New changes to invoice payment periods
On 27 July 2013, Law 11/2013, of 26 July, on measures to support entrepreneurs and stimulate growth and job creation, was published in the official gazette of the Spanish state (BOE). It contains various tax, employment, commercial and administrative measures and introduces some amendments to Law 3/2004, of 29 December, establishing measures to combat late payment in commercial transactions.
Below are the measures that we think could be of interest to you in relation to that amendment. We would also like to remind you that we are at your disposal, should you require any additional information in that regard:
- 1. Reduction of the payment period
Under the new law, from its commencement date, the time allowed for suppliers to get the invoice or equivalent request for payment to their customers is reduced to thirty days (30), calculated from the date on which the goods were received or the services were provided, although the period may be extended by agreement between the parties, provided that it does not exceed sixty (60) days.
- 2. Late payment interest
Law 11/2013 introduces an amendment concerning the legal rate of late payment interest that the debtor is obliged to pay, which will be eight percentage points above the interest rate applied by the European Central Bank to its most recent main refinancing operation carried out before the first day of the calendar week in question (before this amendment it was seven points).
- 3. When can I insist on late payment interest?
Law 3/2004 states that the creditor has a right to late payment interest where the following requirements are satisfied simultaneously:
a) The creditor has fulfilled his contractual or legal obligations.
b) The creditor has not received the amount owed on time, unless the debtor can prove that he is not responsible for the delay.
Law 11/2013 adds a final paragraph according to which in the event that the parties have agreed payment schedules for payment by instalments, where any of the instalments is not paid on the agreed date, the interest and compensation provided for in this law will be calculated solely on the bases of the amounts overdue.
- 4. Compensation for collection costs
A fixed sum of 40 euros is established as compensation for collection costs, which will be added to the amount resulting from the relevant claim for the costs incurred to collect the amount owed.
Also, the previous limit to this compensation, which could not exceed 15% of the original debt, is removed. The compensation may include, among other items, expenses incurred by the creditor, on account of the delay, by hiring a lawyer or a collection agency.
Remember that under Law 3/2004 the debtor is not obliged to pay the compensation established in the preceding paragraph where he is not responsible for the delay to the payment; this point has not been amended by the new law.
- 5. Unfair terms and practices
Lastly, Law 11/2013 amends the regulation of unfair terms and practices, establishing, among other things, that manifestly unfair terms that disadvantage the creditor are null and void.
In that regard, it specifies that, as a general rule, terms under which the interest agreed is 70% less than the legal rate of late payment interest are to be considered unfair.
The amendments described require commercial practices to be reviewed to adjust them to the current legislation. We are therefore at your disposal to help you with the relevant review and modifications.
In any event, as something to bear in mind in your commercial relations with other countries, we would like to remind you that under Article 1 of the Rome Convention, the law applicable to invoices is that of their country of origin and, therefore, the information contained in this post is applicable to invoices issued by a Spanish company to another country, but not vice versa; in the latter case, you will have to adapt to the commercial practices of the invoice’s country of origin.
Published by Andrea Serrano
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