Interesting article on U.S. Tipping

[Jcp2]

Improper wording. Netherlands is a country where a lot of tax ELUSION occurs. If you search for tax EVASION, better to watch here in Italy.
Elusion is a way of paying little tax in a fully legal manner, thanks to favourable tax laws in a country, which is called a "fiscal paradise". Many countries worldwide compete in this field, Netherlands is not alone, here in Europe we also have Belgium and Ireland, for example. As the EU community never reached an agreement about aligning the tax policies among participating countries, this is something which must be accepted here in Europe.
On the other side, however, it appears that also in the US some states apply different tax policies than others.
All this applies mostly to large companies. Individual income tax, instead, is enforced quite strictly almost everywhere here in Europe.
As I already explained, what disturbs mostly Europeans when travelling to US is not the fact that service has to be paid separately from the food or drinks being purchased. This is perfectly acceptable.
But we are used to find it listed on the bill, so that it is fiscally traceable, and hence fully reimbursable from the employer. Having to hand some money, possibly by cash, without any tax-deductible receipt, instead, is highly disturbing, because it means that this money will NOT be reimbursed, nor can be exposed as an expense in a tax declaration.
This money given for tips is "lost". Why should I get an economic damage from this strange habit? On the other hand, the idea of leaving the worker unpaid is also quite disturbing: each worker should be paid fairly, I am not happy with the idea of giving no tip for avoiding my personal economic damage, it looks selfish to me. So there is a need for making the tip payment fully traceable, which would make it acceptable also for people coming from other countries.
However I also have this doubt: how can Americans be reimbursed for the tips paid when travelling for work, or how can these expenses be deducted from the income before paying taxes, if no fiscally-traceable receipt is produced? Do not you have the same problems that an untraceable payment causes to Europeans?

My company won’t pay for tips or alcohol on their per diem. It’s different if the meal is client facing, and then only for certain departments or positions.

 

[Angelo Farina]

My company won’t pay for tips or alcohol on their per diem. It’s different if the meal is client facing, and then only for certain departments or positions.

Can you explain better? I am really interested to learn how these things work in other countries!
When back to office, do you have to compile a "reimbursement list", attaching the receipts?
Or you get simply an additional daily wage when working away?
In the latter case, this additional wage is being taxed, or is still treated as tax-exempt reimbursement?
For your info: here in Italy wine or beer (or coke, or coffee, or other drinks) are reimbursed, if included in the same bill as the meal. They are not included if consumed away from meals.
You can be reimbursed in two ways: with the reimbursement list, providing proof-of-purchase with fiscal bills, and with a max cost for each of the two allowed meals per day, or with a "diaria", an additional fixed additional wage, which is fixed but country-dependent. In the latter case, this additional wage is subject to marginal tax (which can be well in excess than 50%).

 

[Cheizz]

Don't get me wrong but Netherlands is the capital of tax evasion in Europe. Global corporations pay literally no tax in NL for any digital services sold within EU, and NL benefits from global countries having their headquarters and main investments in your country. This is one of the important drivers of your economy. Your welfare is basically based on stealing from others ;-). I hope as a responsible individual you will take personal initiative electing a government that will change this.

I don't say we have it all figured out. But as far as social services, taxation of regular employees and tipping goes, for regular people our system works fine. For big businesses, that's a different story.
In the context of tipping and taxes, living wages etc. I do think that most EU countries have a decent system in place for the average person.

 

[drrich2]

As I already explained, what disturbs mostly Europeans when travelling to US is not the fact that service has to be paid separately from the food or drinks being purchased. This is perfectly acceptable.
But we are used to find it listed on the bill, so that it is fiscally traceable, and hence fully reimbursable from the employer.

I think this is one of those 'big picture' matters, where the employee looks at their overall pay and benefits vs. the demands of the job, and decides to let the issue of paying tips go as relatively minor. I suppose one could request to use a company credit card, and agree in advance that tip is not to exceed a given % (unless mandatory).

Any time a person tries to operate in a foreign nation by the detailed standards of his home nation, there are apt to be incompatibilities and compromises to be made.

The problem is that, without a fiscal receipt, tips cannot be refunded, and the percipient can easily evade tax

Yes, but U.S. culture is rather individualistic. Given the host of reported injustices and problems going on in the world, worrying about whether my table server unreported tips for tax purposes last year isn't even 'on the radar.' Climate change, pollution, inflation and quite a host of other issues are already in line ahead of it.

It's important to remember American tipping culture arose from a 'bottom up' process at the level of the consuming public and businesses serving them, not a 'top down' policy instituted by government. Therefore it's going to have 'rough edges,' because it wasn't carefully planned out according to some higher administrative vision.

 

[Angelo Farina]

I suppose one could request to use a company credit card, and agree in advance that tip is not to exceed a given % (unless mandatory).

