The value of tips declared to the tax authorities surpassed 140 million euros last year, having doubled over the past seven years. Are taxpayers required to pay them?
“This practice, although common, is not mandatory in Portugal,” explains the Portuguese Association of Hotels, Restaurants and Similar Establishments (AHRESP). “It is up to the customer to decide whether or not to give a tip for the service provided and to determine its amount.”
For this reason, and “following this logic, it is not considered good practice for the establishment to suggest a tip by including it in the receipt or price list,” as stated on the AHRESP website.
“Still, there is a growing number of restaurants suggesting to customers that they give a tip, even setting an amount,” admits AHRESP.
There are more and more restaurants including the tip amount in the bill, but is this legal? What are the rules? In Portugal, tipping is not mandatory, but the situation changes if this information is included in the price list.
“In these cases, this amount should be included on the receipt and/or in the price list/menu and posted in a very visible place so that the customer is always aware of this practice before making any orders, avoiding any discomfort during payment.”
Do tips have to be on the invoice?
You should also know that the “tip amount does not need to be included in the invoice,” but “if a restaurant sets a fixed amount for tips, and this is a standard practice, the customer should be informed beforehand or have access to this information in a visible location at the establishment.”
“Once this tip amount is accepted and paid by the customer, the amount should appear on the final invoice, also for the purpose of recording the receipt of that amount. However, this amount is not subject to VAT and does not have to be included on the invoice with the mention ‘not subject to VAT’; it is sufficient to identify that the amounts refer to tips or gratuities,” AHRESP further explains.
The value of tips declared to the tax authorities doubled
The value of tips declared to the tax authorities surpassed 140 million euros last year, a figure that has been growing year on year—doubling in seven years.
According to data from the Ministry of Finance, cited by the same newspaper, the value of tips declared to the tax authorities reached 140.8 million euros last year, 16% above the amount for 2023, marking a new high. These 140.8 million represent double the amount recorded in 2017.
As a rule, tips are not mandatory in Portugal and are also not considered “good practice” by AHRESP. However, if this charge is included in the price list, the customer is obliged to pay it.
