this post was submitted on 21 Nov 2023
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Something funny I've seen is that in Norway it's customary to distribute the income tax deduction over 11.5 months instead of 12, so that in November or December people only get deducted half the regular tax on their payslip. This is done to ensure that everyone has money for Christmas. It's so dumb and beautiful that I can't help but love the idea.
Probably a decent economic stimulus, government probably does not end up taking much of a loss with this.
Government gets a gain from it -- it gets its money sooner that way!
It's actually only 10.5 months. There is no tax on your June payslip, that's when most people get their vacation pay.
Yes that's also very common, but that's a little more complicated. It's only an option for people who have had the same job for more than a year and for those who agree on settling the entire holiday pay in June even if they don't actually go on holiday then. It varies how people do it.
Unlike Norway, most EU countries tax the holiday on accrual so it's always without a deduction when paid out regardless of when. Norway taxes it in the payment year though it is spread over the other months.
There are pros and cons to both ways. Personally I think that EU has the better one, not because of the taxation but because it's not necessary to accrue holiday in advance.