How Is Holiday Allowance Calculated? 🏖️

Holiday allowance is typically 8% of your gross annual salary, which is roughly equivalent to one extra month’s salary per year. The calculation includes bonuses, overtime, and irregularity allowances. Other payments, such as expense reimbursements, year-end bonuses, or profit-sharing, are excluded from the calculation.

Holiday allowance is usually accrued between June 1 of the previous year to May 31 of the current year. If you leave your job before May 31, any accrued holiday allowance will be paid out with your final salary. If you are on sick leave, your holiday allowance continues to accumulate.

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Example Calculation
If your gross monthly salary is €3,000, your annual salary is €36,000. Holiday allowance is 8% of €36,000, which equals €2,880 gross per year.

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When Will You Receive Holiday Allowance? 📅

In the Netherlands, holiday allowance is typically paid out in May or June, giving employees extra funds for summer vacations. Some employers include holiday allowance as part of your monthly salary, so you won’t receive a separate payment in May or June. Check your employment contract or collective labor agreement (cao) for details on when you will receive your holiday allowance.Most full-time and part-time employees receive holiday allowance as a single lump sum. Temporary workers and young people with part-time jobs often receive holiday allowance monthly.

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Gross-Net Differences in Holiday Allowance

The holiday allowance you receive in your bank account will be lower than the gross amount due to taxes. The Dutch tax system uses two income tax brackets: up to €75,518 per year you pay 36.97% tax. Above €75,518 per year you pay 49.5% tax.

Since holiday allowance is added to your regular income, part of it may fall into a higher tax bracket, meaning it will be taxed at a higher rate.Y

ou are also entitled to tax credits, such as the general tax credit and employment tax credit, which reduce the amount of tax you pay. However, as your total income increases, these credits decrease. If your total annual income increases due to holiday allowance, your eligibility for these credits may decrease, potentially resulting in a tax bill at year-end. To prevent this, employers apply a tax adjustment rate to holiday allowance.

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Example Calculation
Mark works as an administrative assistant, earning €2,800 gross per month. His holiday allowance is calculated as: 12 x €2,800 x 0.08 = €2,688.
- Tax Rate: 37.10%.
- Adjustment Rate: 4.16%.
- Total Tax Withholding: 37.10% + 4.16% = 41.26%.

Mark’s employer withholds 41.26% of €2,688, which equals €1,109.06. Mark receives €2,688 - €1,109.06 = €1,578.94 net holiday allowance.

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Holiday Allowance for UWV Benefits

If you receive benefits from the UWV (e.g., unemployment, disability, or sickness benefits) you are also entitled to holiday allowance. The UWV pays this annually in May, and it is 8% of your gross benefit. Taxes are also deducted from this allowance, so the net amount deposited in your account will be lower than the gross allowance.

Note: If you received a UWV benefit for a part of the year and later returned to work, you will receive holiday allowance for the period you received benefits.

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Holiday Allowance for Foreign Employees in the Netherlands 🌷

Foreign employees working in the Netherlands generally have the same rights to holiday allowance as Dutch employees. This also applies to temporary and seasonal workers, who usually receive holiday allowance at the end of their contract or as agreed in their employment terms.

Tip: Always check your employment contract, payroll, and any applicable collective labor agreement (cao) to understand how holiday allowance is handled in your situation. This ensures there are no surprises and helps you fully enjoy your well-earned vacation!

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