Service Charge Breakdown

[chengkp75]

I got added the "extra service charge" for adding the Drink Package" that had to be paid with my fare. Was that was for server gratuities? Will I also get the regular gratuities added to my room?

 

 

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Yes. The 18% added to the drinks package is the same as the 18% added to the per drink charge, based on the "nominal value" of the package. This is completely separate from the DSC which, depending on whether or not you believe NCL, goes to restaurant wait staff, housekeeping, and others, but not the bar staff.

[Smacciemac]

Thanks.. I knew the UBP was I'm pretty sure stated as gratuities.. and my fiancé and I are creatures of habit.. if we have a bartender who takes care of us very well for the duration of the cruise.. he will get tipped extra but that is just because of how we are.. :)

 

 

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[AndyCapn]

If you are a US citizen residing abroad, and you are subject to income tax in the country of your residence, you are allowed to take this tax amount as a credit (not a deduction) against US taxes owed.

 

Same with most countries. In Canada it's called the foreign tax credit. The problem for the cruise ship employees is that they aren't paying any taxes on their income to another country, so there is no tax credit to claim.

 

And yes, for a lot of Americans who earn employment income in Canada where the tax rates are usually higher, they often end up with no U.S. federal or state taxes owing on that income.

[Quilting_Cruiser]

Thanks.. I knew the UBP was I'm pretty sure stated as gratuities.. and my fiancé and I are creatures of habit.. if we have a bartender who takes care of us very well for the duration of the cruise.. he will get tipped extra but that is just because of how we are.. :)

 

 

 

I think that's just the way a lot of people are. :) On my last cruise, we had a favorite bartender and I made sure to take care of him.

[fshagan]

It's a trick that job recruiters for cruises used to use in Canada (and I assume elsewhere) where they convince young adults that the wages may be low on a cruise ship but that's okay because it's tax free! It's true there won't be any withholding taxes, but unless you've established residential ties with another country, you're still considered a Canadian resident and, as such, subject to tax in Canada on your worldwide income.

 

Interesting ... I know a little about US income tax but virtually nothing about other countries. I got the tidbit about the UK taxes from the youtube videos with UK crew extolling the virtues of tax free income. They may be in for a surprise (or their earnings may be low enough to not incur a large penalty anyway.)

 

I did hear from another tax guy that he had a client who worked on a cruise ship and they didn't take out payroll tax, and his client didn't owe payroll tax (that's our social security and medicare tax that is about 15.3% of earnings, although it's split between employee and employer). His client wanted to pay the tax to accrue more earned income for his benefits later. I'm not sure that's true, but I did hear it from a tax pro.

[swedish weave]

Interesting ... I know a little about US income tax but virtually nothing about other countries. I got the tidbit about the UK taxes from the youtube videos with UK crew extolling the virtues of tax free income. They may be in for a surprise (or their earnings may be low enough to not incur a large penalty anyway.

I did hear from another tax guy that he had a client who worked on a cruise ship and they didn't take out payroll tax, and his client didn't owe payroll tax (that's our social security and medicare tax that is about 15.3% of earnings, although it's split between employee and employer). His client wanted to pay the tax to accrue more earned income for his benefits later. I'm not sure that's true, but I did hear it from a tax pro.

 

Could that be because they are considered contractors and not cruise line employees?

[BunnieBear]

Interesting ... I know a little about US income tax but virtually nothing about other countries. I got the tidbit about the UK taxes from the youtube videos with UK crew extolling the virtues of tax free income. They may be in for a surprise (or their earnings may be low enough to not incur a large penalty anyway.)

 

I did hear from another tax guy that he had a client who worked on a cruise ship and they didn't take out payroll tax, and his client didn't owe payroll tax (that's our social security and medicare tax that is about 15.3% of earnings, although it's split between employee and employer). His client wanted to pay the tax to accrue more earned income for his benefits later. I'm not sure that's true, but I did hear it from a tax pro.

 

I think you may be referring to National Insurance payments, which we pay in addition to Income Tax. Significant breaks in payment can effect pension rights at retirement so there is an option to pay missed instalments yourself (or certainly used to be because I did myself to ensure continuity many years ago).

[POA1]

Could that be because they are considered contractors and not cruise line employees?

 

I think you asked this on the HAL board, but the answer is that they're contract employees. This is a whole different thing than an independent contractor. A contract employee is an employee for the term of the contract. The salient difference is permanent vs. contract employee. An independent contractor isn't an employee at all.

