Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 on combating late payment in commercial transactions
Date: 2000-06-29
Institutions: Council of the European Union, European Parliament
Subjects: claim, contract, deadline for payment, goods and services, provision of services, trading operation, type of business

8.8.2000

EN

Official Journal of the European Communities

L 200/35

DIRECTIVE 2000/35/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 29 June 2000

on combating late payment in commercial transactions

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 95 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social
Committee (2),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (3), in the light of the joint text approved by
the Conciliation Committee on 4 May 2000,

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

In its resolution on the integrated programme in favour
of SMEs and the craft sector (4), the European Parliament
urged the Commission to submit proposals to deal with
the problem of late payment.

On 12 May 1995 the Commission adopted a recom-
mendation on payment periods in commercial transac-
tions (5).

In its resolution on the Commission recommendation
on payment periods in commercial transactions (6), the
European Parliament called on the Commission to
recommendation into a
consider
proposal for a Council directive to be submitted as soon
as possible.

transforming its

On 29 May 1997 the Economic and Social Committee
adopted an opinion on the Commission's Green Paper
on Public procurement
in the European Union:
Exploring the way forward (7).

On 4 June 1997 the Commission published an action
plan for the single market, which underlined that late
payment represents an increasingly serious obstacle for
the success of the single market.

On 17 July 1997 the Commission published a report on
late payments in commercial transactions (8), summar-
ising the results of an evaluation of the effects of the
Commission's recommendation of 12 May 1995.

(1) OJ C 168, 3.6.1998, p. 13, andOJ C 374, 3.12.1998, p. 4.
(2) OJ C 407, 28.12.1998, p. 50.
(3) Opinion of the European Parliament of 17 September 1998 (OJ C
313, 12.10.1998, p. 142), Council Common Position of 29 July
1999 (OJ C 284, 6.10.1999, p. 1) and decision of the European
Parliament of 16 December 1999 (not yet published in the Official
Journal). Decision of the European Parliament of 15 June 2000 and
Decision of the Council of 18 May 2000.

(4) OJ C 323, 21.11.1994, p. 19.
(5) OJ L 127, 10.6.1995, p. 19.
(6) OJ C 211, 22.7.1996, p. 43.
(7) OJ C 287, 22.9.1997, p. 92.
(8) OJ C 216, 17.7.1997, p. 10.

(7)

(8)

(9)

(10)

(11)

(12)

(13)

Heavy administrative and financial burdens are placed
on businesses, particularly small and medium-sized ones,
as a result of excessive payment periods and late
payment. Moreover, these problems are a major cause of
insolvencies threatening the survival of businesses and
result in numerous job losses.

In some Member States contractual payment periods
differ significantly from the Community average.

The differences between payment rules and practices in
the Member States constitute an obstacle to the proper
functioning of the internal market.

This has the effect of considerably limiting commercial
transactions between Member States. This is in contra-
diction with Article 14 of the Treaty as entrepreneurs
should be able to trade throughout the internal market
under conditions which ensure that transborder opera-
tions do not entail greater risks than domestic sales.
Distortions of competition would ensue if substantially
different
rules applied to domestic and transborder
operations.

The most recent statistics indicate that there has been, at
in many
best, no improvement
Member States since the adoption of the recommenda-
tion of 12 May 1995.

in late payments

The objective of combating late payments in the internal
market cannot be sufficiently achieved by the Member
States acting individually and can, therefore, be better
achieved by the Community. This Directive does not go
beyond what is necessary to achieve that objective. This
in its entirety, with the
Directive complies therefore,
requirements of
subsidiarity and
the principles of
proportionality as laid down in Article 5 of the Treaty.

This Directive should be limited to payments made as
remuneration for commercial transactions and does not
regulate transactions with consumers, interest in connec-
tion with other payments, e.g. payments under the laws
on cheques and bills of exchange, payments made as
compensation for damages including payments from
insurance companies.

(14)

The fact that the liberal professions are covered by this
Directive does not mean that Member States have to
treat them as undertakings or merchants for purposes
not covered by this Directive.

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(15)

(16)

(17)

(18)

(19)

(20)

(21)

(22)

This Directive only defines the term ‘enforceable title’
but does not regulate the various procedures of forced
execution of such a title and the conditions under which
forced execution of such a title can be stopped or
suspended.

Late payment constitutes a breach of contract which has
been made financially attractive to debtors in most
Member States by low interest rates on late payments
and/or slow procedures for redress. A decisive shift,
including compensation of creditors
the costs
incurred, is necessary to reverse this trend and to ensure
that the consequences of late payments are such as to
discourage late payment.

for

The reasonable compensation for the recovery costs has
to be considered without prejudice to national provi-
sions according to which a national judge can award to
the creditor any additional damage caused by the debt-
or's late payment, taking also into account that such
incurred costs may be already compensated for by the
interest for late payment.

the issue of

This Directive takes into account
long
contractual payment periods and, in particular, the exis-
tence of certain categories of contracts where a longer
payment period in combination with a restriction of
freedom of contract or a higher interest rate can be
justified.

