A thirteenth month salary is an additional payment equal to one month's pay, usually made in December, sometimes split between December and the summer. In some countries it is a legal entitlement, in others a collective agreement obligation, and in a few it is simply a widespread custom that most employers follow.
It matters for two practical reasons. It changes what a quoted annual salary means for monthly cash flow, and in several countries it is taxed differently from ordinary pay.
Where it exists
Why it changes the monthly figure
An Austrian job advertised at 56,000 euros a year is not paying 4,667 euros a month. It is paying fourteen instalments of 4,000 euros, two of which arrive in June and November. Monthly cash flow is 14.3% lower than the naive division suggests, and the annual total is unchanged.
The reverse error is more common and more expensive. Someone comparing a German offer of 60,000 euros with an Austrian offer of 60,000 euros should note that the Austrian figure is often quoted as 14 payments while the German one is 12. If the Austrian employer means 14 times 4,286 euros, the two offers are identical in annual terms. If the advert means 14 times 5,000 euros, the Austrian offer is 16.7% larger.
Always ask how many instalments the number represents. In Austria, Spain, Portugal, Greece and Switzerland the answer is frequently not twelve.
The Austrian rule, which is genuinely unusual
Austria taxes the thirteenth and fourteenth payments, the Urlaubsgeld and Weihnachtsgeld, at a flat 6% rather than at the marginal rate, subject to an annual ceiling and a small exempt band. Social contributions still apply, but income tax on those two payments is charged at a fraction of the rate the other twelve payments face.
For an employee whose marginal rate is 42% or 48%, that is a substantial and entirely legal advantage. It also explains why Austrian net pay comes out better than the headline tax schedule suggests, and why annualised Austrian comparisons need care. The mechanics are set out in the guide to Austria's 13th and 14th salaries.
The Dutch and Belgian versions, which are not bonuses
Dutch holiday allowance is a statutory 8% of annual salary, normally paid in May. It is not discretionary and it is not extra: a contract quoting 45,000 euros a year usually means 45,000 including the allowance, so the monthly figure is around 3,472 euros with a larger payment in May.
The Dutch tax authority applies a special rate table to it, which is higher than the ordinary monthly rate and frequently produces an over-deduction that is refunded through the annual return. The full explanation is in the guide to vakantiegeld.
Belgium goes further, with double holiday pay in May or June plus a year-end bonus in most sectors, both subject to a special withholding scale that can take more than 50% at source. Combined with the highest ordinary deduction rate in the OECD, examined in Belgium's tax wedge, it produces a payslip pattern that is difficult to budget around.
What to check before signing
- Ask explicitly how many payments the annual figure is divided into. Twelve, thirteen and fourteen are all normal answers.
- Ask whether extra payments are contractual, collectively agreed or discretionary. A discretionary thirteenth month is a bonus with a friendly name.
- Ask how they are taxed. Austria at 6% and Belgium at a special heavy rate are opposite ends of the same idea.
- Convert everything to an annual gross before comparing offers, then run that annual figure through the local rules.
Enter the annual gross, not the monthly one, into any Austria Salary Calculator. The tools work on annual figures precisely because instalment patterns differ so widely.