It is “increasingly common” for restaurants to present two payment options for the bill, one that includes the meal’s cost and another that adds a percentage as a tip or gratuity. The organization DECO PROTeste emphasizes that a “service gratuity is not mandatory in Portugal“.
This means the decision to tip is always up to the customer: “The decision is yours if you are presented with a bill showing two amounts“.
“The Associação da Hotelaria, Restauração e Similares de Portugal (AHRESP) states that ‘suggesting a tip as part of the bill or on the price list is not considered good practice by the establishment’. Consumers have this option if they are pleased with the quality of the meal and service. They may pay in cash or by debit card,” the consumer protection organization explains.
It’s on the bill, should I pay?
No, the “mention of a gratuity does not oblige the consumer to pay it”. Therefore, “if you pay by debit card, verify the amount entered on the device before paying to confirm whether or not it includes the gratuity”.
“If the establishment insists on the tip payment, a complaint can always be filed. It’s advisable to use the electronic complaints book in such instances. In extreme cases, authorities might need to be involved,” the organization clarifies.
Different case if listed in the menu…
A tip is not obligatory in Portugal, but “if a restaurant determines a tip amount in its menu, you have no choice but to pay it“.
“Restaurants that choose to set a specific fee for the service provided, equivalent to a gratuity, must state this amount on the menu, displayed in a visible location. Customers have the right to be informed clearly and in advance about what they will have to pay,” DECO PROTeste explains.
Take note of the following: “It’s important to distinguish if the tip is on the menu, where the consumer must pay for this service, or if it’s not mentioned (as is the case in most restaurants), where no obligatory amounts apply”.
Why include tips on the invoice?
The organization further explains that the “requirement to include tips on the invoice is a way to track these receipts and allow their withholding at the source“.
“To ensure proper taxation, tips must be duly documented on the invoice, with employers responsible for determining the amounts received as gratuities and for their distribution among employees. This procedure should allow the identification, quantification, and control of the amounts in question,” it notes.
It is also important to stress that “tips are subject to income tax because they are considered dependent work income,” and “the IRS Code states that dependent work income includes ‘gratuities received for or on account of work performed, when not granted by the respective employer'”.
“Gratuities not granted by the employer are considered dependent work because the motivation for granting them lies in the performance of work of that nature. These gratuities are subject to an autonomous tax rate of 10%,” DECO PROTeste concludes.
