An Unpaid Invoice: The Late-Payment Interest the Law Already Grants You

The claim exists whether or not you wrote it into the contract

Most people quoting for work assume that late-payment interest is something you have to negotiate, and that without a clause you have nothing but a polite email. That is backwards for business-to-business transactions in the European Union. Directive 2011/7/EU creates the entitlement by law and Article 3 makes it automatic: the creditor is entitled to interest for late payment without the necessity of a reminder, where it has fulfilled its contractual and legal obligations and has not received the amount due on time, unless the debtor is not responsible for the delay. No clause, no reminder, no prior agreement — the clock starts and the interest accrues.

One detail from the same article is worth having in front of you when the invoice is challenged: the amount on which interest runs is the principal sum that should have been paid within the payment period, including the applicable taxes, duties, levies or charges specified in the invoice. Interest therefore accrues on the gross figure, VAT included, not on the net. On an invoice where VAT is a fifth of the total that is a fifth more interest, and it is the kind of point a debtor's finance department will try on precisely because it is rarely known.

How the rate is built, and why the German number is not the Italian number

The directive defines statutory interest as simple interest at a rate equal to the sum of a reference rate and at least eight percentage points. For a member state whose currency is the euro, the reference rate is the interest rate applied by the European Central Bank to its most recent main refinancing operations; for a member state outside the euro, the equivalent rate set by its national central bank. The rate is fixed for half-yearly periods, which is why the figure only changes twice a year and why the correct rate for a given invoice depends on when the delay falls rather than on the date you happen to be calculating. The ECB set its main refinancing rate at 2.15% on 11 June 2025 and at 2.40% on 17 June 2026, so the reference rate for the first half of 2026 was 2.15% and for the second half 2.40%.

The eight points are a floor, not a rate, and that is where the countries part company. Italy transposed at the minimum: Article 5 of legislative decree 231/2002 adds eight percentage points to the reference rate, and the finance ministry publishes the reference rate twice a year in the official gazette — 2.40% for the second half of 2026, giving 10.40%. Spain does the same under Law 3/2004, and its Treasury published 10.40% for the same period. France went further: Article L441-10 of the commercial code sets ten percentage points above the ECB refinancing rate, with the further rule that the rate may not be less than three times the legal interest rate, which for the second half of 2026 stands at 2.75% for professional creditors, so 8.25% — below the 12.40% the main formula produces, which is why the main formula governs. Germany reaches its figure through a different quantity entirely: section 288(2) of the Civil Code adds nine percentage points to the Basiszinssatz of section 247, a rate the Bundesbank publishes and which sits about 0.88 points below the ECB refinancing rate. At 1.52% from 1 July 2026, that gives 10.52% — close to Italy's number but arrived at from a different base, and it will not track it exactly.

The fixed sum of EUR 40, and why five small invoices claim more than one large one

Article 6 of the directive entitles the creditor to obtain from the debtor a fixed sum of EUR 40 as a minimum, payable without the necessity of a reminder, as compensation for recovery costs. It also entitles the creditor to reasonable compensation for any recovery costs exceeding that fixed sum — a debt collection agency's fee, a lawyer's letter. Member states may set a higher fixed sum; France set exactly EUR 40 by decree of 2 October 2012, inserted into the commercial code as Article D441-5 and applicable from 1 January 2013, and Germany wrote the same EUR 40 into section 288(5) of the Civil Code for claims against a debtor who is not a consumer.

The fixed sum attaches to each late payment, not to each relationship, and that produces an arithmetic worth noticing when a client is late on a series of invoices. In France in the second half of 2026, a single invoice of EUR 12,000 unpaid for ninety days generates EUR 366.90 of interest and one fixed sum, for EUR 406.90. The same total billed as five invoices of EUR 2,400, all ninety days late, generates the same interest in aggregate but five fixed sums, for EUR 566.90. That is not a trick; it is what the entitlement says, and the reasoning behind it is that each late payment costs the creditor a separate recovery effort. It is also a reason not to consolidate a series of late invoices into a single restated one when you are considering a claim.

The payment periods, and what a contract may and may not do to them

Article 3 of the directive sets a default of thirty calendar days following the date of receipt by the debtor of the invoice or equivalent request for payment, and provides that a period fixed in the contract shall not exceed sixty calendar days unless otherwise expressly agreed and provided it is not grossly unfair to the creditor. France's Article L441-10 implements that with more structure: absent agreement, thirty days after receipt of the goods or performance of the service; by agreement, a maximum of sixty days from the invoice date, or as an alternative a maximum of forty-five days end of month, expressly stipulated. Article 4 tightens the position where the debtor is a public authority to thirty days, extendable to sixty only in specified circumstances.