In my case this would result in a crime. My employer is the University, a public entity, so what you suggest is using public money for paying a gratuity. I could be prosecuted if doing that!
But it would be a problem also if the employer is a private company: in this case, the money spent for the tip would be considered as money given by the employer to the employee not being justified by a mandatory refund. hence this would be considered as an additional retribution given to the employee, which should be taxed with marginal rate. So the employer and the employee could be considered to being evading income tax if this money is not declared as "fringe benefit" in the tax declaration, so that the government gets back more than half of this money.
And there would be problem also for a self-employed worker. if he tries to deduct from his income the sum paid as "tip", it would again considered to be a tax-evading scheme.

Any time a person tries to operate in a foreign nation by the detailed standards of his home nation, there are apt to be incompatibilities and compromises to be made.

I understand this, but it is unfair that the economic damage of this is entirely on the shoulders of the foreign worker travelling to US.
Already there are always some expenses which will not be reimbursed. Adding 20% of tips on all meals, taxi, and other unavoidable expenses can be a big hit on the pockets of the worker. You must understand that a large number of travellers are not rich people travelling for leisure...
In my case, this also applies to diving travels, and I think it is the same for all scuba professionals (DMs, instructors, commercial divers, scientific divers, etc.). We have a number of these people here on SB...
Most people travelling are low-income workers, which are sent by their companies working abroad as installers, maintenance technicians, or sale representatives... On each travel they can have expenses which are 2-3 times their monthly income. Loosing 15-20% of this for each travel becomes really a big hit.

 

[MaxE]

OK... So what is the benefit for ANYONE in this system? I don't see it.

Under this scheme employees are still entitled to the federal minnimum wage. If they work a shift as a tipped worker and no one shows up, legally the employer is required to make up that shortfall. Many do not and the employee surfers, seems someone is benefitting in this scheme and it is not the worker.

 

[brsnow]

In my case this would result in a crime. My employer is the University, a public entity, so what you suggest is using public money for paying a gratuity. I could be prosecuted if doing that!
But it would be a problem also if the employer is a private company: in this case, the money spent for the tip would be considered as money given by the employer to the employee not being justified by a mandatory refund. hence this would be considered as an additional retribution given to the employee, which should be taxed with marginal rate. So the employer and the employee could be considered to being evading income tax if this money is not declared as "fringe benefit" in the tax declaration, so that the government gets back more than half of this money.
And there would be problem also for a self-employed worker. if he tries to deduct from his income the sum paid as "tip", it would again considered to be a tax-evading scheme.

I understand this, but it is unfair that the economic damage of this is entirely on the shoulders of the foreign worker travelling to US.
Already there are always some expenses which will not be reimbursed. Adding 20% of tips on all meals, taxi, and other unavoidable expenses can be a big hit on the pockets of the worker. You must understand that a large number of travellers are not rich people travelling for leisure...
In my case, this also applies to diving travels, and I think it is the same for all scuba professionals (DMs, instructors, commercial divers, scientific divers, etc.). We have a number of these people here on SB...
Most people travelling are low-income workers, which are sent by their companies working abroad as installers, maintenance technicians, or sale representatives... On each travel they can have expenses which are 2-3 times their monthly income. Loosing 15-20% of this for each travel becomes really a big hit.

Sounds to me like the foreign company is not taking care of their employees, they are certainly aware of how things work abroad and are choosing not to reimburse their people.

 

[ontdiver]

Sounds to me like the foreign company is not taking care of their employees, they are certainly aware of how things work abroad and are choosing not to reimburse their people.

I think that we have to take a step back when considering how foreign companies operate. Just because they do not act like "us", does not mean they are treating their employees poorly.

There will no doubt be a tipping thread a couple of years from now, if not sooner. The content will be almost identical...

 

[scubaozy]

Sounds to me like the foreign company is not taking care of their employees, they are certainly aware of how things work abroad and are choosing not to reimburse their people.

Yes, to me, as well. I do some times travel internationally for work, I have to choose either per diem (daily allowance determined by tax authorities) and this amount is tax free, or I just have to pay with company cc and send the receipts. If I travelled to US, I would probably choose per diem, then no one cares what I ate or how much tip I gave. The maximum amount of per diem is determined by finance authorities anyway and is country dependent.
Sure I am against tipping but this tax argumentation is not resonating with me.

 

[brsnow]

I think that we have to take a step back when considering how foreign companies operate. Just because they do not act like "us", does not mean they are treating their employees poorly.

There will no doubt be a tipping thread a couple of years from now, if not sooner. The content will be almost identical...

If a country is aware that international travel will include gratuity and they don’t reimburse, that has nothing to do with foreign countries visited and more to do with employer and employee relations.