Alarm in the restaurant trade:

Attack on tips “is unacceptable”

The Austrian Health Insurance Fund (ÖGK) has suddenly set its sights on tips, much to the chagrin of businesses.

(Bild: Jöchl Martin)

The health insurance fund is taking aim at tipping - and is making Austria's restaurateurs furious. More and more businesses are reporting strict audits and high additional demands. WKÖ Gastronomy Chairman Mario Pulker is sounding the alarm and has clear words: "Tips must remain tax and duty-free."

Tips are an essential part of wages, especially for the catering industry, but also for taxis and hairdressers, for example. Depending on the sector and federal state, there are different flat-rate tax rates set by the Austrian Federal Economic Chamber (WKÖ) and the Austrian Health Insurance Fund (ÖGK). According to the government programme, this is to be evaluated and standardized nationwide. However, industry representatives are already complaining that there is an increase in audits and additional demands.

Businesses must not be overburdened
"Tips must remain tax and duty-free," demands WKÖ catering division chairman Mario Pulker. The head of the Social Democratic Business Association (SWV) Vienna, Marko Fischer, had previously stated: "The flat rate for tips was originally intended to make things easier for businesses in order to avoid the time-consuming task of keeping lists of tips. The fact that the ÖGK is now simply making adjustments and threatening businesses with absurdly high reclaims is unacceptable." An adjustment should not overburden businesses and must take into account the special features of the individual sectors.

Companies are already struggling to find staff - the debate about tipping could further deepen the worry lines among businesses.

(Bild: BARBARA GINDL)

Warning of rising prices
The Freiheitliche Wirtschaft (FW) warned via a press release on Monday that the "additional financial burden for businesses will inevitably lead to rising prices". FW catering spokesperson Simon Schnell even sees a "targeted attack by the ÖGK" on the "hard-earned additional income of catering staff" and attempts to collect this via employers.

"Tipping is a sign of recognition from guests - and now the state is grabbing it as if it were an additional source of tax. This is an unbearable burden for the entire industry." Tips should "remain 100 percent tax-free". It is a "guest gift and not a hidden source of tax".

Card payments make the flow of tips transparent
The businesses are affected by the ÖGK's additional claims, not the employees. Of course, one-person companies (EPU) are also affected. "In the course of the wage tax audit, you can see via the cash register how much a waiter or waitress has made in tips, because this is also increasingly being paid by card," explains Pulker.

"The social security contribution is then deducted." He has recently received information from Styria in particular about increased audits in the catering industry. The additional claims were "sometimes in the five-figure range".

Pulker: Don't take money away from employees
For the chairman of the Chamber of Commerce, restaurateur and hotelier Pulker, however, this cannot be the approach in service industries. "The Ministry of Finance and the health insurance fund cannot stand there and take money away from employees for good service to guests. That is simply not possible." Even if payment is made by card, this must remain the case.

 Following an internal WKÖ consultation with representatives of other affected sectors, Pulker is currently negotiating with the health insurance company. The issue is very complex, "in any case, a solution is needed so that employees are rewarded for their service to guests and not penalized by having to pay tax or social security contributions on their top performance."

"We are not talking about corporations here, but about one-person businesses and family businesses whose economic existence is threatened by the new demands," said Martina Haslinger-Spitzer, Head of Tourism at SWV Vienna. "Tips are an important part of the income of many employees."

Concerns about finding even fewer staff
Gülten Karagöz, head of the SWV hairdressers' association, pointed out that the issue not only affects businesses, but also customers, as an increased tax on tips inevitably leads to an increase in store prices. At the same time, the incentive for employees to work in sectors where tips are a relevant wage component would decrease.

It remains to be seen what the final solution will look like. According to Pulker, a law or an amendment to the law is not necessarily required.