0 Reminders Required: EU Late Payment Directive Rights [2026 Guide]

A business anywhere in the European Union can charge statutory interest on a late invoice the moment it becomes overdue, with no reminder, demand letter, or notice required first, under Article 3(1) of Directive 2011/7/EU. That right sits alongside a fixed 40 euro compensation payment and a legal cap on how long a payment term can run in the first place. Most of what a small business assumes it needs to do before it can charge for a late invoice, such as warning the client first, simply is not true under EU law.

What Is the EU Late Payment Directive?

Directive 2011/7/EU is the EU-wide law governing payment terms and remedies for late payment in commercial transactions, covering both business-to-business contracts and any transaction where a public authority is the buyer. Member states were required to transpose it into national law by March 16, 2013, so every EU country has had its own implementing legislation, built on the same minimum floor, in force for over a decade.

The directive does not set a single EU-wide invoicing statute that businesses deal with directly. Each member state’s transposing law is the one that actually applies to a given contract, which is why a business trading across several EU countries can see the same underlying rights expressed with country-specific variations, similar to how Ireland’s Department of Enterprise, Trade and Employment and the UK’s own Late Payment of Commercial Debts Act calculate the same reference-rate-plus-margin formula slightly differently. What every version shares is the floor Article 2011/7/EU sets: a minimum interest rate, a minimum fixed compensation, and a cap on how long a payment term can legally run.

Do You Need to Send a Reminder Before Charging Interest?

No. Article 3(1) states that the creditor is entitled to interest for late payment “without the necessity of a reminder,” provided the creditor has performed its own contractual and legal obligations and has not received payment on time. Article 6(1) applies the same “without it being necessary for the creditor to have made a reminder” language to the fixed 40 euro compensation payment. Both entitlements exist the moment the due date passes, whether or not the seller ever chases the buyer for it.

Figure 1: The directive’s automatic-entitlement language means the legal right to interest and compensation does not depend on the creditor having sent anything. Source: EU Directive 2011/7/EU, Article 3(1) and Article 6(1).

That legal fact and actually getting paid are two different problems. Only 31% of businesses chase every single overdue invoice, and an invoice nobody follows up on rarely resolves itself just because the interest is technically accruing in the background. BillyPaid’s payment reminders exist for exactly that gap: the law does not require a reminder to trigger the entitlement, but a reminder is still what turns an accruing legal right into an actual bank transfer.

What Are the EU’s Legal Payment Term Limits?

30 calendar days is the default period for a B2B contract that says nothing about payment terms, running from the later of the invoice date or the date the goods or services were received, under Article 3(3)(b). Contracts can agree to a longer period, but Article 3(5) caps that at 60 calendar days “unless it is expressly agreed… and provided it is not grossly unfair to the creditor.”

Public authorities face a stricter default: 30 calendar days under Article 4(3), with no general extension available. Article 4(4) allows a narrower carve-out to 60 days only for specific categories of public entity, such as those providing healthcare or certain public undertakings, reflecting that these buyers sometimes operate under budget cycles the directive’s drafters judged worth accommodating separately from ordinary government purchasing.

Figure 2: Maximum payment terms permitted under Directive 2011/7/EU differ by buyer type, and a B2B term above 60 days needs to clear a fairness test to be enforceable. Source: EU Directive 2011/7/EU, Articles 3 and 4.

How Much Can You Charge in Interest and Compensation?

The statutory interest rate is the reference rate plus a minimum margin of 8 percentage points, calculated under Article 2(6)-(7). For euro-area member states, the reference rate is the European Central Bank’s main refinancing rate; for the second half of 2026, that puts the combined statutory rate at 10.4% a year, using the ECB’s 2.40% rate as of July 1, 2026, per Ireland’s Department of Enterprise, Trade and Employment (a more detailed country-by-country breakdown, including how the UK and US compare, is in BillyPaid’s interest on overdue invoices by country data).

