Vakantiegeld: The Netherlands Holiday Allowance Explained
New arrivals in the Netherlands are often surprised to find an extra payment land in their account in May: vakantiegeld, or holiday allowance. It is not a bonus, a discretionary top-up, or a company perk. It is a statutory right for almost all Dutch employees, set out in the Wet minimumloon en minimumvakantiebijslag, and the minimum amount is 8% of your annual gross salary. For someone earning €60,000 a year, that is €4,800 extra, typically arriving in a single lump in May or June. The question most people ask next is: how much of that actually reaches my account after tax?
What vakantiegeld is and where the 8% comes from
The 8% figure is a legal minimum, not an average. Most employment contracts and collective agreements (CAO) stick to exactly 8%, though some sectors and employers pay more. The allowance is calculated as 8% of total gross earnings over the preceding 12 months, including fixed salary and certain fixed allowances. Variable pay like overtime, one-off bonuses, and employer pension contributions are typically excluded from the base.
The payment builds up monthly from June to May each year, accruing as your employer sets money aside. Most employers pay it out in May or June as a single lump sum, though it is permissible under Dutch law to spread it across the year instead if the employment contract says so. Some flex-contract and temporary-agency workers receive vakantiegeld monthly on top of their regular pay rather than as an annual lump.
How it is taxed
Vakantiegeld is treated as normal employment income under Dutch loonheffing (wage tax). There is no separate or more favourable tax rate for it, and no allowance that applies specifically to this payment. Your employer withholds income tax and, where applicable, social contributions on the combined amount in the month of payment, just as they would on any other part of your salary.
Because the vakantiegeld arrives in a single month alongside your regular salary, the combined gross in that month can be noticeably higher than a normal payslip. The loonheffing system handles this correctly on an annual basis: payroll software calculates withholding for the year based on projected annual earnings, so the May payslip reflects the full-year tax position rather than overtaxing the lump sum in isolation. The net effect is simply that May's payslip is larger than usual, with a corresponding tax withholding that keeps your annual effective rate consistent.
What you actually keep from vakantiegeld, at different salary levels
The proportion of vakantiegeld you keep after tax depends on your marginal income tax rate, since the allowance is taxed at the rate that applies to the top slice of your income. At a €50,000 annual salary, where the marginal rate is 37.56% (income tax on earnings above €38,883), the €4,000 vakantiegeld nets to roughly €1,980: you keep about 49.5% of the gross allowance. At €70,000, the €5,600 vakantiegeld also nets to roughly 49–50% for the same reason; the marginal rate is similar, and the tax credits have partially phased out by this income level.
At higher salaries, where part of the vakantiegeld falls into the 49.5% bracket (above €78,426), the net proportion falls further. Someone earning €100,000 receives €8,000 in vakantiegeld; with most of it taxed at 49.5%, roughly €3,520 of that reaches the bank account (44%). The broad rule of thumb is: expect to keep around 44–52% of your vakantiegeld depending on your bracket, not the full 8% of gross.
Does vakantiegeld affect social security contributions?
For most full-time employees, the volksverzekeringen contributions (AOW, ANW, WLZ) are already capped at the first €38,883 of gross income per year. If your regular salary already exceeds that ceiling before vakantiegeld is added, the extra payment does not attract additional social security contributions. It only attracts income tax on the full amount.
For employees earning below €38,883 in base salary, the vakantiegeld can push total annual earnings above the cap, meaning part of the allowance falls within the combined 35.75% rate (8.10% income tax plus 27.65% volksverzekeringen) and part above it. In practice this mainly affects lower-earning employees, and the distinction is handled automatically by payroll software rather than something the employee needs to track manually.
A note for employees who leave mid-year
If you leave a job before the May payment date, your employer owes you the vakantiegeld that has accrued during the months you worked. This is typically paid out with your final salary, calculated as 8% of gross earnings since the last vakantiegeld payment. This is a legal obligation: employers cannot withhold accrued vakantiegeld, and it should appear as a separate line on your final payslip.
New arrivals who start a Dutch job in the second half of the year will often receive their first vakantiegeld in the following May, covering only the months since they started. This means the first payment is smaller than a full 8% of annual salary, but subsequent years settle into the standard annual rhythm.
Vakantiegeld versus a 13th month: what is the difference?
Vakantiegeld is sometimes described loosely as a 13th month's pay, but the two are not exactly the same thing. A true 13th month payment, where the employer pays one additional month's gross salary in December, amounts to 8.33% of annual salary (one twelfth of the annual total). The statutory vakantiegeld minimum is 8%, which is slightly less, and is calculated differently. Some employers pay both a full 13th month in December and the statutory 8% vakantiegeld in May; others pay only the 8% and call it a holiday allowance. Checking your employment contract or CAO for the exact terms saves a lot of uncertainty when the May payslip arrives.
Frequently Asked Questions
Do all Dutch employees get vakantiegeld?
Almost all. Vakantiegeld is a statutory right for most employees under Dutch employment law. The main exceptions are some freelancers and ZZP (self-employed) workers who are not covered by an employment contract, and certain categories of directors. If you have a standard Dutch employment contract, vakantiegeld applies.
Can my employer pay vakantiegeld monthly instead of annually?
Yes, if the employment contract or applicable CAO allows for it. Some temporary and flex-contract roles pay vakantiegeld as a percentage added to each monthly salary, rather than as a May lump sum. Check your contract to see which arrangement applies, as it affects how you plan around the expected payment.
Is vakantiegeld taxed more heavily than regular salary?
No, it is taxed at exactly the same rate as regular salary. There is no special higher or lower rate. The month you receive it, your combined gross income is higher than usual, so more of it may fall into a higher bracket for that month's withholding calculation, but annual payroll software adjusts for this and your effective annual rate is the same as it would have been otherwise.
How does vakantiegeld interact with the 30% ruling?
If you have the 30% ruling, vakantiegeld is included in the gross salary that the ruling applies to, assuming it is part of your agreed employment income. Your employer designates 30% of the vakantiegeld amount as a non-taxable allowance alongside 30% of regular pay. This means the after-tax retention rate on vakantiegeld is significantly higher for 30%-ruling recipients than for standard employees.