Why tips and service charges require careful accounting
In Switzerland, service in restaurants and hotels has historically been included in the price: since 1974, the collective employment agreement (GAV) for the gastronomy sector provides that front-of-house staff remuneration is included in the rates charged. Nevertheless, customers and tourists still voluntarily leave a tip — and increasingly pay it by card, Twint or POS terminals integrated into the bill.
For a restaurant or hospitality SME, this practice creates an operational grey area: money that passes through the business but does not belong to the owner, social security obligations that apply only above certain thresholds, and different VAT rules depending on how the tip appears on the invoice. Approximate treatment exposes the business to challenges from the OASI, the Federal Tax Administration (FTA), and, in the event of an audit, to back social security contributions and tax adjustments (statute of limitations up to five years for social security contributions, up to ten years for VAT).
This guide clarifies the legal distinctions, federal tax criteria and correct accounting entries — with references updated to 2026 — for managing tips and service charges transparently, protecting staff and the company's compliance.
Tip, service charge and service included: three distinct concepts
Before setting up accounting and payroll, every amount collected from the customer must be classified correctly:
Service included
Forms part of the menu or hotel room price. It is business revenue, subject to VAT, and covers the base salary of service staff. It must not be confused with an additional tip.
Service charge
Surcharge explicitly shown on the bill (e.g. "10% service charge"). If collected by the business and then distributed to staff, it follows specific VAT rules and, in many cases, social security rules. Internal documentation on the distribution is required.
Tip (Trinkgeld)
Voluntary payment by the customer to staff, over and above the agreed price. It may be in cash paid directly to the waiter or via the POS. It is not a worker's entitlement, but a customer's gratuity that the business manages on behalf of staff.
The most frequent confusion concerns the service charge added in international hotels or tourism-oriented restaurants: if the amount passes through the company's bank account or cash register, the operator is accountable to the authorities, even if the intention is to transfer it in full to employees.
Comparative table: tax and accounting treatment
Summary of the main effects for Swiss hospitality SMEs, according to current federal practice:
| Aspect | Tip (correctly managed) | Service charge distributed to staff | Service included in price |
|---|---|---|---|
| Legal basis | Art. 5 para. 2 AHVG; art. 7 lit. e AVIG; WML BSV (Rz. 2044); MWST-Branchen-Info 08, para. 8.3 | Art. 3 lit. f MWSTG; art. 5 para. 2 AHVG; art. 7 lit. e AVIG | GAV Gastronomia; standard VAT law |
| Operating revenue | No — clearing account (liability) on the balance sheet | Depends: if only distributed, similar to tips; if partially retained, business share as revenue | Yes — ordinary revenue |
| VAT / value added tax | Excluded if shown separately on the invoice, with no VAT indicated and fully passed on to staff | Generally subject if included in the invoiced consideration (8.1% restaurant; 3.8% accommodation) | Subject to the rate applicable to the service |
| OASI / DI / EO | Yes, if they constitute an essential part of salary (guideline threshold 10%) | As a rule yes, if it constitutes regular supplementary remuneration | Already included in the subject base salary |
| BVG / daily sickness allowance insurance | Subject if tip is relevant for coordinated salary purposes | Subject if integrated into remuneration | On contractual salary |
| Salary certificate | Shown under figure 7 if an "essential part" of salary (>10%) | Shown under figure 1 or 7 as supplementary emolument | Included in ordinary salary (figure 1) |
| Withholding tax | Relevant for cross-border workers and foreign nationals without a C permit | Subject to the same rules as salary | On base salary |
| Typical accounting | Clearing account "Tips to be distributed" (liability) | Clearing account or personnel cost at time of distribution | Revenue from services |
The 10% threshold: when a tip becomes pensionable salary
According to art. 5 para. 2 AHVG, art. 7 lit. e AVIG and the BSV guidance on assessable salary (Rz. 2044), tips count as assessable salary "to the extent that they constitute an essential part of salary". In administrative practice, the guideline threshold is 10% of annual assessable salary per employee: once that share is exceeded, the entire amount of tips received in the year — not just the excess — must be subject to OASI, DI, EO, AD (ALV) and, where applicable, BVG and daily sickness allowance insurance.
Example: a waiter with an annual salary of CHF 48,000 and CHF 6,000 in tips has exceeded 10% (CHF 4,800). The entire CHF 6,000 must be declared on the salary certificate, with social security contributions borne by employer and employee. In cities with high tourist traffic, tips equal to 20–30% of base salary are not uncommon: the threshold is quickly exceeded.
