Wednesday 19 February 2020

Tax changes will hit holiday pay for average earners this year

Piggy bank with eurosMany people will be in for a shock when they get their holiday pay included in their May salaries this year, according to wage processing firm ADP.

Complicated changes in the tax system mean that holiday pay will be effectively taxed more heavily than in previous years, website reports.

For example, people earning an average income of €2,660 a month gross will get €59 less holiday pay than last year, and people earning €6,655 a month gross will see their holiday pay slashed by €256. Those on the minimum wage (€1,500) will not be affected by the changes, ADP said.

The tax system changes should have been introduced last year and have already led the tax office to claim money back from tens of thousands of taxpayers.

As well as paid holidays, all Dutch workers are entitled to a holiday allowance equal to 8% of their gross yearly salary. This is usually paid out at the end of May and is included as basic salary for tax purposes.

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