefore marks the first payroll declaration for the 2026 calendar year, while annual reconciliation relates exclusively to payroll activity from 2025.
Employment Records and HR Alignment
Payroll reporting is connected to employment records. Annual payroll reporting reflects employment terms as they existed during the year, making consistency between HR documentation and payroll data essential.
Employment-related records that are reflected in payroll reporting include:
- Employment agreements and contractual terms
- Salary structures and working arrangements
- Employment start and end dates
- Terminations and redundancies
- Final payments processed on cessation of employment
Redundancy in Malta: Rights, Obligations, and What Happens Next
Redundancy and Employment changes during 2025
Where employment ended during 2025, payroll reporting reflects the treatment of the final employment period. This includes:
- Final salary payments
- Notice period treatment
- Statutory entitlements processed through payroll
- Correct cessation dates for tax and social security purposes
These elements are incorporated into the employee’s FS3 and the employer’s FS7, ensuring the annual position accurately reflects employment activity during the year.
Payroll parameters applicable from January 2026
From the first payroll run of January 2026, updated payroll and employment parameters apply within payroll and HR systems. These parameters relate both to payroll calculations and to statutory employment entitlements that are administered through payroll records.
The parameters applicable for the 2026 calendar year include:
- The Cost of Living Allowance applicable for 2026 – €4.66 per week.
- Payroll tax tables and statutory deductions applicable for the year -Budget measures impacting payroll calculations
- Statutory annual vacation leave entitlement – 27 days (216 hours)
- Statutory sick leave entitlement – The amount of sick leave varies substantially according to the relevant Wage Regulation Order that regulates the specific sector of industry. /////////
These parameters apply only to payroll periods falling within the 2026 calendar year and are separate from the annual reporting of 2025 payroll data.
Conclusion
January brings together several distinct but connected payroll and HR obligations. It closes one payroll year, finalises statutory employment reporting, and establishes the payroll framework for the year ahead.
For employers, this period represents an administrative reset point, where payroll records, employment documentation, and statutory reporting converge to form a complete and accurate employment record for the previous year, while setting the baseline for payroll activity in 2026.
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