Holiday allowance in the Netherlands

Something that often comes as a nice surprise to expats in the Netherlands is the holiday allowance. By law, all employees in the Netherlands receive a holiday allowance (vakantiegeld) on top of their salary. 

What is the holiday allowance (vakantiegeld)?

The holiday allowance was first introduced in the Netherlands in the 1920s to encourage workers to go on holiday, at a time when travelling was expensive and beyond the reach of many. 

That logic still holds today, and employers continue to pay out the holiday allowance in the late spring to encourage their employees to book a holiday during the summer. However, you are not obliged to spend your holiday allowance on a holiday; many people choose to save it or even use it to buy themselves a different luxury. 

How much is the holiday allowance?

The holiday allowance amounts to 8% of your annual earnings (roughly one month’s salary). It is not paid on additional worker benefits like bonuses, expenses or profit distribution, but it is paid on overtime hours.  

Who is entitled to the holiday allowance? 

As a general rule, all workers in the Netherlands are entitled to a holiday allowance, even those working fixed-term or zero-hours contracts. Collective labour agreements might conclude that employees have no right to a holiday allowance, but this only applies if you receive at least 108% of the minimum hourly wage. 

If you earn more than three times the legal minimum wage, then you may have a reduced entitlement to the holiday allowance. This should be clarified in your employment contract. 

When is the holiday allowance paid out?

Most employers pay out the holiday allowance in a lump sum in May or June. Alternatively, your employer may opt to spread the holiday allowance over 12 months, giving you a higher salary each month rather than a lump sum in the spring. You should clarify with your employer what the arrangement is in your company. 

Holiday allowance calculator

To calculate your holiday allowance, you should take your gross monthly salary and multiply it by 12, then multiply this amount by 0,08. Alternatively, take your gross annual salary and multiply it by 0,08. 

For example, if you earn a monthly salary of 4.000 euros gross, your holiday allowance would total 3.840 euros (12 x 4.000 x 0,08). This will be paid out on top of your regular salary, a total of 7.840 euros. 

Tax on holiday allowance

The holiday allowance is subject to income taxes. It is classed as a form of income paid in addition to your regular salary, and therefore it incurs the highest applicable tax rate for the employee. 

In 2025, this means that your holiday allowance is taxed at 35,82% if you earn less than 38.441 euros per year, at 37,48% if you earn between 38.441 and 76.817 euros per year, and at 49,50% if you earn more than 76.817 euros per year. 

Holiday allowance vs holiday pay

Note that the holiday allowance is different from your holiday pay, although the terms are sometimes used interchangeably. Holiday pay is the regular salary that you continue to receive when you take annual leave while employed in the Netherlands; the holiday allowance is an additional bonus that you receive on top of your regular salary.