Fixed, unavoidable costs – how to find the numbers and documents you will need

Enterprises must have fixed, unavoidable costs in order to be eligible for grants.

By ‘fixed, unavoidable costs’, we mean costs which cannot be reduced in the short term in line with the enterprise’s level of activity. Costs that can typically be reduced include costs that vary with turnover or the quantity og goods and services being produced, or which are attributable to time-limited assignments, deliveries etc. Long-term manufacturing contracts with a duration of more than one year are not to be considered to be time-limited in this context.

To be considered as fixed and unavoidable, a cost must be linked to an agreement established before 1 September 2020.

Fixed, unavoidable costs must be allocated evenly over the period during which they are incurred.

Costs recognised under other items in the income statement may also be covered. The decisive factor is whether the nature of the costs is such that they can be attributed to the listed items in the income statement and that this can be documented.

The following costs can be included in applications:

This cost type includes costs attributable to the leasing of commercial premises used by the enterprise. Only the fixed component of the rent may be included. If the rent also includes a variable component, this component must not be included. If the rent is reduced during the period in question, it is the reduced rent that you must enter.

The rental of company holiday homes, etc. must not be included.

The component of the rental cost that is attributable to additional services must not be included. Examples of additional services are service agreements and staffing.

The rental amount must be distributed evenly over the period that is covered by the rental amount. The component of the rental or leasing cost that constitutes variable rent must not be included. The component of the rental or leasing cost that concerns additional services must also not be included. Examples of additional services are service agreements and staffing.

The cost of operational and financial leasing may be included and accrued in the same way as other rental costs, regardless of the items under which the leasing cost is recognised in the enterprise’s income statement, and regardless of how the leasing cost is accrued according to the accounting standard that the enterprise uses. In the case of leasing, the rental amount for the period must be distributed evenly over the period covered by the leasing.

This cost type includes the cost of electricity for lighting and heating. Expenses for electricity grid rental are also covered.

Manufacturing companies must allocate the electricity they use for manufacturing purposes to cost of goods, and this component of the cost of electricity/energy is not covered here.

This type of cost includes official taxes and charges for refuse collection, water, sewerage and cleaning, etc.

Only official taxes and charges are covered, e.g. general cleaning services are not covered. Property tax is not considered to be a fixed, unavoidable cost.

To determine the monthly cost of taxes and charges, the amount must be divided by the number of months that the tax or charge covers.

This cost type includes other rental costs, such as the renting of machinery, fixtures and fittings, vehicles, etc.

The rental amount must be distributed evenly over the period that is covered by the rental amount. The component of the rental or leasing cost that constitutes variable rent must not be included. The component of the rental or leasing cost that concerns additional services must also not be included. Examples of additional services are service agreements and staffing.

The cost of operational and financial leasing may be included and accrued in the same way as other rental costs, regardless of the items under which the leasing cost is recognised in the enterprise’s income statement, and regardless of how the leasing cost is accrued according to the accounting standard that the enterprise uses. In the case of leasing, the rental amount for the period must be distributed evenly over the period covered by the leasing.

This cost type includes costs for external accountants and auditors.

You cannot include expenses for assistance in connection with applications for funding under the compensation scheme.

Expenses incurred during the year that are attributable to annual financial statements must be distributed evenly over the year, with a share of 1/12 per month. Costs attributable to quarterly accounts must be split between three months.

Costs incurred in the preparation of financial statements and auditing need not relate to agreements established before 1 September 2020. If the year’s cost for the preparation of financial statements is unknown, you must provide your best estimate of the cost.

Costs for electronic communication include phone, mobile phone, internet, etc. Only include costs which are linked to the enterprise and the period that the application concerns.

Here, you can also enter costs from item 6800 of the Business Tax Return.

This cost type includes costs that the enterprise has incurred for insurance and charges for vehicles.

Insurance premiums and fees are usually paid for a longer period. The amounts must therefore be distributed equally between the months in the period covered by the premium or fee.

Deductible membership fees include membership fees for employers’ associations and national professional and business organisations which aim to safeguard the interests of employers with respect to workers.

In order to determine a monthly cost, the membership fee must be divided evenly between the number of months that the membership fee covers.

This cost type includes costs that the enterprise has incurred for insurance policies. Insurance policies which must be entered in the income statement under an item other than 7500, such as insurance policies which constitute salary or personnel costs or transport costs, cannot be included.

In order to determine the monthly cost, the insurance premium must be distributed evenly over the period that the premium covers. Variable components of insurance premiums cannot be included as a fixed, unavoidable cost.

