Clients are increasingly leaving tips not in cash, but by transferring them via the QR code. Are such funds taxable?

Yes. It does not matter how the customer transferred the tip: in cash or via the QR code. Tax payment depends on who received it: the employee or the institution.

If the tip was received by the employee

If the QR code leads to the employee's card, this is personal income. It is needed to pay from it:

- 18% personal income tax;

- 5% military levy.

In this case, the establishment does not withhold taxes, so the employee does it on own: submits declaration and pays taxes.

For example, a client transferred 1 000 UAH to the employee. Taxes will amount to 180 of the UAH personal income tax and 50 UAH of military levy. Therefore, the employee will have 770 UAH left.

If the tip was initially received by the establishment

When a guest leaves the tip through the establishment's terminal, together with general bill or to account of the enterprise or individual-entrepreneur, then the establishment must reflect these funds in the accounting. And when the establishment pays them to the employee, it itself withholds the personal income tax and military levy and transfers them to the budget. The employee does not need to pay anything additional.  

Can tips be considered as a gift?

No. Regular tips for services rendered are not the tax-free gift, even if payment purpose is “thank you” or “for coffee”.

Is it needed to submit tax declaration every time the one receives a tip?

No. Reporting period for individual is a calendar year, so the tax declaration is submitted once a year. During a year, the employee simply records the tips received, and then:

- by May 1 of the following year, submits one tax declaration with the total amount of tips for a year;

- by August 1, pays personal income tax and military levy on this amount.

For example, the tips for 2026 must be declared by May 1, 2027 and taxes must be paid by August 1, 2027. Declaration can be submitted through the taxpayer's Electronic cabinet.

If the institution withheld taxes, it is not needed to submit declaration solely for these funds.

What should the employee do?

During a year, the employee should simply keep such records for oneself. Legislation does not require a separate journal or reporting for this, but the result for a year still needs to be able to confirm. Therefore, it is possible to save card statements or keep a table with the date and amount for oneself. This is also convenient because tips need to be separated from other income that the employee may have during a year, for example: debt repayment or transfer from relatives.

So, the tips via the QR code are taxed in the same way as cash. If they were received by the employee – records them during a year, and once a year submits declaration and pays taxes. If they were initially received by the institution, the institution itself withholds taxes as a tax agent.