External leave saving through a foundation can be realistic for a smaller participant group

Publication date: 20 August 2026

When people think of external leave saving, they often think of sectors or large employers. In practice, however, a smaller participant group can be precisely the reason for placing leave assets in a separate foundation.

The rationale for external leave saving is to prevent high provisions on the employer’s balance sheet and to safeguard accumulated leave assets in the event of the employer’s bankruptcy. The latter provides employees with additional assurance that the funds reserved for them will remain available for future leave.

Leave saving can be a distinctive employment benefit in a tight labour market, for example for employees who wish to take a sabbatical or bridge the period leading up to the state pension age with accrued leave.

A foundation offers a transparent structure in which employees’ accumulated leave entitlements are legally separated from the employer’s assets. With a limited number of participants, administration, governance and communication are generally manageable.

At the same time, such a structure requires very careful consideration and preparation. Is there sufficient justification for external leave saving? Is there enough interest among employees? Does the structure comply with the relevant legal and tax requirements and conditions? Have the accounting and financial reporting implications been adequately assessed?

It is advisable to involve at least a tax lawyer and an accountant from the outset. They can assess whether the arrangement is fiscally sustainable and how it should be administered and reflected financially. The cooperation of a bank, as contractual counterparty of the foundation, is also essential. Obtaining prior approval from the Dutch Tax Authorities is important, as there is no clear statutory framework governing these arrangements.