Many payments in commercial transactions between businesses or between businesses and public authorities are made much later than agreed. This is very costly for businesses. Directive 2000/35/EC
was adopted to combat late payment. A new Directive is about to be adopted.
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.