Article 7 is the provision that makes all of this real, because without it a supplier with less bargaining power would simply be asked to sign the entitlement away. A contractual term or a practice on the date or period for payment, on the rate of interest for late payment or on the compensation for recovery costs is either unenforceable or gives rise to a claim for damages if it is grossly unfair to the creditor. Two of its rules are absolute rather than assessed case by case: a term excluding interest for late payment is to be considered grossly unfair, and a term excluding compensation for recovery costs is presumed to be grossly unfair. Germany states the same in section 288(6) of its Civil Code — an advance agreement excluding the creditor's claim to default interest on a payment claim is ineffective.

What to send, and in what order

Start by fixing the date the period ran from, because everything else is computed off it: the date the invoice or equivalent request was received by the debtor, or the date the goods or service were received where the contract is silent or the invoice date is uncertain. Then state the rate, the statutory basis, the number of days and the arithmetic, and add the fixed sum. A claim that says "plus late payment interest" is easy to ignore; a claim that says "EUR 366.90 of interest at 12.40% for 90 days on EUR 12,000, under Article L441-10 of the commercial code, plus the EUR 40 fixed recovery sum under Article D441-5, total EUR 406.90" is a number an accounts department can process, and it is markedly harder to argue with.

Two practical cautions. The day-count convention is not settled by the directive, and computing on a 365-day year is the ordinary approach but not the only one used; where the sum is material, check what convention applies in the governing law and say which one you used. And a claim that spans a half-year boundary spans two rates: the reference rate is fixed for six months at a time, so an invoice overdue from May to October 2026 accrues at the first-half rate up to 30 June and the second-half rate from 1 July, computed as two segments. Neither point changes the entitlement; both change the number, and a number that is visibly right is worth more than one that is roughly right.

Frequently asked questions

My contract says nothing about late payment. Can I still claim interest?

Yes, and that is the point of the directive. Article 3 gives the creditor the entitlement to interest without the necessity of a reminder, provided you have fulfilled your own obligations and the amount has not been paid on time, unless the debtor is not responsible for the delay. The rate is the statutory one in your jurisdiction, not one you have to negotiate. The fixed recovery sum under Article 6 is on the same footing. A contract that is silent is the ordinary case the directive was written for, and it changes nothing about what you may claim.

Does the interest run on the amount excluding VAT or including it?

Including it. The directive defines the amount due as the principal sum which should have been paid within the contractual or statutory payment period, including the applicable taxes, duties, levies or charges specified in the invoice or equivalent request for payment. So interest accrues on the gross figure. On an invoice with a 20% rate that is a fifth more interest than a calculation on the net amount would give, which on the EUR 12,000 example is the difference between claiming EUR 366.90 and claiming EUR 305.75.

The client is a public authority. Are the rules different?

Tighter, in the creditor's favour. Article 4 of the directive covers transactions between undertakings and public authorities and sets a payment period of thirty calendar days following receipt of the invoice or equivalent request, which member states may extend to a maximum of sixty days only in specified circumstances. The interest and the fixed recovery sum work the same way as in business-to-business transactions. In practice the constraint with a public debtor is less often the legal position than the internal process, so getting the invoice date of receipt formally acknowledged at the outset is worth more than any subsequent argument about the rate.

I waived the interest to keep the client. Can I claim it later?

Distinguish two things. A contractual term agreed in advance that excludes interest for late payment is treated as grossly unfair under Article 7 of the directive, and Germany states outright in section 288(6) of its Civil Code that an advance agreement excluding the creditor's claim to default interest is ineffective — so a clause of that kind does not bind you. Choosing, after the fact, not to pursue interest that has already accrued is a different act and is generally within your power, subject to the ordinary limitation period for the claim in the applicable law. In practice the useful move is to state the amount in writing and then decide whether to pursue it, because a waived claim you have quantified is a negotiating position and a claim you never quantified is nothing.

The invoice has been overdue since May. Which rate do I use for the whole period?

Two rates, in two segments. The reference rate is fixed for half-yearly periods, so a delay running from May to October 2026 accrues at the first-half rate up to 30 June and at the second-half rate from 1 July. With the ECB main refinancing rate at 2.15% for the first half of 2026 and 2.40% for the second, the Italian and Spanish figures are 10.15% then 10.40%, and the French ones 12.15% then 12.40%. Germany moves the same way through its own base rate, from 1.27% to 1.52%, giving 10.27% then 10.52%. Compute each segment on its own day count and add them; a single blended rate is quick but wrong, and it is the kind of wrong that invites an argument you do not need.