Global ExpansionOctober 11, 2024Holiday Allowance in the Netherlands: Everything You Need to Know

If you’ve been working in the Netherlands for a while, you’ve probably heard your colleagues excitedly chatting about their vakantiegeld (Dutch holiday allowance). But what exactly is this magical bonus everyone is looking forward to? How does it work? And more importantly, when can you expect to see it in your bank account?

When it comes to your compensation package, holiday allowance is a standout perk. Whether you’re a local worker, an expat, or someone considering a move to the Netherlands, understanding how this allowance works is essential.

We’ll walk you through the ins and outs of the holiday allowance Netherlands procedure, explain how much you’re entitled to, and answer more relevant questions. Buckle up because we’re about to make sense of it all!

Holiday allowance, or vakantiegeld as it’s called locally, is a statutory payment that almost every employee in the Netherlands is entitled to receive. It’s designed to help cover the cost of vacations, although you can spend money from it however you like—there’s no rule saying it must be used on travel. Whether you choose to book a trip, pay some bills, or save it for later, it’s entirely up to you.

Introduced in the early 20th century, the concept of holiday allowance was aimed at encouraging employees to take time off and recharge. Over the years, it’s become a staple of Dutch employment law. In 1968, the Dutch government made it mandatory for all employees to receive a minimum of 8% of their gross annual salary. This rule applies regardless of how long you’ve been employed; even if you’ve worked for just a few months, you’ll receive 8% of your total gross salary and wages during that period.​

What’s new?

As of January 1st, 2020, there’s been a small but important update for temporary workers. Under the ABU Collective Labour Agreement (CLA), temporary workers now receive an increased holiday allowance of 8.33% of their gross annual salary. This change reflects ongoing efforts to improve workers’ benefits in the Netherlands and applies specifically to companies following the ABU CLA.​

Point to note:

However, if your employer isn’t part of the ABU CLA, the legal minimum you’re entitled to remains at 8%, as set out by Dutch Civil Law (Burgerlijk Wetboek)

In the Netherlands, the standard holiday pay Netherlands is set at 8% of your gross annual salary. This means that if you earn a gross amount of €40,000 per year, you are entitled to at least €3,200 in holiday allowance before taxes​

However, it’s important to remember that Netherlands holiday pay does not include bonuses, expenses, or profit-sharing—it’s strictly based on your base salary​

Example Calculation:

Let’s break it down with some numbers:

• Gross Monthly Salary: €3,000
• Gross Annual Salary: €36,000
• Holiday Allowance (8%): €2,880

If your employer chooses to pay your holiday allowance NL as a lump sum in May or June, you’ll receive a nice financial boost just in time for your summer plans. Alternatively, some employers might pay it in monthly instalments, giving you a little extra each month

Your holiday pay in the Netherlands is typically 8% of your gross salary, but it can be 8.33% in certain cases, such as for temporary workers under specific collective labour agreements​.

This calculation is done on a pro-rata basis, meaning that if you’ve worked for only part of the year, you’ll receive a holiday allowance for the time you’ve been employed. It’s based on how many days you worked, including public holidays, sick leave, and holiday leave.​

The answer is most often in May or June. This is designed to give employees the financial freedom to plan a summer vacation just before the peak season​.

It’s important to check your employment contract to know exactly when and how your holiday allowance will be paid.

But there are exceptions. Employers may choose to:

• Pay holiday allowance monthly instead of once a year.
• Pay the accumulated allowance early if an employee’s contract ends before May.
• Include the holiday allowance in the final paycheck if the employment contract is terminated before the usual payout time.​

Lump Sum or Monthly Payments?

