Holiday allowance in the Netherlands: how to calculate it
Every year in May, most employees in the Netherlands receive an extra payment on top of their salary: the holiday allowance (vakantiegeld). This payment was originally intended to cover vacation expenses, but today it’s simply considered part of your salary. In this blog, we’ll explain when holiday allowance is paid, how much it is, how taxes work, and what exceptions exist.
When is holiday allowance paid?
Holiday allowance amounts to 8% of your gross annual salary, calculated over the period from June 1 to May 31. Employers usually pay it in May.
If you leave your job before May, you will still receive the holiday allowance you’ve accrued for the months worked since the last payment.
How much tax do you pay on holiday allowance?
Holiday allowance is taxed as a special payment (bijzondere beloning). This means it is subject to different tax rates than your regular salary. How much tax you pay depends on your total annual income, including salary, holiday allowance, bonuses, and other extras.
The Dutch Tax Authority (Belastingdienst) applies specific tax brackets to calculate this. For example:
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Income up to €10,698 → 0%
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€21,483 to €22,661 → 33.84%
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€37,692 to €73,032 → 49.54%
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Above €124,520 → 49.5%
Example calculation
Let’s say you earn €2,500 per month. Your annual salary is €30,000.
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Holiday allowance = 8% of €30,000 = €2,400.
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Gross annual salary including holiday pay = €32,400.
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According to the tax brackets, 39.94% tax applies.
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Tax on holiday allowance: €2,400 × 39.94% = €958.56.
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Net holiday allowance = €2,400 – €958.56 = €1,441.44.
Holiday allowance for temporary workers
As a temporary worker, you also build up holiday allowance. The difference: you may receive it monthly instead of annually. Either way, it’s always 8% of your gross salary.
Special cases
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Sick leave → you continue to accrue holiday allowance.
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Unemployment or other benefits → you also receive holiday allowance. For employee insurance benefits, this is 8% of your gross benefit. For social assistance benefits, it’s 5%.
Every employee in the Netherlands is legally entitled to holiday allowance, regardless of their type of contract. Do you need more information or help? We're happy to help you further, contact us here.
