Holiday allowance for Dutch employees; what is it?
It’s that special time of year again! And no… it’s not Christmas. It’s time for the Dutch holiday allowance. Most European countries do not know about this. But the Dutch employees get a sort of yearly “pocket money” from their employer for their summer holiday.
Once a year, most working people in the Netherlands receive nearly double their monthly salary. The Dutch Holiday allowance (in Dutch: “vakantiegeld”) is worth 8% of the gross annual salary and is normally paid out every May. Right in time to finance your Summer holiday!
The holiday allowance is an additional sum paid on top of your gross salary.
Keep in mind that in general holiday allowance is regularly not included in the gross salary. So this comes on top as an additional cost for the employer.
In the Netherlands, holiday pay is taxed more heavily than an ordinary salary. This is because holiday pay is considered as a special reward and therefore falls under a different tax rate. The percentage of this tax rate depends on your salary, but as a rule of thumb, 45-50% of the gross salary will be taxed. So be aware that net holiday pay may therefore be lower than you expected.
How do I calculate my holiday allowance?
As a rule of thumb, the holiday allowance amounts to 8% of an employee’s yearly gross salary. So if an employee earns around EUR 60.000,- gross per year, you can expect to receive an estimation of EUR 4.800,- gross (before taxes) per full year worked.
The calculation is as follows: (EUR 60.000,- x 0.08) = EUR 4.800,- per year
It is also possible to request that the holiday allowance is partially paid out each month, instead of the whole amount once per year. This would mean receiving a higher monthly salary for the employee.
If the employment contract ends before May, the accumulated vacation allowance is still included in the last salary payment.
There are some situations where an employee may not be entitled to this allowance. For example:
- Freelancers must arrange their work and holiday arrangements are set on their own terms.
- There is no obligation for companies to pay the holiday allowance for internships. While it is common for Dutch employers to offer some amount for the holiday allowance to interns, it is also not expected.
Can we help you?
Expanding your business to any new market comes along with its challenges. Local knowledge is essential for growing without risk. At Parakar we are locally based in the countries we serve. We implemented many professional outsourced employment situations in the Netherlands for companies and individuals all over the world!
Want to know more about the Dutch holiday allowance or about other services we offer? Please get in contact with our local HR experts!