This Directive should prohibit abuse of
freedom of
contract to the disadvantage of the creditor. Where an
agreement mainly serves the purpose of procuring the
debtor additional liquidity at the expense of the creditor,
or where the main contractor imposes on his suppliers
and subcontractors terms of payment which are not
justified on the grounds of the terms granted to himself,
these may be considered to be factors constituting such
an abuse. This Directive does not affect national provi-
sions relating to the way contracts are concluded or
regulating the validity of contractual terms which are
unfair to the debtor.

The consequences of late payment can be dissuasive
only if they are accompanied by procedures for redress
which are rapid and effective for
In
conformity with the principle of non-discrimination
contained in Article 12 of the Treaty, those procedures
should be available to all creditors who are established
in the Community.

the creditor.

It is desirable to ensure that creditors are in a position to
exercise a retention of title on a non-discriminatory basis
title
throughout
clause is valid under the applicable national provisions
designated by private international

the retention of

the Community,

law.

if

irrespective of whether

This Directive should regulate all commercial transac-
tions
they are carried out
between private or public undertakings or between
undertakings and public authorities, having regard to the
fact that the latter handle a considerable volume of
payments to business. It should therefore also regulate

all commercial transactions between main contractors
and their suppliers and subcontractors.

(23) Article 5 of this Directive requires that the recovery
procedure for unchallenged claims be completed within
a short period of time in conformity with national legis-
lation, but does not require Member States to adopt a
specific procedure or to amend their existing legal
procedures in a specific way,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Scope

This Directive shall apply to all payments made as remu-
neration for commercial transactions.

Article 2

Definitions

For the purposes of this Directive:

1.

transactions’ means

‘commercial
transactions between
undertakings or between undertakings and public authori-
ties which lead to the delivery of goods or the provision of
services for remuneration,

‘public authority’ means any contracting authority or entity,
(92/
as defined by the Public Procurement Directives
50/EEC (1),
93/
38/EEC (4)),

93/36/EEC (2),

93/37/EEC (3)

and

‘undertaking’ means any organisation acting in the course of
its independent economic or professional activity, even
where it is carried on by a single person;

‘late payment’ means exceeding the contractual or statutory
period of payment;

title’ means

‘retention of
agreement
according to which the seller retains title to the goods in
question until the price has been paid in full;

contractual

the

‘interest rate applied by the European Central Bank to its
main refinancing operations’ means the interest rate applied
to such operations in the case of fixed-rate tenders. In the
event that a main refinancing operation was conducted
according to a variable-rate tender procedure, this interest
rate refers to the marginal interest rate which resulted from
that tender. This applies both in the case of single-rate and
variable-rate auctions;

2.

3.

4.

(1) OJ L 209, 24.7.1992, p. 1.
(2) OJ L 199, 9.8.1993, p. 1.
(3) OJ L 199, 9.8.1993, p. 54.
(4) OJ L 199, 9.8.1993, p. 84.

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5.

‘enforceable title’ means any decision, judgment or order for
payment issued by a court or other competent authority,
whether for immediate payment or payment by instalments,
which permits the creditor to have his claim against the
debtor collected by means of
it shall
include a decision, judgment or order for payment that is
provisionally enforceable and remains so even if the debtor
appeals against it.

forced execution;

Article 3

Interest in case of late payment

1. Member States shall ensure that:

(a) interest in accordance with point (d) shall become payable
from the day following the date or the end of the period
for payment fixed in the contract;

(b) if the date or period for payment is not fixed in the
shall become payable automatically

contract,
without the necessity of a reminder:

interest

(i) 30 days following the date of receipt by the debtor of
the invoice or an equivalent request for payment; or

(ii) if the date of the receipt of the invoice or the equiva-
lent request for payment is uncertain, 30 days after the
date of receipt of the goods or services; or

(iii) if the debtor receives the invoice or the equivalent
request for payment earlier than the goods or the
services, 30 days after the receipt of the goods or
services; or

(iv) if a procedure of acceptance or verification, by which
the conformity of
the goods or services with the
contract is to be ascertained, is provided for by statute
or in the contract and if the debtor receives the invoice
or the equivalent request for payment earlier or on the
date on which such acceptance or verification takes
place, 30 days after this latter date;

(c) the creditor shall be entitled to interest for late payment to

the extent that:

(i) he has fulfilled his contractual and legal obligations;

and

(ii) he has not received the amount due on time, unless the

debtor is not responsible for the delay;

(d) the level of interest for late payment (‘the statutory rate’),
which the debtor is obliged to pay, shall be the sum of the
interest rate applied by the European Central Bank to its
most recent main refinancing operation carried out before
the first calendar day of the half-year in question (‘the
reference rate’), plus at least seven percentage points (‘the
margin’), unless otherwise specified in the contract. For a
Member State which is not participating in the third stage
of economic and monetary union,
the reference rate
referred to above shall be the equivalent rate set by its
national central bank. In both cases, the reference rate in
force on the first calendar day of the half-year in question
shall apply for the following six months;

(e) unless the debtor is not responsible for the delay, the
creditor shall be entitled to claim reasonable compensation
from the debtor for all relevant recovery costs incurred
through the latter's late payment. Such recovery costs shall
respect the principles of transparency and proportionality
as regards the debt in question. Member States may, while
respecting the principles referred to above, fix maximum
amounts as regards the recovery costs for different levels of
debt.

