EU Late Payment Directive: what businesses can claim on overdue invoices

Late payments between businesses place avoidable strain on cash flow and working capital. To protect suppliers across the single market, European Union law establishes common statutory rights when commercial invoices go unpaid.

The foundation of these rights is Directive 2011/7/EU on combating late payment in commercial transactions. This guide outlines the key legal rules that apply across the EU to business-to-business (B2B) trade.

Scope of the Directive

Directive 2011/7/EU applies strictly to commercial transactions, defined as contracts for the delivery of goods or the provision of services for remuneration between undertakings or between undertakings and public authorities (Articles 1 and 2). This article focuses on transactions between businesses. Article 4 sets separate rules for public authorities: generally 30 days, with extensions to 60 days only in specified cases and under specified conditions.

Transactions involving individual consumers are explicitly excluded from the scope of this Directive and remain governed by separate consumer protection frameworks in each member state.

Default payment terms and contractual limits

Under Article 3 of the Directive, payment periods in commercial contracts are subject to clear statutory boundaries:

1. Default statutory period (30 days): If the contract does not specify a payment period, interest starts when the applicable 30-calendar-day statutory period after invoice receipt expires. If the date of invoice receipt is uncertain, the 30-day period runs from receipt of the goods or services.
2. Contractual cap (60 days): Parties may agree on a payment term longer than 30 days, but it cannot exceed 60 calendar days unless expressly agreed in the contract and provided it is not grossly unfair to the creditor.

Statutory interest without prior reminder

One of the central protections of Directive 2011/7/EU is that interest starts on the day after the contractual payment date or period ends, or after the applicable statutory period where no date was agreed. Under Article 3(1), a creditor who has fulfilled their contractual and legal obligations is entitled, unless the debtor is not responsible for the delay, to statutory interest for late payment without the necessity of a reminder.

The statutory interest rate for commercial transactions is formed by combining:

• For euro-area Member States, the ECB reference rate defined in Article 2(7), using the rate applicable on 1 January for the first half-year and 1 July for the second. Non-euro Member States use the equivalent national central bank rate;
• Plus a statutory markup of at least 8 percentage points.

Individual EU member states may choose to apply a higher markup under national transposition law (for instance, 9 percentage points in Germany).

The mandatory 40 euro recovery compensation

In addition to statutory interest, Article 6 of the Directive grants creditors an automatic right to claim compensation for recovery costs:

• As soon as statutory interest becomes payable, the creditor is entitled to obtain from the debtor a fixed minimum sum of 40 euros (or equivalent national currency).
• This fixed sum is payable without the need for a reminder, as immediate compensation for the creditor's internal administrative and recovery costs.
• In addition to the 40 euro fixed sum, the creditor is entitled to obtain reasonable compensation for any further recovery costs incurred exceeding that fixed amount (such as fees incurred by instructing recovery specialists or legal counsel).

National implementations

Because Directive 2011/7/EU is a minimum harmonisation directive, member states transpose its provisions into national legislation with slight variations:

• Netherlands: Articles 6:119a and 6:96 of the Dutch Civil Code (Burgerlijk Wetboek).
• Germany: Paragraphs 286 and 288 of the German Civil Code (Bürgerliches Gesetzbuch).
• France: Article L441-10 and Article D441-5 of the French Commercial Code (Code de commerce).

Before applying these rules to a cross-border invoice, check which national law governs the agreement and whether any sector-specific rules apply. The directive provides a common framework, not one identical procedure in every country.