Year-End Bonus ≠ 13th Month 🗓️

The terms “year-end bonus” and “13th month” are often used interchangeably. That is understandable, since they are very similar. Both are annual extra payments from your employer, usually issued in December.

However, there are key differences:

• The year-end bonus is a percentage of your gross annual salary. Sometimes, a minimum amount is agreed upon as the bonus.
• The 13th month is a fixed bonus equal to one full gross monthly salary—essentially an extra paycheck.

Want to know more? Read: Everything You Need to Know About the 13th Month.

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What Is a Year-End Bonus? 🚀

The year-end bonus is an amount you receive from your employer once a year. It is typically 4% to 8% of your gross annual salary - roughly equivalent to half to a full month’s salary. A year-end bonus is not legally required but is more of a gesture of appreciation from your employer.

Whether or not you receive a year-end bonus depends on your collective labor agreement (cao), company policy, or employment contract. Conditions vary by organization, but most bonuses are paid out in December—making it a nice financial boost for the holiday season.

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How to Calculate Your Year-End Bonus 🤑

Curious about the amount of your year-end bonus? You can calculate it yourself. Your cao or employment contract will state the percentage of your gross annual salary that applies. You will also find your gross annual salary on your payslip. With these two numbers, you can estimate the bonus amount.

Example:

Suppose your gross annual salary is €35,800 and the applicable cao sets the year-end bonus at 5%. 35,800 × 0.05 = €1,790
That means you will receive a year-end bonus of nearly €1,800 in December.

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How Much Tax Will Be Deducted from a Year-End Bonus? 💸

Important: the amount you calculate is before taxes. In the Netherlands, you usually take home less net from a bonus than from your regular salary. That is because bonuses are taxed at a higher rate as they are considered a special form of income. For a more accurate estimate, use the wage tax table for special payments.

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Track Your Income with Grassfeld 📱

A year-end bonus is a welcome extra income stream. To keep an overview of all your income and spending, you can use Grassfeld.

This free app not only categorizes your expenses so you know where your money goes—it also shows you exactly how much comes in each month and year. Grassfeld helps you stay in control of your personal finances. Download the app now in your app store and experience the benefits yourself!