Late payment interest and the €40 fee: how they work in the EU
When a business customer pays late, EU law gives you interest from the day after the due date and a fixed €40 per invoice, without a reminder. Here is how to calculate them and how to say so on your invoices.
Most customers pay on time, and the ones who do not usually pay after a polite reminder. For the rest, the law is on your side: the EU Late Payment Directive gives every business the same minimum rights when another business or a public authority pays late. Knowing them helps you write clear payment terms and a firm final reminder. For the reminders themselves, see how to chase unpaid invoices.
What EU law gives you
The Late Payment Directive (2011/7/EU) applies to payments between businesses and from public authorities to businesses, in every EU country. Each country wrote it into its own law and many go further, but these minimums apply everywhere:
- Interest from the day after the due date, without having to send a reminder.
- A fixed €40 for recovery costs per late invoice, also without a reminder.
- Payment terms between businesses of at most 60 days, unless expressly agreed and not grossly unfair to the supplier. Public authorities pay within 30 days, 60 in some cases.
- A contract term that excludes interest or the €40 is presumed grossly unfair and can be set aside.
When interest starts
Interest runs from the day after the due date written on the invoice or in the contract until the day you are paid. If no date was agreed, it starts 30 days after the customer received the invoice (or the goods or services, if they came later).
How to calculate the interest
The minimum rate is the European Central Bank reference rate plus 8 percentage points. The reference rate is the ECB’s main refinancing rate on 1 January for invoices due in the first half of the year, and on 1 July for the second half. Many countries publish the resulting rate every six months, and some add more than 8 points.
The interest is simple, not compounded: amount × annual rate × days late ÷ 365.
A worked example
An invoice of €5,000 was due on 1 March and is paid on 15 April, 45 days late. Say the reference rate is 2.15 %, so the late-payment rate is 2.15 + 8 = 10.15 %.
- Interest: 5,000 × 10.15 % × 45 ÷ 365 = €62.57.
- Recovery fee: €40.
- Total you can claim on top of the invoice: €102.57.
The 2.15 % is only an example: check the rate that applies for the half-year in which the invoice fell due.
The €40 recovery fee
The €40 is a fixed minimum for each invoice paid late: three late invoices, €120. You do not need to prove any cost to claim it. If chasing the payment costs you more, for example a collection agency or a lawyer, you can ask for reasonable costs above the €40.
What to write on your invoices
Clear terms avoid arguments later. Put on every invoice:
- The due date, or the payment term in days.
- The late-payment interest rate that applies.
- The fixed €40 recovery fee for late payment.
In France these mentions are compulsory on invoices between businesses. In other countries they are not always required, but they make the final reminder easier: the customer has seen them from the start.
Many companies do not claim interest from good customers. Mentioning it in the final reminder is often enough to get paid.
How Tavalle helps
In Tavalle every invoice shows its due date on the PDF, with a payment QR code. Overdue invoices turn red, sales reps get an e-mail with their overdue invoices, and customers receive polite reminders with the invoice at the steps you choose, which stop as soon as the invoice is paid. See automatic e-mails and invoicing.
This guide is general information about the EU minimum rules, not legal advice. National laws can go further: check the rules of your country, or ask your accountant or lawyer.
