Starting this November, the way friendships (and tips) are handled in Greece is about to change dramatically. New rules are coming into effect, especially for employees in sectors like restaurants, hair salons, and personal care services. These changes focus on how tips given by customers as a reward for good service will be taxed. But they also impact employers, who will now face stricter monitoring when it comes to wages and tips.
With the increasing use of POS systems (card payments) for transactions, the Ministry of Finance decided it was time to rethink how tips are taxed. In the restaurant industry alone, POS transactions generate about €8 billion in turnover, with another €580 million coming from hair salons. Since tips via POS are estimated to make up 4-5% of these transactions, the government sees the potential to collect €400 million from tips.
While this figure is significant, there’s good news for employees: tips up to €300 per month will be tax-free. Anything over that amount will be added to their taxable income. According to the Supreme Court, tips are considered part of an employee’s salary, but the government wants to make sure that workers benefit from these rewards without heavy taxes.
For entrepreneurs, there’s a slight relief. Since they aren’t the ones handing over the tips (which come directly from customers), they won’t have to pay insurance contributions on these amounts. The idea is that tips are a “thank you” for service already paid for by the employer.
Currently, tips are supposed to be taxed from the first euro when declared, but in practice, they often pass directly between customer and employee, bypassing formal records. With new rules that link cash registers and POS systems, this informal system is coming to an end, and businesses will have to play by the new regulations.
Key Changes for Employees and Employers:
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Tax-free tips: Tips received via POS up to €300 per month will be exempt from income tax and social security contributions. Any amount above that will be taxed.
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No insurance contributions: Regardless of the tip amount, no contributions will need to be paid by employers.
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Protection for employees: Tips cannot exceed 30% of an employee’s regular salary to prevent misuse. For example, if someone earns €900 per month and gets €300 in tips, that would trigger checks because the tips exceed the 30% threshold.
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No salary replacements: Employers can’t cut salaries and replace the difference with tax-free tips. If they do, they’ll face a 22% fine on the difference. So, if an employee’s salary drops from €1,400 to €1,100 and they receive €300 in tips, the employer will be fined.
This new system mainly affects the catering and hairdressing industries, where tips are common and not part of regular pay. In sectors like casinos, where tips are already regulated through collective agreements, these changes won’t apply.
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