Are tips taxable?
Tips are usually a nice touch in the work of waiters, bartenders and other similar professions. However, it should be remembered that from the point of view of the tax authorities, this type of influence is not only a small positive gesture on the part of the client, but - a remuneration. Admittedly an additional, but nonetheless taxable income tax.
Tips distributed by the employer
The way tips are distributed among employees varies, depending on the rules of the premises.
In some places, the service tip is already included in the price of the service provided. In such a case, it is included on the receipt or invoice received by the customer. The amount of such supplements goes to the joint corporate fund. At the end of the day, week or month - also depending on the rules prevailing in the premises - the employer distributes the tips according to the rules agreed with the employees and pays the income to the staff.
In this case, tips will increase the employment income of the tipped employee. Their value should be included by the employer in the regular remuneration and taxed on the same terms with the income tax. So the employee himself does not make any special billing for tips.
Tips directly from the customer
In some places, however, there is a rule that customers leave tips in addition to the price of the service. In such a situation, the employee receives such additional payment directly from the buyer.
Thus, since tips do not pass through the hands of the employer, they should not be considered as income from an employment relationship. From the point of view of the tax authorities, such tips will be revenues from a different source. In this case, the employee will be required to independently demonstrate this type of income on the annual tax return and tax them.
Tips and ZUS
The basis for the assessment of ZUS contributions is all employee income listed in Art. 12 of the Personal Income Tax Act (PIT Act). However, according to this provision, such income will be all kinds of cash payments and the monetary value of benefits in kind or their equivalents.
Thus, in this case, it can be indicated that the tips received from the employer will constitute a cash payment. Therefore, their value should be included in the basis when calculating contributions for retirement, disability and health insurance.
On the other hand, tips received directly from the customer, considered - in accordance with the previous information - as income from other sources, will not affect the amount of the employee's ZUS contributions.