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Calculation of fixed overheads requirement (FOR)


Investment firms and investment fund managers as referred to in Section 3:57 of the Financial Supervision Act (Wet op het financieel toezicht - Wft) must use the fixed overheads requirement (FOR) as a basis for calculating the solvency requirement. The FOR is calculated on the basis of Article 97 of the Capital Requirements Regulation (CRR) and further elaborated in Commission Delegated Regulation (EU) No 2015/488 as regards own funds requirements for firms based on fixed overheads (DRFO).

Published: 11 November 2015

Latest update: 13 February 2024

The fixed overheads requirement (FOR) referred to in Article 13 of the Investment Firms Regulation (IFR) is one of the own funds requirements for investment firms. The other requirements are the permanent minimum capital requirement and the K-factor requirement. More detailed information on these other requirements can be found on the following Open Book on Supervision page: Prudential assessment conducted within the context of granting investment firms authorisation. In addition to the IFR requirements that follow from Article 13 of the IFR, the European Commission issued Commission Delegated Regulation (EU) 2022/1455 of 11 April 2022 supplementing Regulation (EU) 2019/2033 of the European Parliament and of the Council with regard to regulatory technical standards for own funds requirements for investment firms based on fixed overheads (Delegated Regulation (EU) 2022/1455). This sets out the FOR in more detail.

Level of the FOR

Under Article 13(1) of the IFR, the FOR must be at least one quarter of the fixed overheads of the preceding year. To calculate the overheads, the figures of an investment firm’s most recent audited annual financial statements after distribution of profits must be used, pursuant to Article 1(1) of Delegated Regulation (EU) 2022/1455.

The following must be taken into account: if third parties, including tied agents, have incurred fixed expenses on behalf of the investment firms that are not already included within the total expenses of the investment firm in accordance with the annual financial statements, those fixed expenses shall be added to the total expenses of the investment firm. If a breakdown of the third party’s expenses is available, an investment firm must add to the figure representing the total expenses only the share of those fixed expenses applicable to the investment firm. If such a breakdown is not available, an investment firm must add to the figure representing the total expenses only its share of the third party’s expenses as it results from the business plan of the investment firm.

An investment firm that has not been in business for one full year from the date on which it started providing investment services or performing investment activities is subject to Article 13(3) of the IFR. Such an investment firm is permitted to use the projected fixed overheads included in its projections for the first 12 months’ trading. These estimates must have been submitted concurrently with its application for authorisation, and are used to comply with the FOR.


Several deductions may be considered when establishing the FOR. It is the firm's responsibility to provide reasoned and well-founded evidence of the costs that can be considered as deductions. If no substantiation evidenced by contracts or agreements is submitted, De Nederlandsche Bank (DNB) will consider these costs as non-deductible. Below is a non-exhaustive list of deductions for the FOR:

You can swipe the table to see more columns.
Deduction in the IFR Supplement/explanation in Article 1 of Delegated Regulation (EU) 2022/1455
a. Staff bonuses and other remuneration, to the extent that they depend on the net profits of the investment firm in the respective year

Paragraph 4: There is a dependence on the net profits in the respective year if both of the following conditions are met:

a. The staff bonuses or other remuneration to be deducted have already been paid to employees in the year preceding the year of payment, or the payment of the staff bonuses or other remuneration to employees will have no impact on the firm’s capital position in the year of payment;
b. With respect to the current year and future years, the firm is not obliged to award or allocate further bonuses or other payments in the form of remuneration unless it makes a net profit in that year.

b. Employees’, directors’ and partners’ shares in profits* Paragraph 3: shares in profits must be calculated on the basis of the net profits.
c. Other appropriations of profits and other variable remuneration, to the extent that they are fully discretionary;  
d. Shared commission and fees payable which are directly related to commission and fees receivable, which are included within total revenue, and if the payment of the commission and fees payable is contingent on the actual receipt of the commission and fees receivable  
e. Fees to tied agents  
f. Non‐recurring expenses from non‐ordinary activities Examples of these deductions include: one-off legal fees, or costs of a one-off nature not ensuing from a contractual obligation. **

* For the purposes of applying the deduction for directors’ and partners’ shares in profits, the firm must always qualify as a fixed component at least that part of the remuneration that the Tax and Customs Administration regards as regular wages. If a higher amount has been laid down in a notarised management contract, this higher amount must be regarded as the fixed component.

** This therefore does not include costs related to an extension, authorisation or application for authorisation. It also excludes marketing costs and costs for staff activities.

In addition to the items listed above, an additional list of possible deductions can be found in Article 1(6) of Delegated Regulation (EU) 2022/1455. These deductions apply provided that they are included under total expenses in accordance with the relevant accounting framework. The following is a list of these potentially deductible items.

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Additional deductible items listed in Article 1 of Delegated Regulation (EU) 2022/1455
a. Fees, brokerage and other charges paid to central counterparties, exchanges and other trading venues and intermediate brokers for the purposes of executing, registering or clearing transactions, only if they are directly passed on and charged to customers. These do not include fees and other charges necessary to maintain membership or otherwise meet loss-sharing financial obligations to central counterparties, exchanges and other trading venues.
b. Interest paid to customers on client money, if there is no obligation of any kind to pay such interest.
c. Expenditures from taxes where they fall due in relation to the annual profits of the investment firm.
d. Losses from trading on own account in financial instruments.
e. Payments related to contract-based profit and loss transfer agreements according to which the investment firm is obliged to transfer, following the preparation of its annual financial statements, its annual result to the parent company.
f. Payments into a fund for general banking risk in accordance with Article 26(1), point (f), of the CRR.
g. Expenses related to items that have already been deducted from own funds in accordance with Article 36(1) of the CRR.

Article 2 of Delegated Regulation (EU) 2022/1455 allows commodity and emission allowance dealers to deduct expenditure on raw materials in connection with an investment firm trading in derivatives of the underlying commodity.

Material change in activities

In case of a material change in the activities of an investment firm, DNB may adjust the FOR, as required by Article 13(2) of the IFR. A material change in activities is determined according to the following conditions, as set out in Article 3 of Delegated Regulation (EU) 2022/145:

  1. A change (increase or decrease) in the investment firm's business activities results in a change of 30% or greater in the firm’s projected fixed overheads in the current year.

  2. A change (increase or decrease) in the investment firm's business activities results in changes in the firm’s own funds requirements based on projected fixed overheads equal to or greater than €2 million in the current year.

For this reason, the reporting form relating to the FOR contains a question about the projected fixed overheads for the current financial year, in addition to the fixed overheads as specified in the annual financial statements.

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