As QR payments and cashless tipping become increasingly common in restaurants, cafés, hotels, and other service businesses, more employees are asking what tax obligations arise when tips are received by card or through a QR code.
One of the most common questions is whether these tips are taxable and who is responsible for reporting them — the employee, the employer, or the platform used to transfer the tip.
In February of 2024, the Ministry of Finance of the Republic of Serbia published an official statement clarifying the taxation process of tips which where made using digital platforms. This guidelines helped to solve many questions for both employees and owners of service business.
How are tips treated for tax purposes (tax authorities view on tipping)?
When a guest leaves a tip through a digital platform, the money is intended for a specific employee. Such payments are not considered revenue of the restaurant, café, or hotel, nor are they treated as salary paid by the employer.
According to the Ministry of Finance, these payments are classified as “other income” received by an individual under the Serbian Personal Income Tax Law.
As a result, the tax obligation falls on the person who receives the tip.
For employers, an important point is that when tips are transferred directly to employees and do not pass through the company’s accounts, the business is not required to calculate, withhold, or pay tax on those amounts.
How much tax is paid on tips?
The calculation is simpler than it may initially seem. Serbian tax regulations allow a standard expense deduction equal to 20% of the income received. The remaining 80% becomes the taxable base, which is then taxed at a rate of 20%. In practice, this results in an effective tax rate of 16% of the total amount of tips received.
For example, if an employee receives 50,000 RSD in tips during a month, the tax due will be 8,000 RSD, leaving 42,000 RSD after tax.
For a quick estimate, many accountants use a simple rule: multiply the total amount of tips by 16%.
Are there any additional taxes or contributions?
Many employees assume that, in addition to income tax, they must also pay social security contributions.
For individuals who are employed under a standard employment contract, this is generally not the case. Pension and health insurance contributions are already paid through the employee’s salary, while tips are treated as a separate category of income.
In addition, tips are not subject to gift tax. The Ministry of Finance has stated that income already subject to personal income tax cannot be taxed again under a different tax category.
How to file a tax return
The recipient of the tips must file a tax return independently using the PP OPO form.
The return may be submitted electronically through the ePorezi portal, in person at the Serbian Tax Administration, or through an authorized accountant.
Under the law, the tax return must be filed within 30 days of receiving the income. In practice, people who receive tips regularly often submit a single combined return covering all tips received during a calendar month.
This approach simplifies administration and makes record-keeping easier.
What does this mean for restaurants, cafés, and hotels?
For hospitality businesses, the key point is that tips paid directly to employees through a digital platform are not considered company revenue.
This means that such tips:
- are not recorded as business income;
- are not included in the company’s turnover;
- are not part of the payroll fund;
- are not subject to VAT on the employer’s side;
- do not require payroll tax reporting by the employer.
Tips represent a separate financial flow that exists independently from the business operations of the venue.
Although employers have no tax obligations related to these payments, it is advisable to inform employees about the rules governing the reporting and taxation of tips.
Can an employer reduce an employee’s salary because of tips?
No. Salary is determined by the employment contract, while tips are voluntary payments made by guests in appreciation of the service they receive. These are two separate sources of income. The fact that an employee receives tips does not give an employer the right to reduce the agreed salary or change employment conditions.
What happens if tips are not reported?
Like any other taxable income, tips must be reported to the tax authorities.
If the Serbian Tax Administration determines that income has not been declared, it may assess additional tax, charge late-payment interest, and impose administrative penalties.
For this reason, individuals who receive tips should keep records of their income and submit tax returns on time.