In April 2009 the European Commission issued a press release in which it proposed to alter substantially the Late Payments Directive on the grounds of overwhelming evidence that late payment in commercial transactions was still a problem, with public authorities in Member States being particularly bad. The recast Directive proposed that public authorities should pay within 30 days or pay 5% compensation plus interest, there should be late payment interest and the minimum claim of €5 should be abolished.
According to a press release, the points agreed between Parliament and the Council were:-
- The standard deadline for public and private companies to pay should be 30 days. Only in exceptional circumstances can the payment period be longer and then 60 days should be the maximum for public authorities. It is not clear what the position is for private sector customers, nor whether the public sector can pay by instalments (one of the concerns being that payment by instalments could enable public authorities to circumvent the Directive).
- The statutory interest rate will be the reference rate plus 8%. Compensation for recovery costs will be a fixed sum of €40.
- The time for payment by public entities providing healthcare will be 60 days, instead of 30, because they are largely funded through reimbursements under social security systems.
- The verification period for ascertaining that goods or services comply with contract terms is 30 days. This period may only be extended if expressly agreed and provided that it is not grossly unfair to the creditor. In other words verification periods may not be used as a way to circumvent the regulations.
The next step is that the Commission will publish a draft Directive.
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