Incremental costs of obtaining a contract refer to costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained.

According to IFRS 15, typical examples of incremental costs of obtaining a contract are sales commissions. If a commission is paid to an employee or a third party as a result of obtaining a contract and the commission wouldn't have been paid if the contract wasn't obtained, that commission is considered an incremental cost of obtaining the contract.

An entity shall recognize as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. However, if the amortization period would be one year or less, an entity can opt to recognize the expense when it incurs the cost as a practical expedient.

It's important to note that costs to obtain a contract that would have been incurred regardless of whether the contract was obtained are not incremental costs. For example, fixed salaries of sales staff that do not vary with whether a contract is obtained are not considered incremental costs.