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Malta's Final Settlement System (FSS)
Employers and employees alike operating across the sun-kissed islands of the Maltese Archipelago (including Comino ⛱️ and technically even Filfa 🦈) will undoubtedly encounter forms like the FS3, FS5, or FS7 at some stage in their professional journeys.
These are all part of the islands' Final Settlement System (FSS) that since 1998 has been helping in the regulation of tax collection on gross emoluments as prescribed within specific articles of the Income Tax Act.
As an employer with a PE number (issued by the Malta Tax and Customs Administration or MTCA), you have several obligations, including but not limited to submitting three forms to comply with FSS requirements:
FS3 - Payee Statement of Earnings
FS5 - Payer's Monthly Payment Advice
FS7 - Payer's Annual Reconciliation Statement
Issuing these forms and the End-of-Year Process
Issuing these forms and the End-of-Year Process
The End of Year process is like building blocks, with each step depending on the one before it. To ensure accuracy and compliance:
Finalise payrolls: This is the foundation for all forms.
Generate FS3s: Individual employee records based on payroll data.
Generate FS5s: Company-level summaries of gross emoluments and taxes, compiled from FS3 data.
Generate the Electronic Lodgement: A complete annual summary for the company, built on FS5s.
You may also issue an FS7 for reference, but the Electronic Lodgement is more crucial and precise.
Each form builds on the last, so following the sequence is key to a smooth End of Year process!
Read on for step-by-step instructions on how to issue each form through the platform, or click the linked videos in each section for quick and easy audiovisual tutorials.
💡 Tip: For more information, feel free to consult our primary resource covering all the topics described in this article.
Issuing an FS3
The FS3 form summarises an employee's earnings 💰 during their employment with an employer in the current tax year. It details gross emoluments, fringe benefits, tax deductions, and social security contributions, clearly indicating the deduction categories.
To issue an FS3:
In the Payroll & Leave tab, click FS3.
In the FS3 screen, click on the employees that you wish to generate the FS3 for.
Note: if necessary, you can change the year from the the top left drop down. By default, the current year will be selected.
Click on Generate in the bottom right corner, followed by either All or Selected (x), depending on your needs.
Select the appropriate date and fill in the Principal Full Name and Principal Position fields in the resulting window. When ready, click Generate.
Once your request is processed, you’ll be redirected to the FS3 screen. Employees for whom FS3s were just generated will now display a clickable preview button, checkmarks ✅, and a 'Generated On' date and time in the relevant grid columns.
You can now click on these employees again and click Publish in the bottom right corner followed by your required choice from All, Selected (x) or Pending (x). The system will prompt you to confirm the publication of the FS3s. Click OK to issue them to the selected employees.
Once you issue the FS3s, your employees will receive them through their preferred method—email or printed copy. A soft copy will also be available in their My FS3s widget in the Employee Portal.
💡 Note: If an individual changes jobs during the year, they may receive multiple FS3 forms for that year. As an employer, you may need to issue an FS3 covering up to the specific date when an employee leaves your company.
🤩 Did you know? For employees set to receive FS3s via email, you can protect their document with a password in two simple steps: activate password protection and create a password. Learn how to do both by clicking the button below!
⚠️ Be sure to complete these steps before generating the FS3. After you do that, the process to issue FS3s remains the same as described above!
Downloading and Emailing FS3s in a ZIP File
Downloading and Emailing FS3s in a ZIP File
After generating FS3s, you can download all or select files by bulk in a ZIP file and have that ZIP file emailed to an address of your choosing.
To do this, head back to the FS3s screen and:
Select the required employees from the list.
If their FS3s haven’t been generated yet, click Generate > Selected (x) as outlined in steps 3 and 4 above. You will need to select the employees once again once the FS3s are generated
Click on Download in the bottom right corner followed by All or Selected (x).
In the pop-up window, enter the e-mail address you want to send the ZIP file to and a password for that file.
Click Submit.
Check the relevant inbox for an email from Shireburn Indigo with 'FS3(s) Download' written in the subject line, and follow the instructions provided.
That’s it! Once you complete step 5, a ZIP file containing all your selected FS3s will be downloaded. While the directory file can be accessed by anyone with a file archiver like 7-Zip, opening any individual FS3 within will require the password set in step 3.
⚠️ Important! Before proceeding, make sure you are sending FS3s to the correct recipients, such as the relevant employee, HR admin or team. Be extra careful when sending multiple FS3s at once, as sending these documents to the wrong person could lead to a GDPR compliance breach.
Issuing an FS5
The FS5 form summarises all payments 💸 owed by employers to the MTCA, including FSS, SSC, employee count, gross emoluments, and tax deductions for the period. Indigo allows you to issue FS5s for finalised payrolls either from the FS5 screen or directly from the specific payroll you're working on.
To issue an FS5 from the dedicated screen:
Go to Payroll & Leave > FS5.
Select the appropriate year from the dropdown above the grid. Any payrolls for which FS5s have already been generated will be displayed.
Click Generate FS5 Report.
In the new window called 'FS5 for [month] [year]', select the required payroll month. Fill in the rest of the details as required, or leave the fields blank so that they default to the payroll's existing details.
When done, click Generate.
🏆 Success! After a short while, you will be alerted that the FS5 has been processed. The window will remain open, and the Preview and Delete buttons will also become active and available.
To issue an FS5 directly from a payroll:
Go to Payroll & Leave > Payrolls
Open the required payroll from the grid or create a new one.
Once you're in the Payroll Calculations for Roll [...] screen, click FS5 in the bottom right toolbar. ⚠️ Note: for this button to be available, the payroll must be finalised.
In the new window, fill in the fields or leave it blank and click Generate, much like steps 4 and 5 above.
This will automatically update the grid in the FS5 screen with your newly issued form.
⚠️ Important: FS5s will not automatically adjust themselves if their associated payroll's calculation is changed. This will cause a mismatch and the FS5 will need to be regenerated. To do this, access the payroll's FS5 for [month] [year] window once again and click Regenerate.
You can access an already generated FS5 from the FS5 button on the Payroll Calculation screen or by clicking the Regenerate 🔄 button in the right-most column of the FS5 screen's grid.
Issuing an FS7
⚠️ Efficiency Notice: The FS7 form may have been the go-to for tax submissions once upon a time, but it’s been outclassed by the more accurate and efficient Electronic Lodgement system.
While you can still issue an FS7 in Indigo for reference, beware: discrepancies between the FS7 and the Electronic Lodgement are common, and relying on the FS7 could lead to problems due to imprecise data.
For your End of Year process, trust the Electronic Lodgement—it’s faster, more reliable, and less likely to leave you in the dark!
The FS7 form provides an annual 📆 reconciliation of all payments made by the employer to the MTCA, similar to the FS5, but with an annual total instead of a monthly breakdown. Any discrepancies found while completing the FS7 form, such as under or overpayments of FSS or SSC, should be addressed before submission during the year-end reconciliation.
To issue an FS7:
Go to Payroll & Leave > FS7.
Click on the Insert (+) icon at the top left side of the screen.
Enter the required details in the subsequent window, and click Generate.
A draft with the DRAFT watermark will appear in the grid on the FS7 screen, with buttons to Regenerate, Close, Cancel, and Preview. If no changes have been made since its creation, you can Close the form.
When you close the form, the DRAFT watermark is erased automatically.
If there are changes, click Regenerate first, then Close.
Click Yes in the resulting window.
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