Payment deadlines / Late payment interest

This page was last modified on 25-01-2017

Every debtor is required to pay his invoices within the contractual or legal deadline.

Failing this, the creditor can claim late payment interest.

The payment deadlines and the applicable late payment interest rates depend on the type of client:

  • professionnal;
  • public authority;
  • or private consumer.

Who is concerned

Late-payment interest can be claimed by any professional in the context of:

  • commercial transactions, i.e. the provision of goods or services against payment between businesses or between a business and the public authorities;
  • transactions between a professional and a consumer.

Late-payment interest does not apply to:

  • receivable debts in the framework of insolvency proceedings against the debtor;
  • relations between public authorities;
  • interest on payments made under the legal provisions on cheques and bills of exchange and payments made in the context of compensation for damages, including payments made by insurance companies.

Prerequisites

Transactions between professionals / Transactions with a public authority

The creditor is entitled to claim late-payment interest where:

  • he has fulfilled his contractual and legal obligations;
  • and he has not received the payment on the due date, unless the debtor can not be held responsible for the delay.

Transactions with a consumer

The creditor is entitled to claim late-payment interest if:

  • the invoice was issued within a month of receipt of the goods by the client, of completion of the works or provision of services. ;
  • the invoice clearly states that the legal rate of late-payment interest will be applied where necessary.

Duration and deadlines

Transactions between professionals

Within the framework of transactions between professionals, the creditor can claim late payment interest:

  • as from the day following the payment due date or the end of the payment deadline agreed upon by contract;
  • or failing this, 30 days after:
    • the date of receipt of the invoice (or equivalent request for payment);
    • the date of receipt of the goods or the services if the date on the invoice (or on an equivalent request for payment) is not clearly stated or if the debtor has received the invoice (or equivalent request for payment) before the goods or services ordered;
    • the date of acceptance or verification of the goods/services if such a process has been agreed upon by contract or by law and the debtor has received the invoice before or on the date of acceptance/verification.
      The duration of the acceptance/verification procedure may not exceed 30 days (unless contractual provisions stipulate otherwise and provided the provisions are not grossly unfair).

The contractual payment deadline cannot exceed 60 days.

However, the parties can stipulate a longer contractual deadline provided it is not grossly unfair to the creditor.
Unfair clauses are namely those which exclude late payment interest or any other form of indemnity to cover for the recovery expenses.

The parties may also agree upon a payment schedule for the invoice with the amount to be paid by instalments.

Commercial transactions with a public authority

In the framework of commercial transactions where the debtor is a public authority, the creditor can request late payment interests 30 days after:

  • the date of receipt of the invoice (or equivalent request for payment);
  • the date of receipt of the goods or the services if the date on the invoice (or on an equivalent request for payment) is not clearly stated or in the event the debtor has received the invoice (or equivalent request for payment) before the goods or services ordered;
  • the date of acceptance or verification of the goods/services if such a process has been agreed upon by contract or by law and the debtor has received the invoice before or on the date of acceptance/verification.
    The duration of the acceptance/verification procedure may not exceed 30 days after the date of receipt of the goods or services (unless contractual provisions stipulate otherwise and provided the provisions are not grossly unfair).

It must be noted that the date of receipt of the invoice cannot be stipulated by contract.

The contractual payment deadline cannot exceed 30 days.

However, the parties may agree on a longer payment deadline provided it is truly justified and that it does not, under any condition, exceed 60 days.

The parties may also agree upon a payment schedule for the invoice with the amount to be paid by instalments.

Transactions with a consumer

In the context of transactions with a consumer, late payment interest starts to accrue as from the third month following the date of receipt of the goods, completion of the works or provision of services.

How to proceed

Transactions between professionals / with a public authority

In the framework of commercial transactions, the debtor does not have to undertake any procedures (sending of reminders, formal demand) but can claim late payment interest right away.

The legal late-payment interest rate applicable to commercial transactions is published at the beginning of each half-year in the Mémorial B. It is equal to the European Central Bank's key interest rate increased by 8 percentage points.

Professionals (in B2B transactions) may decide to fix a higher or lower contractual interest rate than the legal rate.

The late-payment interest rate which applies to commercial transactions is set at 8 % (8 + 0.00) for the first half-year 2017 (for previous years, see legal references below).

Legal interest rate - commercial transactions
Period Key interest rate Additional charge Legal interest rate
First half-year 2017 0.00 % 8 8 %
Second half-year 2016 0.00 % 8 8 %
First half-year 2016 0.05 % 8 8.05 %
Second half-year 2015 0.05 % 8 8.05 %
First half-year 2015 0.05 % 8 8.05 %
Second half-year 2014 0.15 % 8 8.15 %
First half-year 2014 0.25 % 8 8.25 %
Second half-year 2013 0.50 % 8 8.50 %
First half-year 2013 0.75 % 8 8.75 %
Second half-year 2012 1 % 7 8 %
First half-year 2012 1 % 7 8 %
Second half-year 2011 1.25% 7 8.25 %
First half-year 2011 1 % 7 8 %

The creditor can request a flat fee of EUR 40 to compensate for recovery costs without the necessity of a reminder.

He can also claim a reasonable indemnity to cover for all other costs which exceed this amount (namely to cover the expenses for a lawyer or a debt-collection company).

Calculation method for transactions between professionals / with a public authority

The creditor must calculate the legal interest as follows:

Calculation of late payment interest
(Amount due X legal interest rate X number of days overdue) / (365 days X 100)

The "amount due" which must be taken into consideration for the calculation is the principal amount which should have been paid within the contractual or legal deadline, including all applicable taxes, rights, royalties or costs indicated on the invoice or equivalent request for payment.

Example: company B has not paid the invoice of EUR 2,000 due on 11 April 2015.

The creditor, company A, claims late payment interest due on 30 April 2015:

  • invoice amount due: EUR 2,000
  • applicable interest rate: 8.05 %
  • number of days overdue: 19

The late-payment interest amounts to: (2,000 X 8.05 X 19) / (365 X 100) = EUR 8.38

Company B is liable for a total of EUR 2,008.38 on 30 April 2015.

Transactions with a consumer

The applicable legal interest rate for transactions with a consumer is fixed annually by Grand-Ducal regulation published in the Memorial A.

Unlike transactions between professionals, it is in this case not possible to contractually agree on an interest rate which is different from the one set annually by Grand-ducal regulation.

The legal interest rate for consumers is 2.25 % in 2017.

Legal interest rate - transactions with a consumer
Year Legal interest rate
2017 2.25 %
2016 3 %
2015 3 %
2014 3.25 %
2013 3.5 %
2012 3.5 %
2011 3.5 %
2010 3.5 %

When recovering a receivable debt through legal action, the creditor may obtain the reimbursement of debt recovery costs, in addition to late-payment interest.

Calculation method for transactions with a consumer

The creditor must calculate the legal interest as follows:

Calculation of late payment interest
(Amount due X legal interest rate X number of days overdue) / (365 days X 100)

The "amount due" which must be taken into consideration for the calculation is the principal amount which should have been paid within the contractual or legal deadline, including all applicable taxes, rights, royalties or costs indicated on the invoice or equivalent request for payment.

Example: consumer B has not paid the invoice of EUR 2,000 due on 11 April 2015.

The creditor, company A, claims late payment interest due on 30 April 2015:

  • invoice amount due: EUR 2,000
  • applicable interest rate: 3 %
  • number of days overdue: 19

The late-payment interest amounts to: (2,000 X 3 X 19) / (365 X 100) = EUR 3.12

Consumer B is liable for a total of EUR 2.003,12 on 30 April 2015.