You pay no VAT on tips for your staff. Tips that go to staff through a tip jar, including card tips, are pay from third parties. As an employer you do not withhold payroll tax on them. The employee reports the tips in his own income tax return.
There are three exceptions. If you pay less than the wage in the collective agreement, the difference counts as pay. If you use tips for the business, for example to cover a cash shortfall, it is pay from you as employer. And a service charge is not a tip but turnover, with VAT.
In short
- Tips for staff: no VAT, and through the tip jar no payroll tax either. That also applies to card tips that first land in your bank account (knowledge group position KG:204:2025:7).
- If you pay less than the collective agreement wage, the Belastingdienst treats the difference as tips that count as pay. You then still pay payroll tax and contributions on it.
- Tips are always voluntary. A service charge the guest has to pay is turnover of the business, with VAT.
In this article
- Do you pay VAT on tips?
- Are tips from the tip jar pay on which you withhold payroll tax?
- Does that also apply to card tips paid into your bank account?
- When do tips become pay after all?
- Can you make tips mandatory or charge a service fee?
- How do you set up your till and records for tips?
- Does the size of the tip say anything about the service?
Do you pay VAT on tips?
Not on tips for your staff. The Belastingdienst writes that if your staff receive tips, you do not have to pay VAT on them (Belastingdienst, tips and extra payments). It does not matter whether the guest gives cash or pays by card.
Do you work yourself as an entrepreneur and natural person, such as in a sole proprietorship, in a sector where tipping is customary? Then you also pay no VAT on tips you receive yourself. The Belastingdienst names hospitality as an example of such a sector (Belastingdienst, tips and extra payments).
In other cases you do. The law calculates VAT on what the customer pays. If the customer pays more than you charged, what he paid counts (Turnover Tax Act 1968, article 8(2)). If the business itself keeps tips, you take the VAT out of the extra amount: 21/121 at 21% and 9/109 at 9% (Belastingdienst, tips and extra payments).
Are tips from the tip jar pay on which you withhold payroll tax?
No, not if you only pass the tips on and pay the collective agreement wage. Tips are then pay from third parties: pay the employee receives from someone other than the employer, here from the guest. The employer has no duty to withhold tax on it (Knowledge group position KG:204:2025:7, 1 May 2025).
The position concerns a restaurant where the waiting staff put cash tips in a tip jar. One employee divides all the tips by hours worked. The employer pays wages under the collective agreement. The Belastingdienst knowledge group finds that under civil law the tips belong to the employees, not to the employer (KG:204:2025:7).
The employee must report the actual amount of tips in his own income tax return (KG:204:2025:7). KHN advises employers not to get involved in how the tips are divided (KHN, taxes or contributions on tips).
Does that also apply to card tips paid into your bank account?
Yes. In the Belastingdienst position, card tips arrive in the restaurant's bank account and appear in the till system. The employer passes the total on in cash each week for division. Even then the employer has no duty to withhold tax (KG:204:2025:7).
The condition is that the tips really go to the staff. If the employer keeps all or part of the tips for himself, for example to cover a cash shortfall or to meet a wage obligation, it is employer pay. The same applies if he decides himself what the tips are spent on, such as an outing or gifts. He then always has to withhold tax (KG:204:2025:7).
Whether you may deduct the cost of the card payment from the tips before passing them on is not covered by the position. The position also says the inspector looks at the facts case by case.
When do tips become pay after all?
If you pay less than the wage the employee is entitled to. If someone works in hospitality and does not receive at least that wage from his employer, he is deemed to have received the difference in tips. That part is pay (Payroll Tax Implementation Regulation 2011, article 3.6).
The second case: you took the tips into account when setting the wage. If you agree a lower hourly wage because the tips top it up, the tips are pay as well (Payroll Tax Implementation Regulation 2011, article 3.6, and KG:204:2025:7).
KHN puts it like this: tips are not pay, but if you pay less than the wage in the Horeca collective agreement pay table, the Belastingdienst assumes you top up the difference with tips. That part is subject to payroll tax and contributions. You must always pay the statutory net minimum wage through the bank (KHN, taxes or contributions on tips).
