EU Late Payment Directive 2011/7/EU: Interest, €40 Compensation & Enforcement (2026)

Quick Summary: Your Automatic Rights

The Statutory Interest Formula

Formula

Interest = Principal × (ECB Rate + 8%) × Days Overdue / 365

Where:
- Principal = Net invoice amount (or gross if VAT not separately stated)
- ECB Rate = ECB main refinancing operation rate on 1st day of half-year (Jan 1 / Jul 1)
- 8% = Statutory margin (fixed by Directive)
- Days Overdue = Calendar days from due date to payment date
- 365 = Day count convention (actual/365)

Current ECB Reference Rates (2026)

Source: ECB Key Interest Rates | Rate fixed on 1st calendar day of each half-year, applies for entire half-year.

Worked Example

Calculate instantly: Late Payment Calculator — enters ECB rate automatically.

Payment Terms: What's Allowed

Default Terms (If Contract Silent)

• B2B: 30 calendar days from receipt of invoice (or goods/services if later)
• Public Authorities: 30 calendar days (statutory, cannot be extended by contract)

Agreed Terms (Contractual)

• Parties may agree longer: maximum 60 calendar days
• Longer than 60 days: void — reverts to 30 days (Article 4)
• Must be expressly agreed and not grossly unfair
• Shorter than 30 days: always valid

When Does the Clock Start?

1. Receipt of invoice (not date of invoice)
2. If goods/services received later: from receipt of goods/services
3. If acceptance/verification needed: from completion of acceptance (max 30 days after receipt)
4. Disputed invoices: interest runs on undisputed portion

The €40 Minimum Compensation (Article 6)

Key Rules

• Automatic: No need to prove actual recovery costs
• Per invoice: €40 for EACH late invoice
• Additional to interest: Not instead of — you get both
• Cannot be reduced: Contractual waiver is void
• Applies from first day of delay: Even 1 day late = €40

What It Covers

Intended for: reminder letters, legal fees, collection agency costs, internal admin time. You don't need to itemize.

Multiple Invoices = Multiple €40

Cross-Border Enforcement: Getting Paid Across EU

European Payment Order (Regulation 1896/2006)

For undisputed claims (including statutory interest + €40):

1. File Form A at your local court (or online via e-Justice Portal)
2. Court serves defendant in their Member State
3. Defendant has 30 days to oppose
4. If no opposition: Order enforceable in ALL EU countries automatically
5. Enforce via local bailiff in debtor's country

European Small Claims Procedure (Regulation 861/2007)

For claims ≤ €5,000 (principal + interest + compensation):

• Simplified forms (Form A + B)
• Written procedure (no hearing unless judge orders)
• Judgment enforceable EU-wide
• Ideal for freelancers/SMEs — lower cost, faster

European Account Preservation Order (Regulation 655/2014)

Freeze debtor's bank account before judgment:

• Available if urgent risk of asset dissipation
• Apply at court of debtor's domicile
• Requires evidence of claim + urgency
• Powerful leverage for settlement

Country-Specific Enforcement

Invoice Requirements for Late Payment Rights

To trigger Directive rights, your invoice must contain:

1. Payment term: Explicit due date (e.g., "Payment due: 30 days from invoice date")
2. Late payment clause: Reference to statutory interest + €40 compensation (recommended)
3. Invoice date + due date: Clear calendar dates
4. Net amount: Principal for interest calculation
5. VAT breakdown: Separate VAT lines (interest on net)

Recommended Invoice Wording

Payment Terms: 30 days from invoice date.
Late Payment: Per Directive 2011/7/EU, statutory interest at ECB rate + 8% p.a. and €40 minimum compensation per invoice apply automatically from day after due date. No contractual waiver permitted (Art. 7).

What Invalidates Your Rights

• No due date on invoice → 30 days from receipt applies (but harder to prove)
• Invoice not delivered → clock doesn't start
• Contractual waiver of interest/compensation → VOID (but avoid the dispute)
• B2C invoices → Directive only covers B2B and public authorities

Real Collection Examples

National Implementations: Key Differences

Note: All implement Directive 2011/7/EU minimums. Some add protections (e.g., France: 40€ fixed by law, not "up to").

Disputed Invoices: Partial Payment Strategy

If Customer Disputes Part of Invoice

1. Interest runs on undisputed portion from due date
2. Disputed portion: interest from date dispute resolved (court/settlement)
3. Always demand payment of undisputed amount immediately
4. €40 compensation: applies per invoice (even if partially disputed)

Strategy: Split Invoices

For project work: invoice milestones separately. If Milestone 3 disputed, Milestones 1-2 still accrue full interest + €40 each.

Tax Treatment of Late Payment Income

Accounting: Accrue interest income monthly. Recognize €40 compensation when payment overdue (not when received).

Late Payment Collection Checklist

Day 1 (Due Date Passed)

• [ ] Verify invoice has clear due date
• [ ] Calculate statutory interest rate (check ECB rate for current half-year)
• [ ] Send polite reminder (email + post) referencing Directive rights

Day 15-30

• [ ] Send formal demand letter (registered post)
• [ ] Include: principal + accrued interest to date + €40 compensation
• [ ] State: "Per Directive 2011/7/EU, interest accrues daily. €40 compensation applies."
• [ ] Set deadline: 7-10 days

Day 30-60

• [ ] Assess: amount vs cost of enforcement
• [ ] ≤ €5,000: European Small Claims Procedure
• [ ] > €5,000: European Payment Order or national Mahnverfahren
• [ ] Engage local lawyer in debtor's country (for service/translation)

Ongoing

• [ ] Recalculate interest monthly (update demand letters)
• [ ] Track €40 per invoice separately
• [ ] Archive all correspondence (10 years)
• [ ] Update accounting: accrue interest income

Tools for Late Payment Calculation

FAQ