Every May, workers in the Netherlands receive an extra payment in their bank account which initially confounds many newcomers: the vakantiegeld. Some mistake it for a bonus, others don’t understand why their payslip looks different that month, and almost everyone asks the same question upon seeing it: why are they deducting so much in tax?
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In this article, I’ll explain what exactly the vakantiegeld is, how it’s calculated, how much you actually keep in your pocket, and the truth behind the myth of “May is the month when you pay the most tax”.
What is the vakantiegeld?
The vakantiegeld (literally “holiday money”) is a mandatory payment equivalent to a minimum of 8% of your gross annual salary, which your employer accrues throughout the year and pays to you in one go, generally in May. It’s neither a bonus nor a gift: it’s your own money, simply paid deferred.
The original logic was for workers to have money available to cover their summer holidays. Over time, it became a standard employment right enshrined in Dutch law (Wet minimumloon en minimumvakantiebijslag).
Some employers distribute it monthly or pay it at another time of the year, but the most common practice is a single payment in May. Your CAO (sector collective agreement) may stipulate a percentage higher than the minimum 8%.
How much are you entitled to?
The calculation is simple:
Gross annual salary × 8% = gross vakantiegeld
- Salary of €2,000/month → €24,000/year → €1,920 vakantiegeld
- Salary of €2,500/month → €30,000/year → €2,400 vakantiegeld
- Salary of €4,000/month → €48,000/year → €3,840 vakantiegeld
If you started working mid-year or had periods without a contract, the vakantiegeld is calculated proportionally to the months worked.
The big question: Do I pay more tax in May?
This is the most common question. The short answer is: a special higher rate is not applied to the vakantiegeld. It’s taxed exactly the same as the rest of your salary, within the progressive box 1 system. But there’s a reason why May seems different and deserves a thorough explanation.
In May, your employer pays you two things at once: your usual monthly salary plus the 12 accrued months of vakantiegeld. This means your gross income that month is significantly higher than any other month of the year. And since the Dutch system is progressive —the more you earn, the higher percentage you pay— part of that extra payment may fall into a higher tax bracket than your usual salary.
The income tax brackets for 2025 are:
- Up to €38,441 in total annual income: 35.82%
- Between €38,441 and €76,817: 37.48%
- Above €76,817: 49.50%
If you earn €30,000 annually, your vakantiegeld of €2,400 does not push you into any higher bracket, and the withholding tax in May is the same as the rest of the year. But if you earn €74,000 and the vakantiegeld is €5,920, that payment takes you above €76,817, and a portion is taxed at 49.50%.
Two examples with real numbers
Example A: Salary of €30,000 annually
- Gross vakantiegeld: €2,400
- All in the 35.82% bracket
- Approximate withholding: ~€860
- Net vakantiegeld you receive: ~€1,540
Example B: Salary of €72,000 annually
- Gross vakantiegeld: €5,760
- Most in the 37.48% bracket, and a small part crosses into the 49.50% bracket
- Approximate withholding: ~€3,220
- Net vakantiegeld you receive: ~€2,540
In the second case, it might indeed seem like “they take a lot,” but it’s not because the vakantiegeld is taxed differently: it’s because your total income that month is higher, and the system registers it.
Agency workers: be careful how vakantiegeld is paid
If you work or have worked through a temporary employment agency (uitzendbureau), the vakantiegeld may operate differently from the norm. There are two common methods used by agencies:
- Accrued and paid in May: same as the standard system. You’ll see it reflected in your monthly payslip as a growing reserve.
- Included in the hourly rate (inclusief vakantiegeld): some agencies include the 8% directly in the hourly rate they pay you, so you don’t receive an extra payment in May — you’ve already collected it throughout the year, distributed in each payslip.
Check your contract or ask the agency which of the two methods applies to you. If it’s the second method and you receive the same amount in May as in other months, that’s normal: they don’t owe you anything extra, you’ve already received it.
Self-employed (ZZP’er): vakantiegeld is not automatic
If you work as a self-employed person (ZZP’er), the law does not oblige anyone to pay you vakantiegeld. You are your own employer, so it’s up to you to include it in your daily or hourly rate and set it aside during the year. Many self-employed individuals calculate their rate by adding an extra 8% to what they need to earn and set it aside each month in a separate account to have it available in the summer.
What to do with your vakantiegeld when it arrives?
Here, everyone has their own strategy, but some common options include:
- Set it aside for holidays: for what it was designed. If you plan to travel to LATAM in the summer, it’s the perfect time to have the budget ready.
- Extra mortgage repayment (extra aflossen): many mortgages allow you to repay up to 10% of the capital annually without penalty. May is a good time to do so, although it’s not always the best financial option — it depends on your interest rate and other investment alternatives.
- Emergency fund: if you don’t yet have 3–6 months of fixed expenses in reserve, the vakantiegeld is an opportunity to build it.
- Invest: if you already have your emergency fund covered and your mortgage under control, investing your vakantiegeld in an index fund is an option many Dutch people use.
To better understand the tax system in which the vakantiegeld fits, you can read The income tax system in the Netherlands. And if you have extra income in addition to your salary, in Extra income in the Netherlands: how much tax you pay we explain how progressive tax brackets are calculated in detail.
Do you have questions about how your vakantiegeld is calculated or are you unsure about which method applies to you with your agency? Leave them in the comments.
Besides saving, have you thought about growing your money? Brand New Day is a Dutch low-cost savings, investment, and pension provider, with index funds and tax-advantaged accounts.