The calculation is individual per employee and is verified retrospectively, at year-end or upon termination. This creates operational uncertainty: the operator does not always know in advance whether tips will have to be subject to social security contributions and included on the salary certificate, because pension relevance emerges only from the annual cumulative total. Rigorous monthly documentation reduces the risk of adjustments.
Risks of under-reporting
OASI audits and tax reviews can identify undeclared tips, especially with traceable digital payments. Consequences include: back social security contributions with surcharges, adjustment of the salary certificate, updating of withholding tax and, if tips were booked as revenue, VAT adjustment. The statute of limitations for social security contributions can extend up to five years.
VAT treatment: when a tip is excluded from taxable consideration
The FTA defines consideration (art. 3 lit. f MWSTG) as any payment received for a service. Tips may remain outside taxable consideration if the conditions of MWST-Branchen-Info 08 (para. 8.3) are cumulatively met:
- 1.The amount promised by the customer is paid in full to staff, with no deductions for POS fees or handling charges.
- 2.Distribution to staff is documented and verifiable in the event of an audit.
- 3.The tip is not recorded in the income statement as revenue, but on a balance sheet clearing account.
- 4.The tip appears separately on the invoice or POS bill.
- 5.No value added tax is shown on the tip line item.
Reference rates (2026)
- • On-site restaurant service: 8.1% (standard rate)
- → Take-away food: 2.6% (reduced rate, if separately organised under art. 25 para. 3 MWSTG)
- • Hotel accommodation: 3.8% (special rate)
- • Alcoholic beverages: always 8.1%
If the tip is included in the total without a separate line item, the FTA treats it as part of taxable consideration — at the rate applicable to the underlying service.
Service charge in hotels
Many hotels apply a service surcharge (10–15%) on the room or in-house restaurant bill. If invoiced as part of the price, it is subject to the accommodation rate (3.8%) or restaurant rate (8.1%). Subsequent distribution to staff does not cancel VAT already due on the consideration, but internal handling still follows the social security rules for supplementary salary.
Distribution to staff: models and internal rules
Tip distribution underpins staff trust and compliance with the authorities. The most common models in Swiss SMEs:
Tronc — centralised distribution
All tips flow into a common pool (tronc) and are redistributed periodically — weekly or monthly — according to defined criteria: hours worked, days present, department (dining room, bar, kitchen) or a weighted combination. Requires a written internal policy, signed distribution minutes and accounting traceability.
Advantage: fairness across shifts and departments. Disadvantage: greater administrative complexity and pension calculation for each beneficiary.
Individual tips (keep your tips)
The waiter or barista keeps the tip from their own table directly. In cash this is straightforward; with digital POS the amount still passes through the company account and must be reassigned to the individual worker with an internal receipt.
Advantage: traceability per employee useful for the 10% calculation. Disadvantage: possible disparities between departments and shifts.
Mixed model
A share (e.g. 60%) stays with the individual server, the rest goes to the tronc for kitchen and support staff. Common in mid-sized restaurants. The policy must be communicated in writing at each hire and attached to the employment contract or staff regulations.
Prohibition on deductions: payment terminal fees, Twint costs or "handling charges" may not be charged to staff on tips. The amount paid to the employee must match the amount collected from the customer.
Accounting: sample entries for SMEs
In accordance with art. 957 et seq. CO and Swiss accounting standards (GAAP/FER), tips managed on behalf of staff do not constitute operating revenue. The standard accounting flow uses a liability clearing account:
| Transaction | Debit account | Credit account | Example amount |
|---|---|---|---|
| Tip collected by card (POS) | 1020 Bank / collections clearing | 2270 Tips to be distributed | CHF 150.– |
| Weekly distribution to staff (no OASI obligation) | 2270 Tips to be distributed | 1020 Bank | CHF 150.– |
| Distribution with OASI subjection (>10% annually) | 2270 Tips to be distributed | 1020 Bank (net) / 2271 Social security contributions payable | CHF 150.– gross |
| Service charge invoiced and partially retained | 1100 Accounts receivable | 3200 Service revenue + 2200 VAT payable | Business share as revenue |
The "Tips to be distributed" account must be cleared regularly: a persistent balance signals to the auditor that tips may be concealed revenue. Integrating the POS with accounting software — such as Accountex — allows the tip line item to be automatically separated from taxable consideration and generates monthly statements per employee useful for calculating the 10% threshold.
