Understanding Holiday Allowance in the Netherlands
What is Holiday Allowance?
The holiday allowance is an additional sum paid on top of an employee’s gross salary, amounting to (at least) 8% of their gross wage. Think of it as 'pocket money', initially designed to help finance summer vacations. Employers in the Netherlands are required by law to pay this holiday allowance to their employees.
Calculating Your Dutch Holiday Allowance
Calculating the holiday allowance is straightforward. The holiday allowance amounts to (at least) 8% of an employee’s gross annual salary. For example, if an employee earns €50,000.- gross per year, they will receive €4,000,- gross as their holiday allowance per year.
The holiday allowance is subject to taxation. The amount of tax deducted can vary based on individual circumstances and the total income of the employee. The holiday allowance is usually taxed at the special tax rate.
Receiving Your Holiday Allowance
The holiday allowance is usually paid out in the month of May or June, coinciding with the start of the summer holiday season. However, it's also possible for employees to receive the holiday allowance on a monthly basis. The employee will then receive 8% of the gross monthly salary as holiday allowance in addition to the regulary salary. This will result in a higher net salary each month.
Special Circumstances
There are certain situations where the holiday allowance might not be applicable for an employee. For instance, if an employee’s gross salary is triple the Dutch minimum wage, the holiday allowance may be reduced or even eliminated, depending on the agreement between the employee and the employer. The holiday allowance is usually also not applicable for interns.
Furthermore, it's of course possible that an employee's employment contract ends before the month in which the holiday allowance is usually paid. In this case the accumulated holiday allowance will be included in the employee's last salary payment.
For more information about holiday allowance in the Netherlands, please feel free to contact us on our website: Free Consultation — Exterus.
