Gratuity: Everything You Need to Know About Tipping, Card Payments, and More.

In Germany, tipping is generally not as prevalent as in some other countries, such as the USA. However, it is customary to leave a tip in places like restaurants, hair salons, and bars if the service was satisfactory. The gratuity can be given by adding a small additional amount to the bill.

How much is it customary to tip in Germany?

The amount of the tip in Germany is not set by law and varies depending on the industry, retail or service, individual perception, the quality of service and the region. However, there are some general guidelines:

·       Restaurant: If you are wondering how much it is customary to tip in a restaurant, we have the answer. Usually the bill amount is rounded up or it is around 5 to 10 percent of the bill amount. For a small order such as a coffee, the tip is simply rounded up to the next full euro.

·       Taxi: Whether the customer pays cash or cashless in the taxi, the amount can also be rounded up. A gratuity of around five to ten percent is common, but by no means obligatory.

·       Friseur: In Germany, it is customary to give a tip to the hairdresser to express satisfaction with the service. Customers can round up to the full euro amount or add 5 to 10 percent of the bill total.

Tipping for Card Payments

In many shops, restaurants, and other service sectors, there is an option to give gratuity directly through the card terminal. Many card terminals provide the option to input the desired gratuity amount directly when paying by card. Customers can select the desired amount or enter a custom amount. However, giving gratuity in this way is not obligatory.

Of course, it's also possible for customers to tip the staff in cash even when paying by card.

Do tips have to be taxed?

One concern many merchants have with cashless payments is that they may have to declare it for taxation, leaving them with little of the amount. However, this isn't always the case. We'll explain when gratuities are tax-exempt.

Tax-Free Tips

No tax is payable on tips if the customer makes the payment voluntarily as an additional amount to the actual invoice amount. There is also no fixed maximum limit for the amount.

Taxable Tips

Tips, on the other hand, must be taxed if they constitute a service charge that is directly specified on the bill and was not voluntarily paid by the customer. These funds initially go to the operator or merchant and are therefore considered business income.

Tips are also taxable if the tips are collected and distributed among all employees. These tips therefore have no personal connection between customer and employee and are ultimately paid by the employer. Therefore, these tips must be declared in the tax return and are therefore subject to tax and social security contributions.

Ways to Encourage Customers to Tip More

Customer willingness to give gratuities often depends on various factors, including perceived service, product or service quality, staff friendliness, and overall experience. Here are some tips that can help encourage customers to give more generous gratuities:

·       Good Service: Always strive for excellent customer service. Friendliness, attentiveness, and professionalism can encourage customers to tip more generously.

·       Personal Connection: Establish a personal connection with your customers. This makes them feel more comfortable and more likely to be willing to give gratuities.

·       Cleanliness and Ambiance: Ensure a clean and pleasant environment. A well-maintained ambience helps customers feel comfortable and may encourage them to leave gratuities.

·       Efficiency and Speed: Be efficient in your work and strive to minimize waiting times for your customers.

FAQs

What is Gratuity?

Gratuity is a voluntary monetary payment that customers give in addition to a particular service to express their satisfaction or appreciation. In many cultures and countries, giving gratuities is common in certain service industries such as hospitality.

Do customers have to give tips?

In Germany, there is no legal obligation for customers to give tips, as tipping is a voluntary payment. Therefore, it is at the discretion of the customer whether and how much tip they would like to give.

Are employers allowed to deduct tips from wages?

In Germany, employers are not allowed to deduct tips from regular wages according to the trade regulations. Tipping is a voluntary payment that customers and guests give directly to service staff in recognition of good service. It is not part of the regular pay and therefore may not be withheld by the employer or offset against the salary.