The updated provisions of the European Union’s Directive on Late Payments have been incorporated into our Commercial Code by virtue of Legal Notice 272 of 2012. By means of this Legal Notice, creditors now have the right to charge interest on late payments, equivalent to eight per cent (8%) over the European Central Bank base rate. Prior to the changes brought about by Legal Notice 272 of 2012, the maximum interest charged was capped at seven per cent (7%) over the European Central Bank base rate.
This legislation is applicable to payments made for commercial transactions carried out between private and public undertakings, between undertakings and public authorities and between main contractors and their suppliers and sub-contractors, retrospectively as of the 1st of March 2012. This Legal Notice has for the first time included interest on late payments between public authorities and private undertakings.
Any payment periods exceeding thirty (30) days must be expressly agreed upon between the parties and should not exceed sixty (60) days. In the eventuality that the parties expressly agree for a period longer than 60 days, such extension cannot be grossly unfair to the creditor.
When payment terms are not specified in the contract of sale, the supplier of goods and services is entitled to interest on late payment after thirty (30) days from the date of receipt of goods or services, or from the date of invoice. In addition to the 8% interest over the European Central Bank base rate, creditors are also eligible to claim a minimum of €40 as a compensation for recovery costs.
Nothing in this legislation prohibits parties from reaching an agreement on payment being effected period by means of instalments.
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