Challenges for the HORECA Industry: The New Tax Regime of Tips as of 1 January 2023

Starting from 1 January 2023, as a result of some last-minute changes brought by the Parliament O.U.G. no. 28/1999 regarding the obligation of economic operators to use electronic fiscal marking machines, the tips became taxable. The modification of the fiscal regime is brought by Law no. 376/2022, published in the Official Journal no. 1255 of 27 December 2022.


Globally, views on tipping are divided. An article published by The Economist on 15 January 2022 – Do tips make a better service? – reflects some of these. Thus, in principle, tipping is a reward for a very good quality service, even if in some areas of the world (e.g. USA) studies prove that tipping has become a social norm. In fact, the most consistent gratuities of this type are given in the United States (on average 20% of the restaurant bill). In many European countries the tip is included in the bill and therefore the extra amounts offered are reduced, while in Japan, South Korea or Hong Kong giving a tip is considered insulting (because it would put the shopkeeper in the position to a beggar desperate to get something).

Previous Regulation Attempts and Justification

It is not the first time that an attempt has been made, in Romania, to determine a tax regime for tips. In 2015, through G.E.O. no. 8/2015, a similar regulation was attempted, which failed due to the practical difficulties of application, a minimum regulation on the tax regime of tips being applicable only to casinos. And then, as now, the initiators justified the approach by the fact that it is requested by the HORECA representatives. In addition, in 2022, the initiator of the legislative proposal to regulate the tips indicated an estimated value between 750 million and 1.5 billion lei for the tips paid in the HORECA industry at the level of one year.

How is a tip defined?

According to art. 23 para. (1) from G.E.O. no. 28/1999, the tip is any amount of money voluntarily offered by the customer, in addition to the value of the goods delivered or the services rendered.

In what industries are the new regulations concerning tips’ taxation applied?

First, according to the same art. 23 para. (1) of G.E.O. no. 28/1999, from 1 January 2023 tips became taxable for the activity of economic operators corresponding to CAEN codes 5610 (Restaurants) and 5630 (Bars and other drinks serving activities).

Within the meaning of art. 23 para. (5) of G.E.O. no. 28/1999, for the delivery of products to customers’ homes there is no obligation to apply the new tax regime and to highlight tips on the tax receipt. The explanation is provided by the statement of reasons of the legislative proposal: the delivery of products to the customer’s home is in fact a retail sale of food and does not involve a restaurant-type service, in relation to which the customer is more or less satisfied with the quality services and the conduct of the provider.

However, according to para. (11) of the same article, the supplier can opt for the application of the tax regime of tips also in the case of delivering the products to the customer’s home, fully applying the new rules. It should be stated that, unlike the statement of reasons of the legislative proposal, which aimed at the possibility of applying the tip tax regime to any other economic activities, in the final form of Law no. 376/2022 this option was restricted only to the delivery of products to customers’ homes.

How are tips collected?

G.E.O. no. 28/1999, as amended from 1 January 2023, regulates a tip collection procedure as follows:

– The economic operator has the obligation to provide the client with a payment note, prior to issuing the tax receipt.

– The customer must have the opportunity to choose whether to pay a tip and how to pay a tip: either a proportional amount, between 0-15% of the consumption value (eg 10%); or a fixed amount, in absolute value, without any limitation in relation to the value of consumption (e.g. 100 lei).

How are tips marked down?

In accordance with art. 23 para. (6) and (7) of G.E.O. no. 28/1999, tips must be shown on the same tax receipt as the goods delivered/services rendered and, possibly, at the customer’s request, on the invoice.

What is the destination of collected tips?

Art. 23 para. (8) of G.E.O. no. 28/1999 stipulates that tips are shown separately in the accounting of economic operators in the HORECA field and are to be distributed in full to the employees, based on a nominal record of them. Economic operators are obliged, at the same time, to establish, through an internal regulation, the procedure and method of distributing to employees the sums derived from tip collection.

Corporate Income Tax

In accordance with art. 23 para. (9) of G.E.O. no. 28/1999, the amounts from tip collection do not represent income for the economic operator. Therefore, there will be no influences from the perspective of corporate tax or other tax on the benefits of companies (e.g. micro-enterprise income tax).


The legislator chose, according to the mention of art. 23 para. (1) of G.E.O. no. 28/1999 that tips do not fall within the scope of VAT, as they cannot be assimilated to either the supply of goods or the supply of services. The solution is logical as long as it is corroborated with para. (4) of the same article, in the sense that the payment of a tip is not mandatory, but remains at the customer’s discretion. However, if the payment were to become mandatory – as is the case with the so-called service charges or coperto in other countries – the inclusion of the amounts in the VAT tax base would be mandatory.

Personal Income Tax

The chosen legislative solution is that of including the income obtained by employees from tips in the category of income from other sources, regulated by art. 114 – 117 Fiscal Code. Thus, the gross amount assigned under this title to an employee will be taxed at 10%, through withholding at source, the employer being obliged to transfer the withheld income tax to the state budget by the 25th of the following month. To avoid misinterpretations, the final sentence of art. 23 para. (10) of G.E.O. no. 28/1999 provides that the amounts cannot be reclassified for tax purposes as income from wages or assimilated to wages.

Social Security Contributions

Within the meaning of art. 23 para. (10) of G.E.O. no. 28/1999, no mandatory social contributions are due for the income obtained by employees from tips (social insurance contribution and social health insurance contribution).

Deductible Expanses for Customers

The new tax regime for tips makes the amounts paid in this way limited deductible expenses (protocol expenses). Thus, according to art. 23 para. (7) of G.E.O. no. 28/1999, tips paid and shown on an invoice representsa deductible expense, within the limits provided by the Fiscal Code.

Legal Challenges

As of 1 January 2023, this new tips’ tax regime also comes with challenges for the HORECA industry. Thus, our estimate is that the companies operating in the field will be obliged to internally regulate two major issues:

– On the one hand, the forms or the necessary technical infrastructure will have to be prepared (e.g. payment note model or electronic application modification in the case of home deliveries).

– On the other hand, it will be necessary to write and approve, at the level of each individual company, its own regulations for the distribution of the collected tip.

For this last step, legal assistance is certainly necessary, since the writing or modification of an internal regulation, doubled by its approval, involves knowledge of labor law. Thus, for example, especially in the case of companies that have collective labor agreements, the adoption of this regulation may prove difficult. In addition, the criteria and concrete way of distributing the tip will have to be determined fairly.

Costaș, Negru & Asociații is a lawyers’ civil partnership with offices in Cluj-Napoca, Bucharest and Arad, providing legal assistance, representation and consultancy in a number of practice areas with a team composed of 16 lawyers and consultants. Details regarding legal services and the members of the team can be found on the website All rights for the materials published on the company’s website and on social media belong to Costaș, Negru & Asociații, their reproduction being allowed only for information purposes and with the correct and complete disclosure of the source.

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