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January, 8 2019
December, 18 2018
Social Security for Seafarers in Malta
Malta has served as an international centre for maritime and shipping industries since time immemorial. The passage of time proved that it has only gotten stronger in this sector, offering numerous benefits to all those involved in the maritime industry. Such benefits are evident when it comes to the social security regulations applicable to seafarers in Malta.
In operating under a European Union flag, ships registered in Malta lead to advantages such as:
1. The possibility for non-residents of the EU/EEA/Switzerland working under a Maltese flag-ship to opt for the social security system of their non-EU/EEA/Switzerland country of residence;
2. A European Health Insurance Card offered to those insured in Malta and an S1 form offered to those residing in a Member State other than Malta;
3. Unemployment benefits in the seafarer’s country of residence, enjoyed in virtue of a U1 form;
4. Pension secured at a rate of benefit reflecting the length of the claimant’s insurance in their scheme paid by any EU, EEA state and Switzerland; and
5. Protection from the repercussions of the French Decree 2017/307 by means of mandatory returns and payments on social security, amongst others.
Such benefits are enjoyed in virtue of the international and regional frameworks employed in Malta. Following its accession to the EU, Malta sought to implement Regulation EC/883/2004 wherein the rules regulating social security applicable to seafarers became more streamlined. Although mariners are still required to pay contributions in the vessel’s flag state, whenever seafarers are remunerated by an ‘undertaking’ in the same Member State where they reside, then the legislation of the Member State of residence shall apply.
In the past, Malta required seafarers working on a Maltese flag-ship to also reside in Malta. This requirement was however done away with as it was deemed to go against the concept of the freedom of movement of persons embraced in the EU. Malta now offers non-residents of the EU/EEA/Switzerland working under a Maltese flag-ship, the possibility to opt for the social security system of their non-EU/EEA/Switzerland country of residence. Conversely, under this regulation, seafarers who are either citizens or residents of the EU/EEA/Switzerland must necessarily be insured in that EU flag state in terms of its respective laws. The only exception for EU/EEA/Switzerland residents lies in the case where the employer and employee reside in the same Member State, provided that the seafarer is affiliated in that State for social security. This is always subject to the main principle that seafarers can only be subject to a social security system of one Member State.
The benefits which a person insured in Malta enjoys include a European Health Insurance Card (EHIC). If a person resides in a Member State other than Malta, he may benefit from an S1 form upon presentation of the salary slips showing the contributions. Those insured in Malta may also claim unemployment benefits in their country of residence, by making an online request.
The process of obtaining insurance in Malta is in fact a very simple one. A registration application must be made for each employee as so as to obtain a social security number for all, wherein the employer is simply required to apply for a “PE number” and an income tax number (under an ‘inactive’ status if a foreign company), whether based in Malta or otherwise. This enables them to carry out the monthly returns.
Contributions are then calculated based on a percentage of the weekly salary if the latter does not exceed the threshold of €438.54. Once the weekly salary goes over such threshold, then a fixed sum of contributions is to be paid. Given that the level of salaries earned by yacht crewmembers exceed this threshold, then contributions are capped at €43.85 both for the employer and employee, resulting in a total contribution of €87.70. One must ultimately add €1.32 contribution for maternity fund.
When it comes to pensions, the Regulation introduced the concept of the portability of rights. This means that if a person has worked for more than one year in two or more of any EU/EEA state or in Switzerland, then the Regulation requires each of these states to pay a rate of benefit proportional to the length of insurance periods in such states. For instance if from a total of 40 years, a person spent 20 years working in Malta, 15 years in Italy and 5 years in the United Kingdom, then this person should get a pension of not less than 20/40 years of the theoretical amount from Malta, 15/40 from Italy and 5/20 from the UK. All these states will work out the full theoretical rate of pension as if the person worked the whole 40 years there.
Finally, Malta ensures that ships registered under its flag shall not be affected by the imposition of the affiliation to the French social security system introduced by the introduction of French Decree 2017-307. This is because the latter applies solely to French resident crewmembers working on yachts not covered by EU legislation or an international social security agreement. Malta however ensures that Regulation EC/883/2004 applies to all ships registered under its flag, whereby returns and payments are made mandatory. Naturally this is applicable provided that crewmembers working on such ships are actually registered with and covered by the Malta’s social security system.
Mifsud & Mifsud Advocates offers services to brokers and owners so as to ensure full compliance with the EU and Maltese laws applicable to them. This involves aid in proceeding with the regularizing and the registering of seafarers working under the Maltese flag in order to avoid the application of the French Decree.
In addition, Mifsud & Mifsud Advocates takes care of the registration of an employer, that is, the entity paying salaries, in Malta as well as the application for Maltese residency for crewmembers. This will be followed by the registration of crewmembers with the Maltese social security system, offered irrespective of the EU/EEA/Swiss flag involved, as long as the employer (that is, the entity paying the salaries) is also registered in Malta.
For more information do not hesitate to contact us on firstname.lastname@example.org.