Calculation of fixed overheads requirement (FOR)
The FOR is calculated by taking 25% of the firm's fixed overheads for the previous financial year. In order to calculate the fixed overheads, the DRFO takes the total fixed costs of the preceding financial year, as determined by the firm's external auditor. From these total overheads, firms must subtract the following items. We have numbered them in line with the reporting form:
2.1. Fully discretionary staff bonuses
2.2. Employees', directors' and partners' shares in profits, to the extent that they are fully discretionary
2.3. Other appropriations of profits and other variable remuneration, to the extent that they are fully discretionary
2.4. Service commission and fees paid that are directly related to revenue
2.5. 65% of the fees to tied agents. See also our explanatory memo on this subject
2.6. Non-recurring expenses from non-ordinary activities
Expenses incurred by third parties on behalf of or for the account of the firm must be added to the firm's total costs.
With regard to the deductible items mentioned in the DRFO, it falls to the company to duly motivate and substantiate why certain costs should qualify as variable costs. Without substantiation supported by underlying contracts or agreements, DNB will regard these costs as non-deductible costs. Costs that are not included in the list above cannot be presented as deductible costs. Only the costs listed in the DRFO can be regarded as deductible items for the FOR.
For the purposes of items 2.2 and 2.3, the shares in profits of directors and partners, 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.