EU Late Payment Directive: What Contractors in Every Country Can Charge

Late payment is the single biggest cash flow threat facing trade contractors across Europe. A roofer in Warsaw, a plumber in Lisbon, and an electrician in Copenhagen all share the same frustration: clients who treat thirty-day invoices as sixty-day suggestions and sixty-day invoices as open-ended commitments. The EU Late Payment Directive (Directive 2011/7/EU, which replaced the original 2000 directive) was designed to address exactly this problem, establishing minimum rights that apply in all EU member states and that cannot be waived by contract to the contractor's detriment. Understanding these rights — and being willing to assert them — changes the dynamic of trade credit for contractors across the continent.

The Core Rules of Directive 2011/7/EU

The directive establishes three fundamental rules for commercial transactions (B2B) between businesses. First, the default payment period is thirty calendar days from the date of invoice or the date of receipt of goods or services, whichever is later. Second, parties may agree a longer period, but only up to sixty days — and even that extension is limited: it cannot be agreed to the detriment of the creditor if the debtor has no valid reason to need more time. Third, any contractual clause that gives the debtor more than sixty days is in principle unenforceable, or at least subject to challenge, in most EU member states' transpositions of the directive. These rules apply to B2B transactions. For contracts with public authorities, the thirty-day limit is generally mandatory with limited exceptions.

Statutory Interest: ECB Rate Plus Eight Percentage Points

When payment is late, statutory interest accrues automatically — the contractor does not need to have included an interest clause in their contract or quote. The interest rate under the directive is the European Central Bank's reference rate for main refinancing operations, plus eight percentage points. The ECB rate is set and published every six months (in January and July), and the rate applicable is the rate in force on the first day of the half-year in which the payment deadline falls. With ECB rates at recent levels, the total statutory rate has typically been in the range of eleven to thirteen percent per annum, which is substantially higher than most commercial borrowing rates — and that is intentional. The directive wants late payment to be economically painful for the debtor. Interest begins to accrue on the day after the payment deadline without any formal notice being required: it is a statutory right that arises by operation of law.

The Forty-Euro Fixed Compensation Fee

In addition to interest, the directive gives creditors the right to a fixed minimum compensation of forty euros for every overdue invoice. This is intended to cover the internal cost of chasing payment. The forty euros is a minimum: member states may set a higher amount, and some have done so. The directive also provides that creditors can recover reasonable recovery costs beyond this fixed amount if those costs exceed forty euros — for example, the cost of instructing a debt collection agency or legal fees in pursuing a small claim. For trade contractors with many smaller invoices — a plumber with twenty-five outstanding invoices of three hundred euros each — the fixed compensation right can itself represent a meaningful sum if asserted systematically. Many contractors are unaware they can claim this automatically, without a court order or even a formal letter, simply by including the claim on a reminder notice.

How Different EU Countries Have Transposed the Directive

While the directive sets minimum standards, each EU member state transposed it into national law with some variation. In Germany, the directive is implemented through § 286 and § 288 BGB (Bürgerliches Gesetzbuch). The statutory interest rate for B2B transactions is the ECB base rate plus nine percentage points (one point higher than the directive minimum), and the fixed compensation is forty euros. In France, the directive was implemented through Article L.441-10 of the Code de Commerce, with statutory interest at the ECB rate plus ten percentage points for late payment of commercial invoices, and a forty-euro fixed fee. In the Netherlands, the directive is implemented in Article 6:119a BW (Burgerlijk Wetboek), using the ECB rate plus eight points and the forty-euro flat fee, though Dutch courts have generally been strict about requiring invoices to state the payment deadline explicitly. In Belgium, the Law of 2 August 2002 on combating late payment (as amended) implements the directive and applies to all B2B transactions; the statutory rate follows the ECB rate plus eight points, and the forty-euro fee applies per invoice. Poland applies the directive through the Act on Counteracting Excessive Payment Delays in Commercial Transactions, which sets statutory interest at the ECB rate plus ten points for transactions not involving public authorities, and allows recovery of collection costs of forty percent of the outstanding amount in some circumstances.

The United Kingdom After Brexit

The UK transposed the Late Payment of Commercial Debts (Interest) Act 1998 before the EU directive existed, and that act predates EU membership in this area. The UK rate is the Bank of England base rate plus eight percentage points, and the fixed compensation is £40, £70, or £100 depending on the value of the debt (under £1,000; £1,000 to £9,999; £10,000 and above). Post-Brexit, UK contractors are no longer directly covered by the EU directive, but the UK's own legislation provides very similar rights. For a British contractor working on a project in Germany or France and issuing invoices under German or French law, the EU directive and its local transposition would apply to that invoice — not UK law.

Asserting Your Rights Without Damaging the Client Relationship

Many contractors are reluctant to apply statutory interest because they fear it will damage the relationship with the client. This reluctance is understandable but commercially irrational when dealing with systematically late payers. The practical approach is to include the statutory interest rate and the forty-euro compensation entitlement as a standard note on every invoice — not as a threat, but as a factual statement of the law. Something along the lines of: "Under Directive 2011/7/EU and applicable national law, interest accrues at the statutory rate and a compensation fee applies to any unpaid balance after the due date." Most sophisticated clients — project developers, facilities managers, housing associations — are well aware of this law and will respond to a notice. The clients who ignore it are the ones who need the deterrent most.

How QuotCraft Automates Late Payment Enforcement

QuotCraft's automated payment reminder system is designed to make late payment enforcement effortless for trade contractors across Europe. When an invoice passes its due date, QuotCraft sends a sequence of escalating reminders, each one noting the accruing statutory interest and the fixed compensation entitlement, calibrated to the client's country and the applicable national transposition of the directive. The contractor does not need to calculate the interest manually: QuotCraft computes the amount owed based on the ECB reference rate in force for the relevant half-year. For contractors operating in multiple EU markets, QuotCraft applies the correct national rate automatically — eight points over ECB for Belgium and the Netherlands, nine points for Germany, ten points for France and Poland. This removes the administrative burden of monitoring legislative interest rates while ensuring the contractor's legal rights are exercised consistently and professionally.