The State Tax Service of Ukraine (STS) has reminded the public of the need to tax tips received by employees of restaurants, cafes, bars and other service establishments. Regardless of how the money is received, such income is subject to an 18% personal income tax (PIT) and a 5% military levy, the agency’s press service reported on November 4, 2026.
Thus, the total tax burden on tips amounts to 23%, and for every UAH 1,000 received, an employee must pay UAH 230 to the state.
The STS explained that the taxation procedure depends on whom the customer transfers the money to: directly to the employee or to the establishment, which subsequently pays it to the staff.
If a restaurant or cafe customer leaves a tip via a QR code linked to the personal bank card of a waiter or another employee, this money is considered the employee’s personal income.
In this case, the establishment does not act as a tax agent, and responsibility for declaring and paying taxes rests directly with the recipient of the funds.
In particular, the employee must independently calculate the total amount of tips received during the year, report it in the annual tax return and pay the corresponding taxes.
According to the STS clarification, income received in the form of tips in 2026 must be declared by May 1, 2027, while personal income tax and the military levy must be paid by August 1, 2027.
For example, if a restaurant employee received UAH 100,000 in tips directly to their personal bank card during the year, the total tax liability would amount to UAH 23,000, including UAH 18,000 in personal income tax and UAH 5,000 in military levy. After paying taxes, the employee would have UAH 77,000 remaining.
A different procedure applies when a customer pays a tip through a restaurant’s payment terminal together with the main bill or transfers it to the bank account of a company or an individual entrepreneur.
In this case, the establishment must record the funds received in its accounts and, when paying them to employees, withhold and transfer 18% personal income tax and a 5% military levy to the state budget.
An employee who receives such payments after taxes have already been withheld does not need to declare them additionally merely because they were received as tips.
The tax service also pointed out that regular tips for services provided cannot be considered tax-exempt gifts.
This rule applies even when the customer indicates “thank you,” “for coffee” or similar wording in the payment description of a bank transfer.
Therefore, the name of the payment itself does not change its tax status if the funds are actually remuneration for services.
The STS recommends that service sector employees retain bank statements and keep records of tips received so that they can correctly determine the amount of income subject to declaration at the end of the year.
At the same time, the legislation does not require a separate special register of tips to be maintained. Employees may independently record the relevant receipts, indicating the date and amount of each payment.
Such record-keeping will also make it possible to distinguish tips from other transfers to a personal bank card, including debt repayments, transfers from relatives and other receipts that may be subject to different tax treatment.
At the same time, the tax authorities emphasize that the method of transferring tips does not affect the obligation to pay taxes on them. The same rules apply to cashless transfers through QR codes and payment terminals as well as to tips received in cash.
For the restaurant business, the key issue remains organizing the accounting of tips and determining the party responsible for paying taxes, while for employees, it is the need to provide documentary evidence of the income received.
At the same time, the STS announcement of November 4 is a clarification of the existing taxation procedure, not the introduction of a new separate tax on tips.
Source: State Tax Service of Ukraine
