The Ministry of Justice is trying to solve the deadlocks created by the current legislation as well as the launch of electronic payments with a new framework for tips.
Actually replacing cash vouchers from bill topping digital means leads to violations of legislation
Of course, in cases of the use of money, which can go to a common fund and is shared or concerned by each employee individually, that the violation will not be recorded.
It is noted that, based on the Income Tax Code but also based on the relevant jurisprudence made in successive decisions of the Supreme Court, the tip is considered salary.
As he mentioned, yesterday, during the presentation of the new structure, the political leadership, together with the existing ones, must declare the tips as income, included in the taxable income and taxed exactly like the salary tax of the employee. In fact, according to the Minister of National Economy and Finance Kostis Hatzidakis, this legal provision in all previous years was hardly implemented, however, it has acquired another dimension recently, due to the rapid spread of electronic transactions, the connection of POS-cash registers and the strengthening of AADE controls.
Therefore, the Ministry of National Economy and Finance continues to adopt a new provision that provides for the first time a tax-free allowance of up to 300 euros per month for tips received by employees (indicating the catering businesses, providing personal care services, etc.) with immediate effect from 1 November 2024.
At the same time, as mentioned for the total amount of tips, employees and employers are exempt from insurance contributions (unless something else is provided in individual or collective agreements). The amount of 300 euros without tax was chosen, as Mr. Hatzidakis said, as the most fair because it is considered that the workers of other companies do not receive tips or are generally taxed like the bonuses they receive.
At the same time, a provision against abuse has been introduced for any employers who consider artificially reducing wages by declaring part of them as tips. Therefore, in the case of a reduction in regular wages, with a simultaneous increase in tipped wages, the employer must pay a 22% levy on the reduction in regular wages.
The turnover
However, the amount of tips in catering and personal care businesses will reach 400 million euros for this year, based on what Deputy Minister of Finance Thanos Petralias said yesterday, during the presentation of new framework for their taxes. All this from a turnover, based on electronic payments, which exceeded, until August, 8 billion euros in restaurants, with an increase of 10% and 575 million euros in hair salons, etc. .
Against this background, therefore, the comprehensive regulation, as it will be submitted in the next days to the Parliament, is registered with the expectation that it will provide an analytical approach to all the details, especially the points that raises questions, such as :
- The tax-free amount of 300 euros for tips will be calculated by a “cutter” on a monthly basis and not on an annual basis.
- If tips count towards pensionable income.
- If workers want to meet living expenses or acquire property or take out debts they can call in more money from tips.
- If the taxable amount from gratuities is taken into account in the calculation of gifts, allowances and payments.
- If the new framework applies to tips received by employees only for the period after November 1 and not for amounts before that date.
- How the process of recording tips in cash registers may have differences in business turnover, a fact that may lead to tax irregularities.
It is noted, however, that based on what was reported by the financial staff, there is a provision that will serve as a protection for employees in cases where some employers want to take advantage of the situation by declaring part of the salary as a tip. Therefore, in the case of a reduction in regular wages, with a simultaneous increase in tipped wages, the employer must pay a 22% levy on the reduction in regular wages. Therefore a relevant safety control valve should also be found.