FAQs: Understanding Malta Social Security for Yacht Crew

Navigating the complexities of Malta’s Social Security (MSS) system can be daunting, especially for yacht crew members and those managing maritime operations. In this article, Fiona Millo, one of our Crew Services Officers, looks at the most frequently asked questions about MSS for yacht crew. Whether you’re a crew member, owner or captain, this guide will help you understand your obligations.

Who do the regulations affect?

EU Regulation 883/2004 states that seafarers who are either citizens or residents of the EU/EEA or Switzerland and employed on board a vessel flying the Malta flag must be insured under the MSS system. It is important to highlight that post-Brexit, while UK citizens no longer have automatic rights to reside or work in Malta, crew employed under the Malta flag must be insured under MSS.

The individual crew member ultimately has the responsibility to ensure they are making appropriate contributions; therefore, they will need to ensure they have the mechanism to evidence payment of contributions when asked, especially if they need to access any benefits.

For owners, employing multinational seafarers, often with differing residencies, on board a yacht engaged on international voyages is a complex process. Appointing a crew management expert such as Praxis to manage the ongoing liabilities can save the owner and captain time and ensure compliance with any updates to avoid penalties.

How are rates calculated?

Rates can vary depending on the crew member’s weekly earnings, and contributions are shared between the employer and the employee.

The amount of social security contributions is subject to minimum and maximum thresholds, which the Maltese government may update annually.

Why do the crew need to pay MSS contributions?

Paying into Malta’s Social Security system is mandatory for crew working on a yacht flagged under Malta, or if they reside in Malta for tax purposes. Non-residents or those working internationally may still need to contribute to MSS if a Maltese entity employs them.

The main reasons to contribute are:

• Legal obligation: Non-compliance can result in penalties and legal issues.
• Access to benefits: Contributing ensures crew are entitled to social security benefits such as healthcare, pensions, and unemployment benefits.
• Portability of benefits: For people relocating or working in another EU country, their contributions to MSS can count towards eligibility for social security benefits in that nation.

How does MSS benefit the yacht crew?

As contributing members of the MSS system, crew gain access to several benefits that can be crucial for their long-term financial security, including healthcare, pension entitlement, unemployment benefits, sick leave, and maternity/paternity pay.

Even though the crew may be working on a yacht and moving between jurisdictions, MSS ensures coverage for essential benefits in Malta and across the EU.

What MSS forms need to be completed?

Various forms may be required to ensure compliance with the MSS system. These forms help register contributions and facilitate access to benefits. The most used forms for yacht crew include:

• A1 Form: This confirms payment of social security contributions in Malta when working in another EU country. It helps avoid double contributions.
• S1 Form: This form allows access to healthcare services in any other EU countries provided by the local state.
• FS3 Form: Annual statement of earnings and social security contributions/or issued at the end of termination of contract
• FS5 Form: This form is used by employers to register employee monthly contributions.
• FS7 Form: A summary of all contributions declared at the end of the year.
• U1 Form: This form details the periods during which crew have paid social security contributions, particularly if they claim unemployment benefits in another EU country.

Understanding which forms are relevant to each crew member’s situation and filing them on time ensures they and the owner stay compliant and avoid potential legal issues.

How much does MSS cost as a yacht crew member?

The cost is determined by income. The typical social security rate for yacht crew is set at the applicable weekly rate charge, which the employer deducts from wages. The employer also contributes the same rate, which goes directly to the MSS fund.

Remember that MSS contributions are capped, meaning the maximum contribution applies if a salary exceeds a certain threshold.

What are the risks of not paying MSS?

Failing to comply with MSS regulations can have significant legal and financial consequences. Risks include:

• Fines and penalties: Non-payment of social security contributions can result in substantial fines for the employee and the employer.
• Legal action: If contributions are not paid, authorities may take legal action, which could affect the crew’s employment status and ability to work in Malta or aboard Maltese-flagged vessels.
• Loss of benefits: Not contributing means losing access to essential benefits like healthcare, pensions, and unemployment assistance, both in Malta and across the EU.

Yacht owners, captains, and management companies are responsible for registration and ensuring deductions and contributions are accurately made and reported. Non-compliance carries a legal and reputational risk and could lead to difficulties in hiring crew members in the future.

What if a crew member is already paying social security in another country?

Individuals should inform the authority in the jurisdiction they are currently paying social security that they will be contributing in Malta. Form A1, which confirms that social security contributions are being paid in Malta, can help.

Conclusion

Malta’s Social Security system ensures that yacht crew members have access to critical benefits and are legally protected while working internationally. Understanding the requirements, knowing the correct forms to submit, and staying up to date with the latest rates are essential to avoid complications and comply with Maltese regulations.

MSS contributions provide the crew with long-term financial security and access to important social benefits. As an owner or captain, if you are unsure about your specific situation or need further advice, consider consulting an expert such as Praxis which specialises in maritime employment.

Please note that this article is intended to provide a general overview of the matters to which it relates. It is not intended as professional advice and should not be relied upon as such. Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence. © Praxis 2023