Tipping must be taxed regardless of whether the covered taxpayer in Romania pays VAT or not.

The taxation of the tip voluntarily granted by the customers is made regardless of whether the place in question is a VAT payer or not, as it results from the law that implemented the measure. We come up with this clarification in the context in which the erroneous information appeared in the public space that taxation would be mandatory only for VAT payers.

According to the changes introduced by Law 376/2022, restaurants and bars in Romania are obligated, as of January 1st this year, to pass the tip on the tax receipt, to tax it with 10%, and then to distribute the net amounts to the employees. The obligation does not apply to home deliveries of goods by these entities.

Particularly, from the VAT point of view, tipping is not considered a supply of goods or services, meaning that companies do not have to pay VAT on the amounts collected as a tip. However, the wording used by lawmakers in this new regulation is clear and states that the obligation to tax tipping is valid for all economic operators carrying out activities corresponding to CAEN codes 5610 (restaurants) and 5630 (bars and other beverage serving activities), making the type of business (determined by a specified CAEN code) the set criteria for this new obligation.