The Greek government is considering introducing a new legislative regulation that would reportedly make employees’ monthly tips in Greece and gratuities below a certain threshold non-taxable.

The initiative comes in the wake of widespread reactions sparked by a 2022 Supreme Court decision that resurfaced two weeks ago and ruled that all tips in Greece are income and therefore subject to taxation and insurance and healthcare contributions.

The Ministry of National Economy and Finance is planning to introduce the regulation setting a monthly 300-euro threshold for tips granting tax exemption for employees working in food and beverage establishments (cafés, restaurants, bars, etc.). Amounts below this threshold would not be subject to deductions and normal taxation as per law.

The issue came to the forefront due to a substantial rise in the use of electronic transactions and the widespread linking of cash registers to points of sale (POS) systems.

Under the current law, employers are obligated to declare the tips their employees receive, which in turn are taxed in the same way as normal wages.

According to reports, the legislative regulation will also provide for fines for employers who attempt to reduce their employees’ wages while simultaneously increasing their additional earnings. In such cases, the employer will be required to pay a contribution equal to 22% of the wage reduction.

When the total amount of tips exceeds 3,600 euros per year, it will be subject to deductions and social security contributions and will be factored into the calculation of holiday bonuses, allowances, and severance pay.

What Happens in Other Countries

Italy

In Italy, the country’s Supreme Court recently ruled that tips are income and therefore taxable, following a case when a man had received the sum of 83,650 euros in tips from customers in 2007, which he had not declared.

While a local court initially had decided in favor of the man who had received the tips, the Italian Supreme Court overruled the decision, accepting the appeal of the Italian Revenue authorities stating the so-called tips fell within the scope of the all-inclusive notion of income.

Until the Supreme Court decision, tips in Italy were considered excluded from taxation.

United Kingdom

In the UK, following a relevant law, the Employment (Allocation of Tips) Act, which came into effect at the start of October this year, workers are allowed to keep 100% of the money they have earned through tips.

These changes will require employers to pass all tips, gratuities, and service charges on to workers, without deductions.

Germany

In Germany, when tips go directly to the employee, they are not taxed. If the tips are shared between employees, they are subject to tax.

USA

According to the law in the United States, all cash and non-cash tips received by an employee are considered income and are subject to Federal income taxes.

If the total tips received by the employee during a single calendar month by a single employer are less than $20, then these tips are not required to be reported and taxes are not required to be withheld.