PhorestTips Ireland: Understanding Tax Responsibilities for Business Owners and Staff

PhorestTips enables clients to leave a digital tip for their service provider during checkout, which is sent directly to the individual team member who performed the service.

This guide provides a high-level overview of how tips are treated for tax purposes in Ireland. It is designed to help salon owners and staff understand their responsibilities when using PhorestTips.

For Owners & Management

Transaction Flow

• PhorestTips allows tips to go directly from clients to staff members—automatically, without the business needing to handle or distribute them.
• No processing fees are charged to the business for tips made through PhorestTips.
• The full tip amount (less any applicable fee, if not covered by the client) is transferred directly to the staff member’s bank account, outside payroll.
   

Key Points

Based on guidance issued by the Revenue Commissioners, if staff members receive tips directly from clients:

• The amounts do not constitute pay for the purposes of the PAYE system. There is no obligation on the employer to calculate Income Tax, PRSI, and USC on the direct tips received by the staff member.
• The employees, however, are obliged to declare the tips received on their annual Income Tax return.
   

📘  Revenue guidance for employers: Revenue: Tips and Gratuities – Employer Responsibilities

📘  The Employers’ Guide to PAYE: Reference to gratuities (3.4.7)

📘  The Employers’ Guide to PAYE: Reference to tips (29)

📘  Learn how PhorestTips works

Additional Considerations - Documentation

Under the Workplace Relations Commission and the Tips and Gratuities Act 2022, employers are required to display information on how tips and gratuities are shared or distributed to employees, to ensure that clients are fully informed of where their money is going.

For Staff Members

Transaction Flow

If you receive tips via PhorestTips:

• The money is first routed into your Stripe wallet, then transferred into your personal account.
• These tips are not taxed at source — no PAYE is deducted.
• Revenue treats them as taxable income, just like cash tips.
   

How to Declare Tips if You Are Employed

Tips you receive via PhorestTips are treated as income and must be reported to Revenue if they are not taxed at source.

You are responsible for declaring any untaxed income, including digital or cash tips.

You can use the Revenue MyAccount service to declare this income on your income tax return.

• Choose the relevant tax year and, under the Income Tax Return panel, click “Amend.”
• Click “Start” to begin the amendment process.
• Complete all required fields in Panel 1, then continue to Panel 2 – PAYE Income.
• Proceed to Panel 3 – Non-PAYE Income, and click on “Other Income.”
• Select “Emp/Off/Pen not subject to PAYE deductions.”
• In the Description of Income field, enter “Gratuities.”
• Review your details, then click “Next.”
• Confirm your tax credits, complete the declaration, and proceed to submission.
   

You will be prompted to enter your PPS number and myAccount password to finalise the process.

How to Declare Tips if You Are Self-Employed

If you're self-employed, you're already required to submit an annual Income Tax return through Revenue myAccount or ROS.

You can report any tips you received on this return, along with your other earnings.

📌 Final Note

PhorestTips simplifies tipping for clients and staff - but it’s important that everyone is aware of their tax responsibilities under Irish law.

We strongly recommend reviewing the links above or seeking professional tax advice to ensure full compliance.