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​The Final Settlement System is a tax deduction methodology designed to produce accurate tax deductions from emoluments. This methodology ensures that the correct amount of tax is deducted from gross emoluments as they are received thus reducing the incidence of large refunds and tax bills arising from end of year tax assessments.

Under the FSS system, employers are obliged to deduct FSS tax and Social Security Contributions from their employees’ salaries and wages and forward such payments to the Commissioner on a monthly basis. An end-of-year reconciliation exercise is carried out by each employer and should be completed by the 15th February of the following year. This annual procedure involves the creation of FS3s for each employee and the reconciliation of the payments made throughout the year with the annual totals for all employees through an FS7. Employers with 10 employees or more are obliged to submit their end-of-year FSS documents online. Those with less than 10 can submit the documents manually.