An example. A non-skilled worker aged 18 in job group I+II gets at least € 9.74 an hour under the Horeca collective agreement from 1 July 2026 (KHN, Horeca collective agreement pay table 1 July 2026). The statutory minimum wage for an 18-year-old is € 7.50 (Rijksoverheid, minimum wage amounts 2026). If you pay € 8.50, you are above the law but € 1.24 an hour below the agreement.
If that employee works 80 hours in a month, that is € 99.20 a month. The Belastingdienst treats that amount as tips that count as pay, and you pay payroll tax and contributions on it. In addition the employee is entitled to the agreement wage itself, because the Horeca collective agreement is generally binding up to and including 31 December 2026 (Government Gazette 2025, 10545).
Can you make tips mandatory or charge a service fee?
You may not make tips mandatory. A service charge on the bill is allowed, but that is not a tip. KHN writes that under Dutch law and regulations tips are always voluntary (KHN, making tips mandatory).
If you offer fixed amounts or percentages for tips on the card terminal, make sure there is a no-tip option. KHN says it is important that you always offer an option where the guest does not have to give a tip (KHN, making tips mandatory).
A service charge is a compulsory amount on the bill. According to KHN this makes it fundamentally different from a tip, and it is part of the business's turnover (KHN, making tips mandatory). The law calculates VAT on the total amount you charge (Turnover Tax Act 1968, article 8). So you pay VAT on a service charge.
We did not find an official calculation rule for a service charge on a bill with food at 9% and wine at 21%. Splitting it in proportion to the amounts per rate is the obvious choice, but it is an inference. If you pass a service charge on to staff, you as employer pay it out of your own turnover. KHN says the tax then depends on how you process it (KHN, making tips mandatory).
How do you set up your till and records for tips?
Record tips separately from turnover and show that everything goes to the staff. The Belastingdienst lists tips as one of the reports a reliable till system must be able to produce (Belastingdienst, Guide to a reliable till system, June 2023).
You keep all till data for 7 years, in detail. Condensing, meaning merging details into totals, is not allowed (Belastingdienst, Guide to a reliable till system). So that also applies to the tip lines in the till.
- A separate till key or payment line for tips, apart from turnover.
- The weekly or monthly total of card tips and cash tips, with the date they were passed on.
- No cash shortfalls or business costs paid out of the tip jar.
- Service charges as turnover in the till, with VAT.
Does the size of the tip say anything about the service?
Little. An analysis of 14 studies with 24 correlations between tips and service found that tips do rise when guests rate the service more highly. But the relationship was so weak that tips are not a good measure of how well the staff perform (Lynn, 2001).
According to that analysis, tips are therefore also not a good tool to motivate staff or to spot dissatisfied guests. The research is about tipping in restaurants in general and says nothing about Dutch tax rules.
For your business this means: do not let your people's pay rest on tips. The collective agreement wage is the floor, for tax purposes and for the employee. Tips come on top of that and belong to the staff.
Sources
- Belastingdienst, Tips and extra payments, accessed 29 October 2026. belastingdienst.nl
- Turnover Tax Act 1968 (Wet op de omzetbelasting 1968), article 8. wetten.overheid.nl
- Belastingdienst knowledge groups, KG:204:2025:7 Duty to withhold on tips (in Dutch), 1 May 2025. kennisgroepen.belastingdienst.nl
- Payroll Tax Implementation Regulation 2011 (Uitvoeringsregeling loonbelasting 2011), article 3.6, in force from 1 September 2026. wetten.overheid.nl
- KHN, Do I have to pay taxes or contributions on tips for waiting staff? (in Dutch), accessed 29 October 2026. khn.nl
- Minister of Social Affairs and Employment, extension of the Horeca collective agreement 2025/2026, Government Gazette 2025, 10545, dictum II. officielebekendmakingen.nl
- KHN, Horeca collective agreement pay table from 1 July 2026 (in Dutch). khn.nl
- Rijksoverheid, Minimum wage amounts 2026 (in Dutch), accessed 29 October 2026. rijksoverheid.nl
- KHN, Can I require my guests to give a tip? (in Dutch), accessed 29 October 2026. khn.nl
- Belastingdienst, Guide to a reliable till system (Handreiking voor een betrouwbaar afrekensysteem), June 2023. belastingdienst.nl
- Lynn, M. (2001). Restaurant tipping and service quality: A tenuous relationship. Cornell Hotel and Restaurant Administration Quarterly, 42(1), 14-20. doi.org