The proposal suggests that tips left for service workers should be collected by employers in a separate account and subjected to a 10% tax. According to the Revenue Administration, this measure aims to increase state revenue and combat the informal economy.
Currently, under the Simplified Tax Application for Tip Income, tips given directly to service staff by customers are considered gifts and are not subject to income tax. However, if tips are included in the invoice amount or collected by the employer and distributed to employees based on certain criteria, they are treated as part of the wages and must be taxed accordingly.
Additionally, tips collected by the business through invoices or receipts are considered part of the service fee and are subject to VAT.
The proposed regulation plans to ensure that tip income is monitored through a separate bank account opened by employers. Tips should not exceed 10% of the invoice amount and must not surpass the gross minimum wage per employee per month. The income from tips would be subject to a 10% withholding tax and then transferred to the employees without being included in the wage base.