[chengkp75]

I think you asked this on the HAL board, but the answer is that they're contract employees. This is a whole different thing than an independent contractor. A contract employee is an employee for the term of the contract. The salient difference is permanent vs. contract employee. An independent contractor isn't an employee at all.

 

And a further distinction is that what the crew generally refers to as their "contract" is actually legally known as the "articles of engagement" or shipping articles, which is a contract between the crew member, personally, and the Captain, personally, acting as the cruise line's representative. As they have signed "articles", they are "seamen" or "mariners", and so fall under international maritime law as regards to their employment status.

[POA1]

And a further distinction is that what the crew generally refers to as their "contract" is actually legally known as the "articles of engagement" or shipping articles, which is a contract between the crew member, personally, and the Captain, personally, acting as the cruise line's representative. As they have signed "articles", they are "seamen" or "mariners", and so fall under international maritime law as regards to their employment status.

Thanks for the clarification.

[SteveH2508]

I think you may be referring to National Insurance payments, which we pay in addition to Income Tax. Significant breaks in payment can effect pension rights at retirement so there is an option to pay missed instalments yourself (or certainly used to be because I did myself to ensure continuity many years ago).

 

Fair point - but - I am married to a US citizen (she is also a UK citizen). She has to complete two tax returns each year. When it is that time, I go and hide - it is a fraught time!

 

 

There are many differences between the two systems, and when it involves declaring income from both US and UK it gets even worse (different tax years, foreign income, residency, yada-yada-yada).

[fshagan]

I think you may be referring to National Insurance payments, which we pay in addition to Income Tax. Significant breaks in payment can effect pension rights at retirement so there is an option to pay missed instalments yourself (or certainly used to be because I did myself to ensure continuity many years ago).

 

Sorry, I did a mash up of UK and the US in the same paragraph. The "payroll tax" here in the use is comprised of Social Security and Medicare taxes, and is usually about 7.5% to the employee and 7.5% to the employer (self employed people pay both parts, so about 15.3% from the first dollar). The tax guy I was speaking to had a US client who was concerned that they weren't required to pay into the system, and were not getting credit for the years worked on board for that system of benefits. They wondered if they could "volunteer" to pay in. (I have no idea if this is actually the arrangement, where mariners pay regular income tax but do not pay "payroll tax" for earnings at sea).

 

I briefly looked into a fisherman's situation when he asked me about taxes, and there are some different tax treatments for mariners who are at sea for periods of time. I didn't research further because he was a tax cheat, so I wished him luck and showed him the door.

[CruisinHarvey]

For those wondering about DSC. This quote is on HAL a thread. It doesn't surprise in the least. According to the poster..

 

 

Page 25 of the Crew Handbook & it states-

Quote

TIPPING NOT REQUIRED POLICY

 

 

All ships have the Rewards for Excellence (RfE) Plan which consists of Hotel Service Charges and Beverage Service Charges. If a guest chooses to adjust out of the RfE Plan and instead provide cash tips to an employee, the employee is required to turn in this cash to their Department Head so the money can be added to the RfE plan. Any “tips” received above and beyond the guests standard

amount may be kept by the crewmember.

If correct, those of you who think tipping cash and removing the DSC from your account makes a difference, you'd be wrong. They know what cabin numbers are removing the DSC. I wouldn't think HAL is any different than NCL.

[pokerpro5]

I don't want to start beating the same dead horse I beat in previous threads, but it has been my determination (from various inside sources + common sense) that removing the DSC typically does NOT remove money from the tip pool for employees.

 

That is, removing DSC takes away from NCL's revenue, not the employee salaries/tips.

 

DSC is basically there to reimburse NCL for employee expenses.

 

Don't believe me? Consider the fact that you can only remove DSC via a refund request form, which takes about 30 days to process. So given that's the case, how are they going to take tips back from employees who already received the money a month ago? What if they don't even work for NCL anymore?

 

The DSC removal form is basically used to discipline bad employees. That's why it goes through the Miami office. They ask you to list a reason. If the reason is, "I want to tip in cash" or "I don't feel I should have to tip above what I've already paid", then nobody gets in trouble. If the reason is, "My steward was terrible" or "The waiters at the Main Dining Room were rude", then they punish a specific employee or department by withholding some of the money (or fire people).

 

That's my understanding of how it works.

 

I'm sure 100 people will respond telling me how wrong I am.

 

You are welcome to your own interpretation.

 

FYI I've never removed the DSC because I consider it to be part of the cruise fare, so I understand that I'm paying it when I sign up. But if I were to remove it, I would know that it's likely not affecting any employees, unless I name an employee or department on the form.

