Fighting late payments

General principles of Directive 2000/35/EC

The Directive only applies to transactions between undertakings or between undertakings and public authorities.

The Directive does not harmonise payment periods, but creates a statutory right to interest 30 days after the date of the invoice, unless another payment period has been negotiated in the contract.

Unless otherwise specified in a contract, the interest rate for late payment is the total of the applicable reference rate and the margin rate:

The applicable reference rate is the European Central Bank's main refinancing rate. Outside the Euro zone the rate is set by the relevant national central bank. The reference rate on 1st January applies until 30 June while the reference rate of 1st July applies until 31 December.

The margin rate is at least 7 percentage points. Member States are entitled to apply a higher rate.

The new Directive 2011/7/EU

The new Directive [783 KB] will have to be transposed into national law by 16 March 2013 at the latest. 

The provisions of the new directive include, among others: 

• Harmonisation of period for payment by public authorities to businesses: Public authorities will have to pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.
• Contractual freedom in businesses commercial transactions: Enterprises will have to pay their invoices within 60 days, unless they expressly agree otherwise and if it is not grossly unfair.
• Enterprises will automatically be entitled to claim interest for late payment and will also be able to obtain a minimum fixed amount of €40 as a compensation for recovery costs. They can claim compensation for all remaining reasonable recovery costs.
• The statutory Interest rate for late payment will be increased to at least 8 percentage points above the European Central Bank’s reference. Public authorities are not allowed to fix an interest rate for late payment below.

Member States may continue to maintain or to bring into force laws and regulations which are more favourable to the creditor than the provisions of the new Directive.

Interesting websites in the Member States

Germany

• Tipps für ein erfolgreiches Forderungsmanagement
• Forderungen durchsetzen

France

• La réduction des délais de paiement : une nécessité pour les PME

Ireland

• Late Payments in Commercial Transactions Regulations 2002

Netherlands

• Antwoord voor Bedrijven
• Kamer van Koophandel

United Kingdom

• The Better Payment Practice Campaign
• Recovering late payments

Further reading

• Reference documents on fighting late payment
• European e-Justice Portal 
• European Judicial Atlas in Civil Matters
• European Judicial Network in civil and commercial matters
• Other related EU legislation
  • The European small claims procedure
  • The European order for payment procedure
  • The European enforcement order for uncontested claims
  • Jurisdiction, recognition and enforcement of judgments in civil and commercial matters ("Brussels I")
  • Insolvency proceedings
  • Alternative dispute resolution: mediation

Contact

ENTR /C/4 INTERNAL MARKET & ENFORCEMENT