Despite not being an essential part of the dining experience as in other countries, tipping in Switzerland is still said to earn workers in the industry a collective 1 billion francs a year. Now, the Swiss government is moving towards changing the law, so that tips would be subject to income taxes.

Is tipping in Switzerland still a thing?

While tipping is always seen as a way of recognising and rewarding good service in bars, cafes and restaurants, gratuities in Switzerland are not as necessary as in countries where staff rely on them as essential income. Indeed, since 1974, the Swiss hospitality industry has agreed that service charges are included as part of the main bill, which in effect switched staff from relying on tips to being given a salary.

Nevertheless, a survey from the Tages-Anzeiger recently showed that nine in 10 people in Canton Zurich still give a tip if they are given good service. By their estimates, around 1 billion francs are received as tips in Switzerland every year.

Rules around taxing tips remain vague

This poses a headache for the Swiss government: following the 1974 change, it was assumed that tips would become exceedingly rare. As a result, they are not subject to specific taxation, meaning gratuities do not go towards paying for Swiss social security or pensions. 

According to the law, the only time when they are taxed is if tips make up a “significant part” of staff salaries, though the Federal Social Insurance Office (BSV) told the Tages-Anzeiger that “there is no fixed limit” to what a "significant part" means. This means that while some restaurants do declare tips within employees' payslips, many others don’t.

Swiss government moves to tax tips

Faced with the continual popularity of tipping, and the rise of digital and card-based gratuities, the BSV confirmed that it would be looking into tightening the system. This would likely involve tips becoming integrated with payslips, meaning all gratuities would be subject to taxation.

Those in support of the change argue that while it would mean a cost to workers in the short term, staff in the hospitality sector would benefit from better protections against sickness and unemployment and would receive a higher pension once they reach retirement age. It would also provide a new revenue stream for Swiss cantons and the federal government.

In contrast, the industry association Gastro Suisse rejected any move to reform the system. Association spokesperson Patrik Hasler-Olbrych told the Tages-Anzeiger that tips are a “matter between the guest and employee” and should not be considered part of salaries. The BSV are due to publish their reforms by the autumn.