Greece: Tips Now Count as Income, to Be Taxed Accordingly

A landmark decision from the Greek Supreme Court has caused nationwide outrage within the food and service industries as it altered the perception of tips received by employees, deeming them “salary” and thus taxable income. This ruling focuses on tips given via card transactions (as cash tips are more difficult to monitor), categorized as additional earnings subjected to taxes and included in an employee’s official wage calculations.

Empowered by this directive, authorities now consider any gratuity, no matter how small, as part of the total salary, involving tax withholdings and social security contributions. For example, according to media reports, the state will cash at least four euros out of a €10 tip. The ruling has significant implications for both workers who collect tips and the businesses that employ them.

Technological Changes and Compliance

The shift emerged from integrating point-of-sale (POS) systems with cash registers, elucidating tip tracking. As George Kourasis, vice president of the Restaurateurs Federation, told Skai TV, this coordination demands that extra amounts left via card payment must be explicitly recorded to comply with tax regulations.

For instance, if a patron’s bill totals €100 and an additional €10 is left for the staff, a specific POS button is used to log this. The business must then manage this amount as a part of the monthly payroll, deducting necessary charges before dispensing it to the employee. Consequently, these added incomes are reported for potential tax increments at the fiscal year’s conclusion.

Broader Political Implications

The New Left party has publicly criticized the government over the new tip tax while luxury yacht owners receive tax breaks. They assert that while servers face increased taxation, the affluent sector enjoys exemptions from various luxury and maritime taxes. Concurrently, publicly traded companies continue to announce growing profits yearly without adequate redistribution back to society.

The New Left urges immediate governmental action to relieve tips from taxation burdens, revoke yacht-related tax reliefs, and impose windfall taxes on the substantial profits of major corporations. Their appeal highlights the rising economic divide perpetuated by these policies, advocating for systemic changes to ensure equitable fiscal responsibilities across economic strata.

This critical debate over fiscal fairness suggests a profound reevaluation of how both additional employee earnings and corporate profits are managed within Greece’s economic framework.