[POA1]

For those wondering about DSC. This quote is on HAL a thread. It doesn't surprise in the least. According to the poster..

 

 

Page 25 of the Crew Handbook & it states-

Quote

TIPPING NOT REQUIRED POLICY

 

 

All ships have the Rewards for Excellence (RfE) Plan which consists of Hotel Service Charges and Beverage Service Charges. If a guest chooses to adjust out of the RfE Plan and instead provide cash tips to an employee, the employee is required to turn in this cash to their Department Head so the money can be added to the RfE plan. Any “tips” received above and beyond the guests standard

amount may be kept by the crewmember.

If correct, those of you who think tipping cash and removing the DSC from your account makes a difference, you'd be wrong. They know what cabin numbers are removing the DSC. I wouldn't think HAL is any different than NCL.

 

You are correct. That's actually in the HAL employment handbook. It also says that they take out the credit card vig (~2%) and less than a percent for administrative costs. The rest goes to the employee compensation / incentive plan.

 

From people have posted here, NCL does not do it that way.

[Moby0215]

I don't want to start beating the same dead horse I beat in previous threads, but it has been my determination (from various inside sources + common sense) that removing the DSC typically does NOT remove money from the tip pool for employees.

 

That is, removing DSC takes away from NCL's revenue, not the employee salaries/tips.

 

DSC is basically there to reimburse NCL for employee expenses.

 

Don't believe me? Consider the fact that you can only remove DSC via a refund request form, which takes about 30 days to process. So given that's the case, how are they going to take tips back from employees who already received the money a month ago? What if they don't even work for NCL anymore?

 

The DSC removal form is basically used to discipline bad employees. That's why it goes through the Miami office. They ask you to list a reason. If the reason is, "I want to tip in cash" or "I don't feel I should have to tip above what I've already paid", then nobody gets in trouble. If the reason is, "My steward was terrible" or "The waiters at the Main Dining Room were rude", then they punish a specific employee or department by withholding some of the money (or fire people).

 

That's my understanding of how it works.

 

I'm sure 100 people will respond telling me how wrong I am.

 

You are welcome to your own interpretation.

 

FYI I've never removed the DSC because I consider it to be part of the cruise fare, so I understand that I'm paying it when I sign up. But if I were to remove it, I would know that it's likely not affecting any employees, unless I name an employee or department on the form.

 

 

 

And you think employees are actually turning in that cash? Heck no! At least not all of it.

 

 

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[Visigoth]

The DSC does not REPLACE tipping. Many here love to say it does however even according to NCLs own FAQ pages there are distinct entities. There is no requirement to tip at all and no suggested amounts. It boils down to giving tips to the person you want, at the time you want, in the amount you want. If someone gives you service that you personally feel is worthy of a tip by whatever means you measure that, then tip them. The only caveat I would add is that "not tipping because the DSC covers it" is weak at best. Akin to saying one will not tip a bar keep in a hotel at a Disney resort because the resort fees "cover it".

 

Actually, according to the FAQ pages the DSC does replace tipping or at least set a base level for tipping. It says:

 

"How-to-Tip-on-a-Cruise?

Cruise lines, like Norwegian, include automatic tips either at time of booking or on your onboard account when disembarking for your stateroom steward. When ordering drinks at a bar or food at a specialty restaurant, gratuity will already be added to the bill. A few cruisers bring cash to tip for service that goes above and beyond high quality, but that is not expected by the staff."

[SeaShark]

Actually, according to the FAQ pages the DSC does replace tipping or at least set a base level for tipping. It says:

 

"How-to-Tip-on-a-Cruise?

Cruise lines, like Norwegian, include automatic tips either at time of booking or on your onboard account when disembarking for your stateroom steward. When ordering drinks at a bar or food at a specialty restaurant, gratuity will already be added to the bill. A few cruisers bring cash to tip for service that goes above and beyond high quality, but that is not expected by the staff."

 

You neglected to mention that this is on the CANADIAN FAQ page.

 

The applicable page states:

 

What about Gratuities?

Unlike most other ships in the cruise industry, there is no required or recommended tipping on our ships for service that is generally rendered to all Guests. While you should not feel obligated to offer a gratuity, all of our staff are encouraged to “go the extra mile,” so they are permitted to accept cash gratuities for exceptional or outstanding service if you care to offer them. Also, certain staff positions (e.g., concierge, butler, youth program staff and beverage service) provide service on an individual basis to only some guests and do not benefit from the overall service charge. We encourage those Guests to acknowledge good service from these staff members with appropriate gratuities. Additionally, there is an 18% gratuity and spa service charge added for all spa and salon services, as well as an 18% gratuity and beverage service charge added for all beverage purchases and an 18% gratuity and specialty service charge added to all specialty restaurant dining and entertainment based dining.

