Are you a self-employed person, but the thought of Tax, VAT and social security scares you? The professional team of accountants at GCS Malta have your back and outline in detail in our latest article.
Self-employed persons
Firstly, a self-employed person is an individual that conducts economic activity in their name. Any person in this category must manage their taxation and social security affairs, given that they do not have the benefit of having these taken care of by their employer.
Value Added Tax (VAT)
The individual must register for VAT with the Commissioner for Revenue (CFR) within 30 days from activity commencement. Types of registration differ as follows:
- Article 10 – An individual is charged VAT on the supply of goods/services and claims back VAT on expenses incurred in the course of taxable activities;
- Article 11 – An individual is charged VAT on the supply of goods/services and reclaims the VAT on expenses incurred; however, annual revenues cannot exceed EUR 30,000 and EUR 35,000 in the case of services and goods, respectively; and
- Article 12 – An individual is charged VAT when making intra-community acquisitions of goods from the EU exceeding EUR 10,000 per year or receiving intra-community services of any value.
Quarterly VAT returns must be submitted one month and 22 days following the month the relevant quarter ends, except for Article 11 registrations for which VAT Returns are to be presented annually.
Tax
From the first year of economic activity, the individual must register for a tax number with the CFR and will be required to submit a tax return and pay tax on profits. The deadline for submitting the tax return and respective payment is six months after the end of the calendar year.
For part-time self-employment, tax may be paid at a flat rate of 15% on profits, provided that profits do not exceed EUR 12,000 and taxes are paid by the end of April following the end of the financial year.
Social Security
The individual must own a social security number issued by the Department of Social Security. Contributions are paid to the CFR every four months, namely in April, August, and December.
Rates for social security contributions are based on the annual net profit or income for the year preceding the contribution payment year and are summarised below:
Suppose the individual is self-employed on a part-time basis and has another primary source of income (for example, from full-time employment). In that case, contributions are to be paid only on the primary source of income.
Why GCS Malta?
At GCS Malta, our team of accountants are up-to-date with issues concerning VAT, Tax and social security. Hence, our accountants can assist you with your queries. Contact us today for more information.