Accrued interest costs on debts to banks and credit institutions and bond loans, less interest income on own lending, deposits and bonds, are considered to be fixed, unavoidable costs.

Interest costs to non-financial institutions may also be included for the component of the interest cost where the lender has an opposing interest cost of the same amount on debt from banks and credit institutions and bond loans. Where the net interest cost becomes negative, it is considered to be zero.

Foreign exchange losses and gains must not be included under interest costs and income when calculating the net interest cost.

For the grant period, only interest costs of up to 1.5 percent of the loan amount for the loan concerned as of the first day of the grant period may be included as a fixed, unavoidable cost.

Enterprises that sell services where live animals form a necessary element can enter essential wage costs and essential costs relating to animal husbandry, such as costs for feed and veterinary services.

‘Essential wage costs’ means wages, employer’s National Insurance costs, holiday pay and pension expenses linked to wage payments. Insurance premiums are not included.

Examples of services which fall under this rule are zoos, riding schools and dog sledding with tourists.

To be considered as fixed and unavoidable, a cost must be linked to an agreement established before 1 September 2020. A cost may also be linked to an agreement signed before 1 September that has been renewed since 1 September without any extension to the scope of the agreement and without price adjustment over and above normal price adjustment. However, costs incurred in the preparation of financial statements and auditing do not need to relate to agreements established before 1 September 2020.

Costs linked to agreements with an upper limit on the scope of goods and service deliveries are only considered to be fixed and unavoidable up to the level of goods and service deliveries that had actually been delivered to the enterprise as of 1 September 2020.

The component of rental or leasing costs attributable to additional services must not be included as a fixed, unavoidable cost. Examples of additional services are service agreements and staffing.

Costs must be reduced by any discounts, price reductions, etc. given for the period for which the support applies.

Costs which, according to the enterprise’s accounting standard, are to be recognised in the balance sheet, such as indirect fixed costs recognised as manufacturing costs or construction loan interest, cannot be considered fixed, unavoidable costs.

VAT which can be deducted by the enterprise in the VAT statement is not considered to be a fixed, unavoidable cost according to the Regulation.

Fixed, unavoidable costs for the rental and leasing of fixed assets or property must be reduced by income from subleasing of the fixed assets or property.

Property tax must be entered under item 7700 in the income statement and are not to be considered as a fixed, unavoidable cost.

For the grant period, only interest expenses up to 1.5 percent of the loan amount for each loan may be considered as a fixed, unavoidable cost. The loan amount constitutes outstanding loans as of the first day of the period for which support is being sought.

Enterprises which provide services where live animals are an essential element and which must maintain a certain level of staffing for animal welfare purposes may include essential expenses for animal husbandry, feed and veterinary expenses as fixed, unavoidable costs.

Section 3-2 (2) states that costs may be considered as fixed and unavoidable insofar as they can be entered under the specified items in the income statement as stipulated in the provision. The cost’s cost code is of no significance.. It must be documented what costs are included and in what amounts, e.g. a contract showing the basis for allocation, how the tax was calculated and what it covers. The agreement must be established before 1 September; see Section 3-2(4) of the Regulation.

You must also decide whether the costs in their entirety would qualify for a grant, or whether they need to be adjusted. For example, you can only enter the component of the cost that is attributable to the period for which you are applying for a grant. You must also exclude the variable components of costs, such as the component of rent that is attributable to turnover.

How to prepare an overview of the enterprise’s fixed unavoidable costs

Before applying, you must prepare a statement which supports the figures and calculations which form the basis for your application.

  1. Prepare an overview of all fixed, unavoidable costs you have incurred during the period for which you are seeking a grant.
  2. Find contracts and invoices so that you have an overview of costs and where this is documented.

Example of how to prepare an overview

Fixed avoidable costs incurred by the enterprise during this period (e.g. September/October 2020)

Cost for which we are applying for coverage through a grantTotal for September/OctoberWhere will I find the figures and documentation for this?
Rent for our commercial building at Solgaten 1NOK 40,000• Tenancy agreement with owner, signed 1 July 2018.
• Invoice for fixed rent for the second half of the year, totalling NOK 120,000; see voucher 2020-417
Internet in our commercial building at Solgaten 1NOK 2,500• Invoice from the internet company, internet for September; see voucher 2020-804
Company car insuranceNOK 2,000• Invoice from the insurance company, 15 August for the period July to December, NOK 6,000; see voucher 2020-643