As we explained in our article on the return of EET 2.0, electronic sales reporting will return to the Czech Republic on 1 January 2027. The legislation also introduces an income tax exemption for tips received by restaurant, café and bar employees, subject to a limit. Act No. 180/2026 Coll., Sections 30 and 36.
To apply the exemption, employers will need to record tips however they are paid: in cash, by card, by bank transfer or via a QR code. Here we explain who qualifies, how to calculate the limit and what information your accountant will need.
Which tips qualify for the tax exemption
The exemption applies to employees’ tips (spropitné, informally known as dýško). It covers employees on standard employment contracts as well as those working under agreements to complete a job (dohoda o provedení práce, DPP) or work activity agreements (dohoda o pracovní činnosti, DPČ). It does not apply to tips that a self-employed individual (osoba samostatně výdělečně činná, OSVČ) receives as their own business income. Ministry of Finance clarification, p. 194; explanatory memorandum, p. 95.
Several conditions must be met for the exemption to apply.
The payment must be voluntary. A mandatory cover charge (couvert) or an automatic, compulsory service charge does not become a tip simply because it is labelled as one on the receipt.
The tip must relate to a specific instance of service to a customer. A customer might leave it when paying the bill, for example. The money may reach the employee through the employer. A fixed bonus funded by the restaurant, however, does not qualify if it is unrelated to tips left by customers.
The establishment must prepare and sell food or drinks for consumption on the premises. This covers food service premises (provozovna stravovacích služeb) such as restaurants, cafés and bars. An outlet that operates solely as a takeaway and has no area for customers to eat or drink does not meet this condition. Explanatory memorandum, p. 96.
The employee must do work for which tipping is customary. This criterion is set out in Act No. 586/1992 Coll., Section 6(9)(g). The explanatory memorandum links it to serving customers or preparing food and drinks, and specifically mentions waiting staff (číšníci, servírky), cooks (kuchaři) and bartenders (barmani). The same criterion can be applied to a barista who makes coffee and serves customers.
There is no exhaustive list of eligible occupations. Accounting or HR duties alone do not meet the criterion. For managers and kitchen assistants, the duties they actually perform are what matter. Eligibility for dishwashers and other support staff is not clearly established: the Czech-language article on Podnikatel.cz specifically identifies this as a disputed point. Giving an employee a share of pooled tips does not, by itself, make those tips tax-exempt.
How the 7 per cent limit works
Calculate 7% of the employer’s monthly income from food and beverage services. This is the maximum total amount of tips that can be exempt from income tax across that employer’s workforce.
For example, suppose the restaurant’s qualifying income from food and beverage services for the month is CZK 1,000,000. The overall limit is:
CZK 1,000,000 × 7% = CZK 70,000 in tips.
Provided the other conditions are met and individual limits are allocated appropriately:
- If customers leave CZK 50,000 in tips, the full amount is exempt from tax.
- If customers leave CZK 80,000 in tips, CZK 70,000 can be exempt, while the remaining CZK 10,000 is taxable.
Exempt tips are not subject to social security or health insurance contributions. The usual rules apply to the taxable portion. For employees working under DPP or DPČ agreements, this includes checking whether the conditions for participation in the relevant insurance schemes are met. Any minimum health insurance contribution that applies to the employee still has to be paid. Act No. 589/1992 Coll., Section 5; Act No. 592/1992 Coll., Section 3.
If one employer operates several restaurants, their income from food and beverage services is added together: there is one overall limit per employer. Separate employers calculate their limits separately. The limit is recalculated for each calendar month.
The exemption applies only to tips actually received. It does not allow a business to reclassify 7% of its ordinary revenue as tips and make that amount tax-exempt. Act No. 586/1992 Coll., Section 6(9)(g), as in force from 1 January 2027.
Which income is used to calculate the limit
The calculation uses monthly income specifically from food and beverage services (měsíční příjmy ze stravovacích služeb). You cannot simply use all money paid into the bank account or the company’s total turnover if it includes other activities.
For a company that keeps accounting records, the figure is the revenue (výnosy) recognised in its accounts for the relevant month, as required by Act No. 586/1992 Coll., Section 21h. This may differ from the cash actually received during that month.
When setting up the calculation, agree with your accountant which figures to use, taking account of VAT (DPH), advance payments, refunds and the accounting method used. The total shown by the till or card terminal will not always be the correct basis for the calculation.
Allocating the limit between employees
The employer can set individual limits within the overall cap. If it does not do so, the overall limit is divided equally between the employees who received tips in that month.
This matters when employees receive different amounts. Suppose the overall limit is CZK 70,000 and two employees receive tips: one receives CZK 50,000 and the other CZK 20,000.
Under the default equal allocation, each employee’s limit would be CZK 35,000. The first employee would exceed their individual limit by CZK 15,000, even though total tips do not exceed the overall cap. If the employer instead sets individual limits of CZK 50,000 and CZK 20,000, both amounts can qualify for the exemption, provided the other conditions are met.
