EU Late Payment Directive: Interest Rates and Rules 2026

Late payment is one of the biggest cash flow threats for European freelancers and small businesses. The EU Late Payment Directive (2011/7/EU) was designed to fix this by giving creditors automatic, enforceable rights to interest and compensation — no court order required, no contractual clause needed. Yet a 2023 Intrum European Payment Report found that only 38% of European businesses regularly claim late payment interest. That leaves significant money unclaimed every year. This guide gives you every number you need for 2026.

What the EU Late Payment Directive Covers

Directive 2011/7/EU applies to commercial transactions — any transaction between undertakings or between undertakings and public authorities that involves the delivery of goods or the provision of services for remuneration. It covers:

• Freelancers and sole traders invoicing companies
• B2B contracts of any size, regardless of written agreement
• Transactions with public authorities (government, municipalities, state agencies)

It does not cover consumer transactions (B2C), employment contracts, insolvency proceedings, or cheque and bill-of-exchange transactions governed by separate legislation.

The Statutory Interest Formula

The core of the Directive is the automatic right to interest once payment is overdue:

Statutory Interest Rate = ECB Reference Rate + 8 percentage points

The ECB reference rate used is the rate for main refinancing operations, published by the European Central Bank. It is updated every six months. The rate applicable to a specific debt is the rate in force on 1 January (for debts falling due in H1) or 1 July (for debts falling due in H2) of the year in question.

2026 Statutory Interest Rates

For debts falling due between 1 January and 30 June 2026, the applicable rate is 10.65% per annum regardless of any ECB rate changes during that period.

B2B vs Public Authority Payment Deadlines

The Directive sets different default deadlines depending on who owes the payment.

B2B Transactions (Business to Business)

• Default payment period: 30 days from receipt of invoice, or 30 days from receipt of goods/services if the invoice date is unclear.
• Maximum agreed period: Parties may agree up to 60 days in writing. Any agreement extending beyond 60 days is only valid if it is not "grossly unfair" to the creditor and is expressly agreed — not buried in standard terms.
• Interest accrues automatically from the day after the deadline, without any formal notice or reminder required.

Public Authorities

• Default payment period: 30 days (strictly enforced for most authorities).
• Maximum period: 60 days for certain healthcare organisations or public entities with specific justification. Extensions beyond 60 days are prohibited.
• Public authorities cannot contractually waive the 30-day rule for their own benefit.

The €40 Minimum Flat Compensation

In addition to interest, the creditor is automatically entitled to a minimum compensation of €40 per late invoice to cover recovery costs. No proof of actual costs is required.

If your recovery costs exceed €40 — for example, you engaged a debt collection agency or incurred legal costs — you can claim the full reasonable recovery costs above €40.

What This Means in Practice

On a €2,000 invoice paid 45 days late (15 days after a 30-day term):

• Interest: €2,000 × 10.65% ÷ 365 × 15 days = €8.74
• Flat compensation: €40.00
• Total additional claim: €48.74

On a €10,000 invoice paid 90 days late (60 days overdue):

• Interest: €10,000 × 10.65% ÷ 365 × 60 days = €175.07
• Flat compensation: €40.00
• Total additional claim: €215.07

Use our Late Payment Calculator to calculate the exact interest and compensation for any invoice in seconds.

Statutory Interest Rates by Country — 2026

Most EU member states have transposed the Directive into national law, sometimes with higher rates or additional protections. Here are the applicable rates for key markets:

Poland and Sweden use their own central bank reference rates rather than the ECB rate, resulting in different effective statutory rates.

How to Add a Late Payment Clause to Your Invoices

While the statutory right applies automatically, adding an explicit clause to invoices and contracts signals that you will enforce your rights and reduces disputes.

On your invoice footer, include language such as:

"Payment is due within 30 days of invoice date. Pursuant to Directive 2011/7/EU, overdue invoices accrue statutory interest at the ECB reference rate plus 8 percentage points per annum, plus a minimum flat recovery fee of €40, automatically from the due date."

In your contract or general terms, specify:

• The payment term (e.g., 14 days, 30 days, or agreed 60 days)
• The applicable statutory interest clause referencing the Directive
• The right to claim full recovery costs above the €40 minimum
• Jurisdiction and governing law (critical for cross-border enforcement)

Sending a Formal Payment Reminder (Mahnung)

While interest accrues automatically, sending a formal written reminder (Mahnung in German, mise en demeure in French) is the practical first step before legal action. A well-drafted reminder:

1. States the invoice number, date, and original amount
2. States the number of days overdue and the current outstanding amount
3. Calculates and states the accrued interest to date
4. States the €40 compensation fee
5. Sets a final payment deadline (typically 7–14 days)
6. Notes that further non-payment will result in legal proceedings

Most overdue invoices are resolved at this stage. Clients who receive a Mahnung with specific interest calculations and Directive references understand that the creditor is serious and informed.

Country-Specific Enforcement

Germany

German courts handle Mahnverfahren (payment order proceedings) through a simplified online process at the state court (Amtsgericht). Filing a Mahnbescheid (payment order application) costs approximately €32–€105 depending on claim amount. If the debtor does not object within two weeks, a Vollstreckungsbescheid (enforcement order) is issued, enabling seizure of assets without a full court hearing.

France

The injonction de payer procedure allows creditors to obtain a payment order quickly through the tribunal judiciaire. Cross-border claims within the EU are handled under the European Payment Order procedure (Regulation 1896/2006).

European Small Claims Procedure

For cross-border claims within the EU up to €5,000, the European Small Claims Procedure (Regulation 861/2007) provides a simplified, written process in your local court. No lawyer is required. The judgment is enforceable in all EU member states without further proceedings.

What Counts as "Grossly Unfair" Payment Terms

The Directive prohibits payment terms that are "grossly unfair" to the creditor. National courts in Germany, France, and the Netherlands have ruled that:

• Payment terms of 90 days or more in standard B2B contracts are presumptively unfair
• Terms excluding or capping interest below the statutory rate are unenforceable
• "Pay when paid" clauses (payment conditional on the debtor receiving payment from a third party) are unfair when used to delay payment beyond 60 days

If a client insists on contractual terms that contradict your statutory rights under the Directive, those terms are void and the statutory rules apply regardless.

Calculate exactly what you are owed on any overdue invoice using our Late Payment Calculator — including the H1 2026 rate of 10.65%, the €40 flat compensation, and daily interest accrual. Getting this right takes 30 seconds and gives you a legally sound number to put in your Mahnung.