[fshagan]

For those wondering about DSC. This quote is on HAL a thread. It doesn't surprise in the least. According to the poster..

 

Page 25 of the Crew Handbook & it states-

Quote

 

TIPPING NOT REQUIRED POLICY

 

All ships have the Rewards for Excellence (RfE) Plan which consists of Hotel Service Charges and Beverage Service Charges. If a guest chooses to adjust out of the RfE Plan and instead provide cash tips to an employee, the employee is required to turn in this cash to their Department Head so the money can be added to the RfE plan. Any “tips” received above and beyond the guests standard

amount may be kept by the crewmember.

 

If correct, those of you who think tipping cash and removing the DSC from your account makes a difference, you'd be wrong. They know what cabin numbers are removing the DSC. I wouldn't think HAL is any different than NCL.

 

 

Not correct. NCL allows their "serving crew" to keep cash tips. It's not surprising that one company would have a policy different than another company, so I'm not putting the other poster's citation in doubt; but it is for a different company. If you look at NCL's FAQ page you'll find this:

 

What about Gratuities?

Unlike most other ships in the cruise industry, there is no required or recommended tipping on our ships for service that is generally rendered to all Guests. While you should not feel obligated to offer a gratuity, all of our staff are encouraged to “go the extra mile,” so they are permitted to accept cash gratuities for exceptional or outstanding service if you care to offer them.

(Emphasis mine)

[Gampy1967]

I really wanted to hear how those making the claim that the DSC was not equivalent to gratuities would explain this, but no one picked it up.

 

Because they know it really is related to gratuities.

[cruiser man 60]

Most NCL cruises in UK are now sold as all inclusive which includes all drinks and all service charges including in the drinks package. Therefore I consider all gratuities covered although do give the cabin steward and bar staff we use regularly a cash tip at end of cruises

[cruiser man 60]

Most NCL cruises in UK are now sold as all inclusive which includes all drinks and all service charges including in the drinks package. Therefore I consider all gratuities covered although do give the cabin steward and bar staff we use regularly a cash tip at end of cruises

[OrlandoSingleCruiser]

It's so funny to read the "don't worry about it" and "just do it" comments. That's exactly what NCL wants you to do.

 

People just accepted the charge once upon a time because they saw it as a tip that the workers on the ship were getting. You know, you go out to eat and you tip the waiter. It's the American way of doing things. Slowly but surely the gratuity amount went up and it changed to a "service charge". You know why? Because it doesn't all go to the workers now.

 

About 1 year ago I had a "fling" with a NCL employee in Miami. She worked in revenue management and we went out for a couple of months. Did you know that up to 50% of your service charge goes directly into the pockets of NCL? Also, when you get the beverage package NCL pockets 75% of that as well. That's the main reason that the beverage package on NCL is the most expensive, because they higher the price the higher the amount the 18% comes out to. The money they get from the 18% you pay when you get a beverage package basically covers 90% of the cost of the alcohol you consume. It's a pretty shady way of doing things but as long as people never question it and NCL is never exposed then everything will remain status quo.

[Two Wheels Only]

It's a pretty shady way of doing things but as long as people never question it and NCL is never exposed then everything will remain status quo.

Would you rather have....

 

A) A $1000 cruise with an additional $1500 in service charges added.

 

B) A $2000 cruise with an additional $500 in service charges added.

 

C) A $2500 cruise with no additional service charges added.

 

If the total is the same, why do people care about how NCL distributes the $2500? As long as I have $2500 (or more) worth of enjoyment, I'm good. :cool:

[OrlandoSingleCruiser]

Would you rather have....

 

A) A $1000 cruise with an additional $1500 in service charges added.

 

B) A $2000 cruise with an additional $500 in service charges added.

 

C) A $2500 cruise with no additional service charges added.

 

If the total is the same, why do people care about how NCL distributes the $2500? As long as I have $2500 (or more) worth of enjoyment, I'm good. :cool:

 

While honesty and transparency might not mean much to you, it does to me and many others. A good amount of people don't tip on the ship because they think the service charge is a "tip" to the workers when in fact it's just NCL pocketing it.

 

That's why I encourage everyone to get your service charge back at the end of the cruis and instead bring $100 per person to hand out to staff on the cruise. Usually I reserve $30 for the room attendant and always give the people in the restaurants and bars a few bucks at a time. Including those at the buffet.