The growth of declared tips exceeds 120 million euros | Público

In recent years, in Portugal, the volume of declared tips to the tax authorities has seen a remarkable increase, doubling in just eight years and reaching a figure exceeding 120 million euros.

This increase is related to several factors, such as the growth of tourism, the rise of digital payments, and the popularization of ride-hailing platforms (TVDE).

Nuno de Oliveira Garcia, a tax lawyer at the Gómez-Acebo & Pombo law firm in Portugal, points out that employers “must maintain an updated record of all amounts received by their workers.” Although these amounts do not always appear on receipts or in the annual tax declaration, the law establishes that “it is the worker themselves who must indicate them in their annual income tax declaration.”

Furthermore, Oliveira Garcia explains that, although the Income Tax Code does not set a specific threshold, if the value of the tips is low compared to the salary, the taxpayer may be exempt from paying income tax due to the so-called “minimum subsistence.” This tax rule exempts citizens with lower incomes from the tax either fully or partially. In 2024, the full exemption will apply to those with annual incomes below 11,480 euros, and those who slightly exceed this threshold may also benefit from a partial reduction in income tax.

The habit of leaving tips in sectors such as restaurants has been gaining ground, even though it is not a consensual or formally established practice in Portugal, as it is in countries like the United States. However, evidence shows that this gesture of rewarding good service is on the rise across various sectors, which could continue to drive the numbers of declared tips in the future.

This scenario presents new opportunities and challenges for both the business sector and workers, who will need to continue adapting to tax regulations regarding tips and their proper declaration to the authorities.

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