Your trip to Budapest can get even more interesting. Transform your Budapest adventure into an unforgettable experience with my exclusive market and food tours. Join me for a private or small group tour of two of Budapest’s most vibrant markets. Discover hidden gems, savor local flavors, and immerse yourself in the city’s rich culture. Let me be your guide to an authentic Budapest experience! I offer private and small group market and food tours. You can read more about here or you can book the experience here.
As a service provider in tourism it’s a bit hard to write about tipping but I’m asked enough that I decided to do so.
Tipping in Hungary and in Budapest differs from North America and even some parts of Europe. While in the US a lot of times tips are the only source of income for people working in hospitality, mainly in the front of the house (wait staff, bar staff, host, bussers), in Europe and in Hungary the law mandates to provide wages (preferably liveable) to the workers. This puts the employer in charge instead of the patrons making sure the staff gets compensated.
Before I’d get too deep in the rabbithole of the pros and cons of American vs European tipping culture, let’s see when and if it’s appropriate to tip. I thought it’s important to clarify the cultural differences in tipping, which is mainly split between US tipping culture and the rest of the world. Now we can go and dig a bit deeper.
When to tip?
For this I use a very simple and straightforward method which I openly say if someone asks me after the tour if I accept tips.
Searching Availability…
When you liked the service and you feel it was more than you anticipated, feel free to tip. If your cab driver gives some great insights, sure, go ahead and tip, and if he didn’t even get out of the car to open the door or put your bag in the trunk, might consider paying what the meter says. If your waiter provides a service you are more than happy with, sure, go ahead and tip.
Service Charge (Szervízdíj or Felszolgálási díj)
If you have been or will be dining out you also see Szervízdíj or Felszolgálási díj (Szervízdíj and felszolgálási díj are just different names for the same thing: service charge) on your receipt. In order to understand and know how they relate to tipping, let’s take a look at how the law defines service charge and tip.
Service charge is a fee charged by a service provider for the service provided by the front of the house. The amount of service charge has to be clearly visible on the menus and on the final receipt, most staff members will actually tell you if that’s included upon receiving the check.
Paying the service charge isn’t optional. Service charges are considered a form of income yet one does not have to pay income tax after it. However employers are mandated to pay the VAT (either 5% or 27%), it is also decreased by other taxes (social security, universal healthcare contribution, etc.). A simple example: for every 100 Forints, 77 Forints (if 5% VAT is charged) or 64 Forints (in case of 27% VAT) is what the worker is left with.
Tipping
Tipping by its non compulsory nature is a whole different story, but it is just as complicated when it comes to taxes. A tip is voluntarily given by the customer, if the service was beyond satisfactory, usually around 10% but it’s not given exclusively in restaurants like the case with the service charge.
Legally, unless the employer authorizes it, an employee can’t accept tips. That’s the law, but most people usually don’t comply. Nobody will say no to tips, saying their boss won’t approve.
Since there is no exchange of goods and services and money, money received as tips can’t be considered as income and as such is absolutely tax free. You’d think.
But it’s Hungary. The thing is, it’s tax free until it reaches the register. Once it does, it becomes revenue for the restaurant and as such, is not exempt from taxes anymore. Giving your server cash at the end of the meal is the best way to make sure that the person who deserves your tip gets your tip.
But what about credit cards or tip buckets? Here is where things get interesting.
In the case of a tip bucket it’s tax free if the employees physically divide the money among themselves. If it is split by the employer, it’s his money then, and as such, you guessed it… it’s taxable.
With credit cards the same applies. If they don’t have a separate “account” where the tips are going, it becomes revenue and as such… it’s taxable.
To summarize.
Tipping is voluntary and highly appreciated in certain sectors, while you will be automatically charged with the service fee.
If you’d like the receiver of the tip to get the most out of your hard earned money, tip in cash.
You’ll only encounter service charge in restaurants. It’s mandatory to pay and it is taxed. It’s not for the quality of service, but for the service itself. It’s usually either 10% or 15%.
10% in tips will usually be sufficient but again it all depends on how satisfied you were with the service. Remember: it’s always nice to be financially rewarded for work service providers do, but the main source of income isn’t from tips. (The only exemption from this is anything that is advertised as free. Like free walking tours where they make only tips.)
If you like this article make sure you share with your friends and if you are visiting Budapest make sure to check out my private market and food tours here.
Searching Availability…