For year-end closing, verify that no significant amount remains on the clearing account on 31 December. Document any tips still to be distributed with justification (e.g. sick leave of the person responsible for distributions).
Digital payments: Twint, card and cashless hospitality
The vast majority of payments in gastronomy today are cashless. Digital tips necessarily pass through the company's bank account, making every amount visible to the authorities — unlike cash left directly with the waiter, historically difficult to trace.
Some operators, after going cashless, have adopted the "tip = salary" model: they systematically subject digital tips to OASI and include them on the salary certificate, regardless of the 10% threshold. This conservative approach eliminates the risk of adjustments but increases personnel costs by approximately 10.6% (employer/employee OASI/DI/EO share, excluding ALV) and reduces net pay for employees.
A still common intermediate practice: collect digitally, record on a clearing account, distribute by bank transfer or specially withdrawn cash — documenting every step. Avoid "balancing" cash differences with unrecorded tips: cash discrepancies are a red flag in an audit (art. 957 CO) and can lead to official estimates by the cantonal tax authority.
Recommended POS configuration
- • Separate "Tip" line item from service total, with no automatic VAT calculation
- • Daily report: taxable consideration vs tips by shift and operator
- • Export to accounting and payroll with mapping to account 2270
- • Suggested tip option (5%, 10%, custom amount) aligned with Swiss customs
Payroll, salary certificate and withholding tax
When tips exceed the 10% threshold, the employer must:
- Include the entire annual amount of tips in OASI assessable salary
- Calculate and pay social security contributions on a parity basis, with retroactive effect on the current year if the threshold emerges in December
- Show the amount on the salary certificate (figure 7 — other benefits, with mention of "tips")
- Update withholding tax for cross-border workers (Germany, Austria, Italy, France) and foreign nationals without a residence permit
- Check the impact on BVG coordinated salary and daily sickness allowance insurance obligation
For part-time staff with high tip volumes (typical in bars and evening venues), monitoring the tip/salary ratio monthly avoids surprises at year-end. A spreadsheet or Accountex payroll with a "tips" category simplifies this check.
Political scenario: possible simplifications ahead
The federal debate on tip treatment is evolving. GastroSuisse and various industry operators are calling for a general exemption from tax and contributions on voluntary tips, arguing that they are a gift from the customer to the worker, not employer remuneration. The Federal Council rejected a proposal for a general exemption, preferring to clarify the concept of "essential part of salary" and close contribution gaps — especially for digital tips.
In March 2026 the Council of States approved almost unanimously (42 votes to one) a motion proposing to exclude tips from tax and social security subjection. The dossier is now before the National Council; the final legislative decision rests with Parliament. Until then, SMEs must apply current law and not rely on uncertain legislative prospects.
Compliance checklist for owners and trustees
| Requirement | Frequency | Responsible |
|---|---|---|
| Internal tip distribution policy signed by staff | On hire / annual update | Employer / HR |
| Recording tips on clearing account 2270 | Daily (POS collection) | Cashier / accounting |
| Distribution minutes with signatures and amounts per employee | Weekly or monthly | Front-of-house manager |
| Check tip/salary ratio vs 10% threshold | Monthly | Accounting / trustee |
| VAT return with separation of consideration / tips | Quarterly or semi-annual | Accounting |
| Update salary certificate and pay contributions | Annual (or upon exceeding threshold) | Payroll / trustee |
| Verify zero balance on tips clearing account | At year-end closing | Auditor / accounting |
Conclusion: transparency as an investment, not a cost
Tips and service charges are not a marginal detail in the accounts of a Swiss restaurant or hotel: they are a regulated financial flow that intersects VAT, social security, employment law and bookkeeping obligations. The digitisation of payments has removed the opacity of cash and requires documented processes.
A clear internal policy, a clearing account that always balances, a correctly configured POS and monthly monitoring of the 10% threshold form the basis of compliant management. Integrated tools such as Accountex — from recording collections to distribution in payroll — reduce manual errors and prepare the business for audits and inspections without costly adjustments.
In case of doubt about particular situations (hotels with multiple departments, restaurants with mixed take-away, cross-border staff), consult the trustee or cantonal OASI office before defining accounting practice: the consequences of incorrect classification weigh far more heavily than getting the initial setup right.