Keep separate records of how the money is distributed and how the tax exemption limit is allocated. When setting individual limits, the employer may take account of factors such as differences in working hours and leave. Explanatory memorandum, p. 97.
When tips need to be reported through EET
For an establishment required to use EET, the following rules apply to payments made on the premises.
Employees’ tips do not have to be reported through EET. These are tips a customer leaves for a member of staff, or money the establishment collects to distribute among its employees. Reporting the bill amount without those tips is sufficient.
Tips retained as the business’s own income must be reported through EET. This applies both to a self-employed individual (OSVČ) and to a company, such as a limited liability company (společnost s ručením omezeným, s.r.o.). If the business keeps the tips as its own income from running the restaurant, it must report the bill amount including those tips.
Employees’ tips may also be reported through EET if the till system sends them together with the bill payment for technical reasons. This does not turn employees’ tips into the business’s income.
In either case, the records must distinguish between payment for the order and employees’ tips. Reporting a combined amount through EET does not replace records of each employee’s income. Czech Financial Administration (Finanční správa) guidance, p. 32.
Recording tips received by different payment methods
Under Act No. 586/1992 Coll., Section 6(19), the employer is treated as the payer of tip income for tax purposes, even when an employee receives the money directly from a customer. Employers therefore need details of each employee’s tips. The same Act requires monthly income, including exempt amounts, to be recorded in individual payroll records (mzdové listy). Act No. 586/1992 Coll., Section 38j(1) and (2), as in force from 1 January 2027.
The following is one practical way to keep the records needed to meet these requirements. You can use your till software, a logbook or a spreadsheet. The law does not prescribe a special tips log or specifically require a report at the end of every shift.
Cash tips handed directly to an employee. The employee records the date and amount and passes the information to the person responsible, for example at the end of the shift. If the employee has kept the money, record that too: entering it in the payroll system does not mean it should be paid a second time.
Pooled tips. Record the total collected and each employee’s share. It is good practice to document the count and any handover of the money. If a member of the waiting staff first receives a tip personally and then adds it to the pool, make sure the same money is not counted twice in the final total.
Card tips. Record the bill amount separately from the voluntary extra payment. For example, if the bill is CZK 1,200 and the customer pays CZK 1,300, record the CZK 100 tip separately, together with its allocation to employees. When reconciling payments with the bank statement, record transaction fees separately so that the full original tip amount remains accounted for.
QR code payments, bank transfers and tipping apps. Keep a record of the tip amount, the service it relates to and the recipient. Transfers made directly to an employee must also be included in that employee’s monthly total.
What to give your accountant each month
A useful monthly summary for each employee should show:
- tips received directly from customers;
- the employee’s share of pooled and cashless tips;
- the monthly total, with no double counting;
- the individual exemption limit allocated to the employee;
- the exempt and taxable portions;
- amounts already received by the employee and any balance still to be paid.
The accountant records the income in each employee’s payroll records (mzdové listy), including the exempt portion of tips. Keep the calculation of the employer’s overall limit with the monthly summary.
What happens if tips are not recorded
The exemption may be denied without supporting records. If a tax audit identifies an underpayment, the consequences may include an additional tax assessment, late-payment interest and penalties. A separate fine may also apply for failing to keep legally required records. The outcome depends on the breach identified. Act No. 280/2009 Coll., Sections 92 and 247a; Act No. 280/2009 Coll., Sections 251–252.
A tax audit is not limited to EET data. The tax authority can compare till records, card terminal reports, bank statements and payroll records, and can also use witness testimony. Cash tips are harder to trace, but that does not remove the obligation to record them. Act No. 280/2009 Coll., Section 93.
Waiting staff may keep their own tips, but the employer must still record the amount. The employer is responsible for the tax calculation. If an underpayment is the employee’s fault, the law provides for recovery of the unpaid tax and interest from their pay with their agreement, or for notifying the tax authority and supplying supporting documents by the end of the month following the month in which the underpayment was discovered. The employee must be informed of that notification at the same time. If the employer chooses the notification route but fails to meet these requirements, it must settle the amount itself. The employee’s fault must be substantiated: simply saying “they did not tell me” is not enough. Act No. 586/1992 Coll., Section 38i(5) and (6).
Help with recording and accounting for tips
If you run a restaurant, café or bar, we at DoMyTax can help you identify which tips qualify for the exemption, put suitable records in place and provide the information needed to process payroll.
Through our tax consulting and accounting support services, we can review how your establishment operates and help you prepare your records and procedures for the new requirements.
To contact us:
💬 Chat with us online: DoMyTax
📞 Call us: +420 228 229 092
📧 Email us: info@domytax.cz
📍 Visit our office: Vista House, Na Pankráci 30, 140 00 Nusle, Prague