2.
For certain categories of contracts to be defined by
national law, Member States may fix the period after which
interest becomes payable to a maximum of 60 days provided
that
from
they either restrain the parties to the contract
exceeding this period or fix a mandatory interest rate that
substantially exceeds the statutory rate.

3. Member States shall provide that an agreement on the
date for payment or on the consequences of late payment
which is not in line with the provisions of paragraphs 1(b) to
(d) and 2 either shall not be enforceable or shall give rise to a
claim for damages if, when all circumstances of
the case,
including good commercial practice and the nature of the
product, are considered, it is grossly unfair to the creditor. In
determining whether an agreement is grossly unfair to the
creditor, it will be taken, inter alia, into account whether the
debtor has any objective reason to deviate from the provisions
If such an agreement is
of paragraphs 1(b) to (d) and 2.
determined to be grossly unfair, the statutory terms will apply,
unless the national courts determine different conditions which
are fair.

4. Member States shall ensure that, in the interests of cred-
itors and of competitors, adequate and effective means exist to
prevent the continued use of terms which are grossly unfair
within the meaning of paragraph 3.

5.
The means referred to in paragraph 4 shall include provi-
sions whereby organisations officially recognised as, or having
a legitimate interest in, representing small and medium-sized
law
enterprises may take action according to the national
concerned before the courts or before competent adminis-
trative bodies on the grounds that contractual terms drawn up
for general use are grossly unfair within the meaning of para-
they can apply appropriate and effective
graph 3, so that
means to prevent the continued use of such terms.

Article 4

Retention of title

1. Member States shall provide in conformity with the
applicable national provisions designated by private inter-
national law that the seller retains title to goods until they are
fully paid for if a retention of title clause has been expressly
agreed between the buyer and the seller before the delivery of
the goods.

2. Member States may adopt or retain provisions dealing
with down payments already made by the debtor.

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Article 5

3.

In transposing this Directive, Member States may exclude:

Recovery procedures for unchallenged claims

(a) debts that are subject to insolvency proceedings instituted

against the debtor;

(b) contracts that have been concluded prior to 8 August

2002; and

(c) claims for interest of less than EUR 5.

4. Member States shall communicate to the Commission the
text of the main provisions of national law which they adopt in
the field covered by this Directive.

5.
The Commission shall undertake two years after 8
August 2002 a review of, inter alia, the statutory rate, contrac-
tual payment periods and late payments, to assess the impact
on commercial transactions and the operation of the legislation
in practice. The results of this review and of other reviews will
be made known to the European Parliament and the Council,
accompanied where appropriate by proposals for improvement
of this Directive.

Article 7

Entry into force

This Directive shall enter into force on the day of its publica-
tion in the Official Journal of the European Communities.

Article 8

Addressees

This Directive is addressed to the Member States.

Done at Luxembourg, 29 June 2000.

For the European Parliament

For the Council

The President

The President

N. FONTAINE

M. MARQUES DA COSTA

1. Member States shall ensure that an enforceable title can
be obtained, irrespective of the amount of the debt, normally
within 90 calendar days of the lodging of the creditor's action
or application at
the court or other competent authority,
provided that the debt or aspects of the procedure are not
disputed. This duty shall be carried out by Member States in
legislation, regula-
conformity with their respective national
tions and administrative provisions.

The

respective national

2.
and
administrative provisions shall apply the same conditions for
all creditors who are established in the European Community.

regulations

legislation,

The 90 calendar day period referred to in paragraph 1

3.
shall not include the following:

(a) periods for service of documents;

(b) any delays caused by the creditor, such as periods devoted

to correcting applications.

4.
This Article shall be without prejudice to the provisions
of the Brussels Convention on jurisdiction and enforcement of
judgments in civil and commercial matters (1).

Article 6

Transposition

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive before 8 August 2002. They shall forthwith inform
the Commission thereof.

When Member States adopt these measures, they shall contain
a reference to this Directive or shall be accompanied by such
reference on the occasion of their official publication. The
methods of making such reference shall be laid down by
Member States.

2. Member States may maintain or bring into force provi-
sions which are more favourable to the creditor than the
provisions necessary to comply with this Directive.

(1) Consolidated version in OJ C 27, 26.1.1998, p. 3.