COVID-19 Wage Supplement - Social Security Implications for Self-Employed Persons
News    ·   21-05-2020
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AUTHOR: Donald Vella; Kirsten Debono Huskinson; Gabriella Chircop

The Commissioner for Revenue (“CfR”) has published a notice to self-employed persons, outlining the social security implications attached to the COVID-19 Wage Supplement.

Social Security Implications for Self-Employed Persons

Self-employed persons whose businesses have been adversely impacted by the COVID-19 crisis have been able to avail of the Government’s contribution by way of basic wage supplement (€800 or less according to eligibility). Since the wage supplement is replacing or supplementing the normal income of the self-employed person it is nevertheless deemed to be taxable in the hands of the recipient.

To this end, out of the €800 COVID-19 wage supplement (or less according to eligibility) given to each self-employed person, 10% of this wage supplement (amounting to €80 or less) will be withheld by the Government as the self-employed person’s prepaid social security contribution (“SSC”).

The self-employed person would be then required to calculate the total SSC due to the CfR at the normal SSC rates, for all the weeks covered by the respective SSC instalment, and proceed to deduct therefrom the 10% SSC prepaid to the CfR.  In this respect, additional clarity is given by way of example:

  • A self-employed person paying Class 2 SSC at the SA rate would be liable to pay €30.77 x 17 weeks, i.e. €523.09 for the period January to April.
  • From this amount one will deduct the 10% withheld from the supplement (e.g. €80 on a wage supplement of €800) and pay the difference, i.e. €523.09 - €80 = €443.09.

Employed Persons who are liable to pay Class 2 SSC

Class 2 Social Security Contributions are typically paid by self-employed and self-occupied persons. Nevertheless, the Social Security Act also prescribes for the circumstance whereby the liability to pay Class 2 SSC likewise arises for certain specific employees, such as certain directors, even though they are employed persons.

In such cases, the CfR clarifies that the employer may be eligible to receive the the wage supplement on behalf of such designated employees.  The 10% SSC shall also be retained and treated as prepaid. The quantum of the Class 2 SSC shall be calculated in the manner outlined under the afore-mentioned section. 

 

The emoluments earned and tax paid must additionally be declared in the relative FSS forms, with the exclusion of the SSC Class 2, which is omitted from such forms in line with the usual procedure.

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