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The 13th: Bonuses around the world

In some countries, workers are accustomed to a 13th month of pay (or even a 14th) as a bonus. What does that mean for payroll?

In many countries, employees expect a 13th month of salary. 

“The thirteenth” is often equal to a month’s salary and paid ahead of holidays such as Christmas, Lunar New Year or Eid al-Fitr, to help employees with expenses related to such periods. 

The 13th-month pay was originally paid as gratifica natalizia, or Christmas bonus, in Italy, and was codified in law there in the early 20th century. 

The tax implications of the 13th-month of pay vary depending on laws and regulations of the country concerned. In many countries it is considered taxable income subject to standard withholding, and in some countries with progressive tax rates the 13th-month pay can push an employee into a higher tax bracket for that month. Timing of the payment also affects taxes; if it is paid in December it may be counted as income for that tax year, but if it’s paid in January, it’ll be part of the next year’s income.

Some countries provide tax exemptions for certain categories of workers or for certain types of income such as bonuses, with the 13th-month pay regarded as one. And in some places, employees are given tax credits to offset the additional taxes incurred from the thirteenth. 

Countries with a thirteenth month

Latin America

The 13th-month pay is a legal requirement in many Latin American countries, including Argentina, Bolivia, Brazil, Colombia, Costa Rica, Peru, Mexico and Nicaragua. It’s not required by law but customary to pay a thirteenth in Chile. This is usually paid out in December, but in some countries, half is paid in December and the other half is paid at another time of year specified by the law. 


In Europe, 13th-month pay is mandatory in Greece, Italy, Portugal and Spain. In countries including Austria, France, Germany, the Netherlands, Slovakia and Luxembourg, such a bonus is customary in December but not required by law. In Finland, it’s common for employees to receive a summer bonus. Such bonus payments depend on the details of employment contracts, and are useful in attracting and retaining employees.

Africa and the Middle East

Thirteenth bonuses, usually paid in December, are not legally required but very common in Angola, Nigeria, Senegal, Mauritius and South Africa. In Saudi Arabia, employers must pay bonuses to employees at Eid al-Fitr, the end of the month of Ramadan. It’s also customary in the United Arab Emirates for employees to receive an end-of-year bonus.


Asian countries with a mandatory 13th-month pay include the Philippines, certain categories of workers in India, and Indonesia, where it is paid before Ramadan. In China, it is customary to be paid such a bonus at the Lunar New Year, and in Japan the 13th month comes in summer, with a 14th month paid in December.

How the 13th month is calculated

The calculation of the 13th month varies by country, but in most places, it is calculated as the annual base salary divided by 12. In Italy, the employee’s base salary is divided by 13. In Spain, the employee’s annual salary is divided into 14 equal parts to account for the 13th-month and 14th-month bonuses in summer and at Christmas. 

In Mexico, law states the 13th-month pay, known as aguinaldo, must be at least the salary for 15 working days, but some companies pay more if they are able.

In India, the 13th-month pay is a percentage (at least 8.33% and topping out at 20%) of the employee’s annual base pay.

In Brazil, the bonus amounts depend on several factors, including the employee’s gross salary, number of dependents, overtime worked, hazard pay and if the employee wants the payment in a single payment or in two installments. 

Tax implications for the 13th

Jonathan Merry, a taxation expert at Moneyzine, says whether the 13th-month salary is subject to tax depends on the country. 

“Taxation may be applied if the payments go beyond certain limits for an employee,” Merry says. “In the Philippines, for example, there’s a law that specifically addresses the 13th-month salary, making it non-taxable up to a certain point. So, if your 13th-month pay, along with any other benefits, is below 90,000 Philippine pesos ($1,584), you’re in the clear, tax-wise.”

He also describes the tax peculiarities on the 13th-month pay in Brazil and India. 

“In Brazil, the 13th-month salary is paid in two payments; the first one comes in November and usually doesn’t include any deductions or withholding taxes, but taxes are applied to the second payment in December,” Merry says. 

India mandates 13th-month pay only for certain categories of workers such as factory employees and low-income workers who earn less than 21,000 rupees ($255) per month. Merry says in these cases, the tax amount is calculated at a rate between 8.33% and 20% of the employee’s basic income.

“The rest of the pay is taxable as a part of the employee’s regular earnings,” says Merry.

In Mexico, a portion of the 13th month is not taxable. The tax-exempt amount is calculated by multiplying the legal minimum wage by 30 days. For example, if the daily minimum wage is $20, the tax-exempt amount will be $600.

Employees in Argentina pay taxes on the 13th-month salary, but recent income tax legislation has exempted workers that earn up to a monthly gross salary of 150,000 pesos ($286) from paying tax on the bonus. Italian employees also pay taxes on the 13th-month bonus, but new legislation is in the works to reduce the taxes paid on the tredicesima by all categories of employees.

In Paraguay, the 13th month is subject to income tax but those who earn up to 880,000 gaurani ($121) monthly are exempt from paying taxes on the bonus. In El Salvador, those earning up to $1,500 are exempt from paying taxes on their 13th-month pay. Payments over 90,000 pesos ($1,589) are subject to taxes in the Philippines, and in Austria, the 13th and 14th month salaries are taxed at a rate of 6%, which is lower than the normal tax rate.

The 13th salary payments are taxable as normal income in Greece, Portugal, Spain, Italy, Indonesia, Uruguay, Singapore, Japan, China, and Saudi Arabia.

The 13th-month pay is completely tax-free in Bolivia and other Latin American countries such as Costa Rica, Honduras, Guatemala, and Nicaragua.

14th month pay

Some countries, including Brazil, Greece, Guatemala, Peru, and Spain, also have an additional 14th month of pay. This is an extra compensation employers provide and could be a year-end or performance-based bonus. It is usually calculated as 1/14th of the employee’s annual salary or splits a 13th-month payment into two — so 50% of the usual monthly salary for the 13th- and 14th-month payments. 

The 14th-month salary may be paid at any time of the year (usually during summer, around July) and may depend on the employee’s performance or the performance of the company for that year. In the study People at Work 2023: A Global Workforce View, the ADP Research Institute found that bonuses were highly desired by employees, with 41% of workers surveyed expecting to receive a bonus in the next 12 months. So while holiday bonuses are valuable to workers, employers must be mindful that these financial offerings can have overtime and tax implications. Making sure such payments are accurate and follow local tax rules is essential to maintain employee trust while rewarding good work.

Adejoke Adeboyejo

Adejoke Adeboyejo is a freelance writer and journalist based in Lagos, Nigeria. Having worked in human resources for more than 12 years, she now writes about the workplace, women’s issues and the environment.