Late payment interest
Under EU law, whenever business' clients pay their invoices late, you can claim late payment interest.
This applies to all commercial transactions with other businesses (including sole traders, if they issue invoices) and public authorities.
- you must have fulfilled your contractual and legal obligations
- the client is responsible for the delay (that is, it is not due to circumstances beyond their control).
You can't claim late payment interest:
- in transactions with consumers
- if the invoice is for compensation payments for damages (for example by insurance companies).
In some EU countries, late interest payments may not be enforceable if:
- the client is undergoing insolvency proceedings.
When can you claim?
Fixed payment deadline? You can claim interest from the 1st day after the due date.
- If your customer is a public authority, you have to be paid within 30 calendar days.
- If your customer is another company, the period for payment fixed in the contract cannot exceed 60 calendar days, unless you expressly agreed otherwise and if it is not grossly unfair to you as the creditor.
Payment period not fixed in the contract? Interest becomes automatically payable 30 calendar days after receipt of the invoice or payment request.
Apart from your due interest, you are automatically entitled to a minimum fixed amount of €40 to compensate for recovery costs. You can separately claim compensation for all remaining reasonable recovery costs.
If you don't know when the invoice was received, you can claim interests 30 calendar days after you delivered your service and/or products.
If you send the invoice to your client before you deliver your service and/or product, the countdown starts only after delivery.
How much interest can you claim?
Late interest is the sum of a reference rate and an additional rate. This additional rate must be at least 8% but individual countries may apply higher rates. Public authorities are not allowed to fix lower interest rate.
The reference rate in the eurozone is the European Central Bank's main refinancing rate.
In EU countries not using the euro, the reference rate - the interest rate that banks have to pay when they borrow money from their central bank - is set by the national central banks.
In both cases, the published reference rates on 1 January and 1 July are valid for all transactions for the following 6 months. For example, if your unpaid invoice was due on 15 March, the valid reference rate is the one set on 1 January.
EU countries can apply conditions more favourable to the creditor.