Under EU law, whenever business' clients pay their invoices late, late payment interest can be claimed.
This applies to all commercial transactions with other businesses (including sole traders, providing that they fall under the definition of undertaking Art 2(3) ) 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 EU countries, late interest payments do not apply if the client is undergoing insolvency proceedings.
When is a payment classified as late?
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.
If you don't know when the invoice was received, you can claim interest 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.
Interest for late payment
The statutory late payment interest rate comprises the sum of the reference rate and an additional rate set by each individual country (minimum 8%). Public authorities are not allowed to fix lower interest rates. For B2B claims — if no agreement is reached — the statutory interest for late payment will be applied.
Statutory interest rate (%/year)
|Member State||1st January 2016 - 30th June 2016|
- The reference rate (the interest rate that banks have to pay when they borrow money from their central bank) for EU countries not using the euro is set by the national central banks.
In both cases, the reference rates (published on January 1st and July 1st each year) are valid for all transactions for the following 6 months after publication. For example, if your unpaid invoice was due on 15 March, the valid reference rate is the one set on 1 January.
To help protect SMEs and businesses in their commercial transactions with larger businesses or public authorities, enterprises can now more easily challenge grossly unfair terms and practises before national courts.
Compensation for recovery costs
Apart from the interest due, you are automatically entitled to a fixed amount to compensate for recovery costs (minimum EUR 40). You can separately claim compensation for all remaining recovery costs — up to a reasonable amount.
Late Payment E-Helpdesk
For more information on the late payment you can contact the E-Helpdesk: GROW-LATE-PAY-E-DESK@ec.europa.eu
The Commission also invites companies and citizens to share information concerning the application of the Directive in their own countries, and to send any evidence of problems experienced when applying the rights conferred by the Directive.
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