1. Lump Sum: The most common method is paying the allowance in one instalment (usually in May or June), which results in a significant paycheck boost for that month. For example, if your monthly salary is €5,000 and your holiday allowance is 8%, you’d receive a total of €9,800 in June—€5,000 salary + €4,800 holiday allowance​.
2. Monthly Payments: Employers can also pay the 8% holiday allowance on a monthly basis, adding it on top of your regular salary. For example, with a €5,000 monthly salary, you’d receive an additional €400 each month, making your total paycheck €5,400​

The answer is unfortunately yes! Like your regular income, holiday allowance Netherlands is subject to tax. In fact, it’s often taxed at a higher rate because it’s considered a “special reward,” much like a bonus.​

Taxation Rates:

The amount of tax you pay on your holiday allowance depends on your overall earnings. For an employee’s salary example:

• Income up to €73,031: 36.93% tax rate on holiday allowance.
• Income above €73,031: 49.5% tax rate​

Let’s look at an example of how taxation might work:

• Gross Holiday Allowance: €3,000
• Tax Deducted (36.93%): €1,108
• Net Holiday Allowance: €1,892

While the tax rates may seem high, the allowance is still a significant financial benefit, and understanding how it’s taxed can help you plan better​

Holiday allowance is just one aspect of the Netherlands holiday pay system. In addition to the 8% financial bonus, Dutch employees are legally entitled to a minimum of 20 paid vacation days per year if they work as a full-time employee​.

However, many Dutch companies go beyond this minimum holiday entitlement, offering between 25 and 30 vacation days, especially in sectors governed by collective labour agreements (CAOs). On top of that, employees also get paid time off on public holidays such as Christmas, King’s Day, and Easter.​

How Are Vacation Days Accrued?

According to the Dutch system, Vacation days are accrued over the course of the year. Even if you’re on maternity leave or sick leave, you still accumulate vacation days​. These days are separate from your holiday allowance and are meant to ensure employees take enough time off to relax and unwind.

Number of vacation days in the Netherlands

Working part-time or as an expat in the Netherlands? Good news—you’re still entitled to the 8% holiday allowance! For part-time employees, this holiday pay is adjusted pro-rata based on the number of hours worked. Even if you have a zero-hour contract, Dutch law ensures fair treatment—you still get your vacation allowance Netherlands, calculated from the total hours worked.

Expats also enjoy the same rights under Netherlands holiday pay laws. If you’re eligible for the 30% ruling (a tax advantage for expats), your holiday pay might even come with tax benefits

Yes! Although these allowances was originally meant to help employees unwind with a vacation, there’s no law requiring you to spend it that way. Whether you take a luxurious trip, save it for future expenses, or splurge on something you’ve been eyeing, the choice is entirely yours.​

Many employees use it to cover big-ticket items, summer holidays, or personal projects, but others may prefer to stash it away for emergencies or savings. Regardless of how you spend it, the holiday pay Netherlands gives you the financial flexibility to use it however it benefits you most.

Leaving your job before the usual holiday allowance payout in May or June? No worries—you won’t lose out! Any accrued holiday allowance will be included in your final paycheck, ensuring you receive everything you’re entitled to, even if your contract ends mid-year​

This is especially important for expats and temporary workers, whose contracts might not align with the typical payout cycle. Dutch labor laws guarantee fair treatment, so you’ll receive a prorated allowance based on the time you’ve worked, no matter when you leave the job.

The holiday allowance Netherlands arrangement is a key part of your compensation, providing a financial boost to relax, travel, or save for future needs. Whether it’s paid as a lump sum in May or June or distributed monthly, this allowance offers you the freedom to make the most of your time off.

Here’s a quick recap:

• Entitlement: 8% of your gross annual salary as holiday allowance.
• Payment Timing: Typically, in May or June, unless otherwise stated in your contract.
• Taxable: Yes, with the final amount depending on your income tax bracket.
• Vacation Days: At least 20 paid vacation days annually, on top of the allowance.

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Holiday allowance (vakantiegeld) is a mandatory benefit for employees in the Netherlands. It amounts to at least 8% of your employee’s gross salary and is intended to help cover vacation costs, though you can spend it on anything you like​

Holiday pay is typically paid in May or June as a lump sum. Some employers may opt to pay it monthly as part of your salary, depending on your employment contract.​

Yes, holiday allowance is taxable. It is subject to a higher tax rate than regular income because it’s considered a “special payment.” The exact tax rate depends on your overall income​.

Yes, part-time employees are entitled to holiday payment in the Netherlands. The amount is calculated pro-rata, based on the number of hours worked per employment period.​

If your employment ends before the usual holiday allowance payment, your accrued holiday pay will be included in your final salary​