Late Payments in Commercial Transactions Regulations 2012
The purpose of these Regulations is to give legal effect to Directive 2011/7/EC of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions. That Directive repeals, with effect from 16 March 2013, an earlier Directive from 2000 (Directive 2000/35/EC) on combating late payment in commercial transactions
European Communities (Late Payment in Commercial Transactions) (S.I. No. 580 of 2012) which was signed by Minister for Jobs, Enterprise and Innovation, Mr. Richard Bruton, T.D., on 22 December 2012 transposed this Directive and came into effect on 16 March 2013.
The Regulations repeal, with effect from 16 March 2013, the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002) which transposed Directive 2000/35/EC).
Applicable Interest Rate
The Regulations, which apply equally to the public and private sectors, provide an entitlement to interest if payment for commercial transactions is late.
The Regulations provide that unless otherwise specified in an agreed contract, the interest rate will be the European Central Bank main refinancing rate (as at 1 January and 1 July in each year) plus 8 percentage points.
The ECB rates in force on 1 January and 1 July apply for the following six months in each year.
Only one rate will apply to a late payment – that is the rate in force on the payment date.
With effect from 1 July 2014 the late payment interest rate is 8.15% per annum (that is based on the ECB rate (as at 1 July 2014) of 0.15% plus the margin of 8%). That rate equates to a daily rate of 0.022%. Penalty interest due for late payments should be calculated on a daily basis.
The ECB rate can be checked on the Central Bank and Financial Services Authority of Ireland website www.centralbank.ie.
The main provisions of the revised legislation are:
I. Public authorities must pay for the goods and services that they procure within 30 days or, in very exceptional circumstances, within 60 days.
II. Enterprises should pay their invoices within 60 days, unless they expressly agree otherwise and if it is not grossly unfair to the creditor.
III. Enterprises are automatically entitled, without the necessity of a reminder, to interest for late payments plus compensation costs.
IV. The statutory interest rate for late payment is increased
V. Enterprises can challenge grossly unfair terms and practices
For more information please see Frequently Asked Questions about the Regulations on Combating Late Payment in Commercial Transactions.
In the meantime if you require further information please send an email to the dedicated mailbox email@example.com where your query will be dealt with.
The SME Policy Unit provides information in respect of late payments only. It is important to note that while staff in the Unit will endeavour to provide the fullest information, it is not their function to offer advice. Where specific interpretations of the Late Payments legislation are required, it is recommended that these be sought from competent parties with the appropriate expertise within the legal profession.
Last modified: 01/07/2014