Legal late payment interest rate for commercial transactions increases

The interest rate for late payment for commercial transactions amounts to 8,5% for the second semester of 2011. This implies an increase of 0,5% compared to the first semester of 2011. Since companies and governments still are not very prompt with their payments, Europe has approved a Directive to make the current regulation more severe.

Interest rate for the second semester of 2011

Late payments disturb the financial balance of a company and increase the administrative costs. The continued existence of a SME can be jeopardized by it. The interest rate for late payment for commercial transactions is published twice a year in the Belgian Official Gazette. The legal interest rate for the first semester of this year was 8% and was applicable from 1 January 2011 until 30 June 2011.
The interest rate of 8,5% is only applicable if parties in their contracts do not provide for another interest rate. The creditor has an “automatic” entitlement to interest if his debtor pays too late. He should not send a proof of default. The interest is also due after the payment period has expired.

Scope: commercial transactions

The interest rate of 8% only applies to commercial transactions: transactions between companies, or between companies and tendering governmental services. The transaction should relate to the supply of goods or services for consideration. It applies to merchants, liberal professions, craftsmen and farmers.
Please note that in civil cases and some commercial transactions (transactions between merchants and private individuals) another legal interest rate is applicable. For 2011 it amounts to 3,75% (3,25% in 2010).

Legal payment period: 30 days

When nothing is provided for, every payment for a commercial transaction should be made within a period of 30 days. This legal payment period can start on three moments:

on the day following the receipt of the invoice by the debtor;

if this date is not clear or in case the debtor receives the invoice before the supply of goods or services, the day following the receipt of the goods or services;

if the law or the contract provides for an acceptance or audit procedure, the day following the acceptance or audit, in case the debtor receives the invoice before or on the moment the acceptance or audit takes place.

You can agree with your debtor on a longer (or shorter) payment period. But in case that this payment period is “clearly unfair”, the court can impose another payment delay. It will take the commercial and financial interests into consideration.

New European Directive to fight defaulters

The European Council and the European Parliament have on 16 February 2011 approved a new Directive to fight the payment delay in commercial transactions. This Directive should be implemented into the Belgian legislation ultimately 16 March 2013. When parties do not provide for a payment period, this period remains at 30 days. Companies can provide for other payment periods in their contracts of maximum 60 days, unless they explicitly provide for a longer payment period that is not clearly unfair. For transactions with governmental services, the new regulation is considerably more severe. Member states can also extend the legal payment period to 60 days, but only for certain governmental bodies (e.g. Belgacom and De Post). For all other governmental bodies a payment period of 30 days with become the standard. The interest rate with be increased with 1%. This increase applies to all delays, of companies and governments.