On 12 June 2026, the Dutch Central Bank (De Nederlandsche Bank, “DNB”) published a supervisory update outlining the findings of a review into the calculation and reporting of the Fixed Overhead Requirement (vastekostenvereiste, “FOR”) by investment firms and fund managers. The review follows DNB’s 2024 guidance and its announced supervisory focus on the FOR throughout 2025. According to DNB, the review identified several recurring deficiencies in how firms calculate and report their FOR, particularly regarding the treatment of deductible expenses and the inclusion of costs incurred by third parties on behalf of the firm.
What is the FOR?
Alongside the permanent minimum capital requirement and the K-factor requirement, the FOR is one of the three key prudential capital requirements under the Investment Firm Regulation (“IFR”). The FOR must amount to at least one quarter of a firm’s fixed overheads of the preceding year. Article 13(4) IFR and Delegated Regulation 2022/1455 provide for several deductible items when calculating the FOR, including employees’, directors’ and partners’ shares in profits and fees to tied agents.
Why is DNB focusing on it?
DNB has repeatedly drawn attention to the requirement, and has noted that firms regularly calculate and report the FOR incorrectly. DNB believes this to be concerning, as it may result in the capital requirement being incorrectly reported and potentially insufficient capital being held by firms in that case. In addition, firms may lack an accurate understanding of their prudential position, making it more difficult to identify, prevent and address potential issues in a timely manner.
Following the publication of guidance in 2024, DNB has now shared the most common issues identified during its (follow-up) review.
Key Takeaways
- DNB continues to observe shortcomings in FOR calculations and reporting despite earlier guidance issued to the sector;
- Firms frequently apply deductions incorrectly, particularly in relation to management fees, bonuses, non-ordinary expenses and shared commissions and fees;
- Variable remuneration may only be deducted where the relevant conditions are contractually documented and sufficiently linked to the firm’s net profit;
- Non-recurring expenses from non-ordinary activities may only be deducted where they are both non-recurring and related to non-ordinary activities;
- Costs incurred by third parties on behalf of a firm that are not recharged to the firm must be included in the FOR calculation.
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Areas where DNB identified deficiencies
Bonuses and variable remuneration
DNB observed that the conditions attached to variable remuneration are not always contractually documented or sufficiently linked to the firm’s net profit. Both conditions must be met for variable remuneration to qualify as a deduction from the FOR. Firms should therefore review their remuneration arrangements and ensure that any deductions are adequately supported by contractual documentation.
Non-recurring expenses related to non-ordinary activities
DNB emphasises that a non-ordinary expense must satisfy both criteria of being (i) non-recurring and (ii) related to non-ordinary activities in order to qualify as a deduction from the FOR. Meeting only one of these criteria is insufficient. Costs associated with ordinary business activities, such as marketing initiatives or events organised for clients or employees, do not qualify as expenses relating to non-ordinary activities and therefore cannot be deducted.
Shared commissions and fees
DNB notes that shared commissions and fees may only be deducted where the payment obligation arises after the corresponding revenue has actually been received. In practice, arrangements under which a firm passes on a fixed fee to a third party based on assets under management will generally not qualify as a deduction, as the firm’s payment obligation exists independently from the client’s payment obligation. DNB indicates that this topic will be referred to EBA and the European legislators for further clarification. Until further guidance is provided, firms are expected to apply DNB’s interpretation.
Costs incurred by third parties
DNB reiterates that costs incurred by third parties for activities necessary to the operation of the business must also be included in the firm’s total cost calculation where those costs are not recharged to the firm. Examples include office space provided by a parent or sister company free of charge, or personnel employed by another group entity but used by the firm. Such costs should be allocated appropriately and taken into account when calculating the FOR.
What should firms do?
In light of DNB’s findings, investment firms and fund managers should consider the following actions:
- Review whether deductions for variable remuneration comply with the applicable IFR requirements and are supported by appropriate contractual documentation;
- Reassess whether non-recurring expenses deducted from the FOR genuinely relate to non-ordinary activities;
- Review commission and fee-sharing arrangements to ensure that deductions are applied consistently with DNB’s interpretation;
- Identify costs incurred by group entities or other third parties that should be included in the firm’s total cost calculation for FOR purposes.
How can we help?
We regularly assist investment firms and fund managers with prudential requirements under the IFR/IFD framework, including FOR calculations, qualitative capital requirements and regulatory reporting. We can support firms in reviewing their FOR methodology, assessing the eligibility of deductions and preparing for supervisory reviews by DNB.