Figure 3: The EU’s statutory late-payment interest rate for the second half of 2026, recalculated twice yearly under Directive 2011/7/EU. Source: Ireland Department of Enterprise, Trade and Employment.

On top of that interest, Article 6(1) guarantees a fixed 40 euro minimum compensation payment the moment interest becomes payable, and Article 6(3) entitles the creditor to additional reasonable compensation for recovery costs that actually exceed that 40 euros, such as legal or debt-collection fees. Together, the interest and the fixed sum mean a business is compensated for something closer to the real cost of being unpaid, not a token penalty. BillyPaid’s guide to how much late fee you can charge walks through applying a comparable fee structure on an actual invoice.

When Is a Payment Term “Grossly Unfair”?

Article 7 voids any contractual term or practice that is grossly unfair to the creditor, and it does not leave that entirely to case-by-case judgment. The test looks at whether a term represents a gross deviation from good commercial practice, contrary to good faith and fair dealing, taking into account the nature of the product or service and whether the debtor had any objective reason to deviate from the statutory rate or the 30-day default period.

The directive goes further with two specific presumptions: a term that excludes interest for late payment is automatically treated as grossly unfair, and a term that excludes compensation for recovery costs is presumed grossly unfair unless the debtor can show otherwise. Article 7(5) also lets member states allow representative organizations, such as trade or business associations, to bring court or administrative action against a business or industry body that keeps using grossly unfair terms, rather than requiring each individual creditor to challenge its own contract alone.

Figure 4: The gap between what businesses agree to and what they actually collect has widened since 2023, even though the underlying legal cap on payment terms has not changed. Source: Intrum European Payment Report 2026.

Is the Late Payment Directive About to Change?

Not yet, and not for a while. In September 2023 the European Commission proposed replacing the 2011 directive with a stricter regulation, one that would have cut the B2B payment term cap from 60 days to 30 days in most cases and made interest and compensation effectively non-waivable. The European Parliament adopted a negotiating position on the file in 2024, but the Council of the EU never reached its own agreed position; member states raised concerns about the effect on supply-chain financing and contractual freedom, and successive Council presidencies were unable to find a compromise the working party would accept.

As of the European Parliament’s own Legislative Train Schedule, last updated June 20, 2026, the file’s status is listed as blocked, with the Council named as the blocking institution. That means the current Directive 2011/7/EU, with its 60-day contractual cap and reminder-free entitlement to interest, remains the operative law across the EU for the foreseeable future, not the stricter 30-day regulation that was proposed. The same period has seen faster movement on a related but separate track, EU e-invoicing mandates under the VAT in the Digital Age reforms, which is its own compliance timeline rather than a change to payment-term law.

How Bad Is Late Payment Still Across the EU?

Still widespread, and getting slightly worse by one key measure. Intrum’s European Payment Report 2026, based on responses from 8,385 businesses across 20 European countries and published in April 2026, found that the B2B payment gap, the difference between agreed payment terms and when businesses actually get paid, widened from 16 days in 2023 to 20 days in 2026. The same report found that 62% of businesses say delays in receiving payment from their own customers force them to pay their own suppliers late, turning one overdue invoice into a chain of downstream late payments.

Figure 5: Nearly two-thirds of European businesses pass a customer’s late payment straight through to their own supplier chain. Source: Intrum European Payment Report 2026.

That gap between the legal right and what actually happens is the same gap the directive’s automatic-entitlement language cannot close on its own. The interest accrues whether or not anyone tracks it, but somebody still has to notice the invoice is overdue, calculate the right rate for the right country, and put it in front of the client.

EU Late Payment Directive: The Rights at a Glance

Right	Legal Basis	What It Guarantees
Interest without a reminder	Article 3(1)	Statutory interest accrues automatically once an invoice is overdue
Interest rate	Article 2(6)-(7)	Reference rate plus 8 points minimum, 10.4%/yr in the EU for H2 2026
Fixed compensation	Article 6(1)	40 euro minimum, owed without prior notice
Recovery cost compensation	Article 6(3)	Reasonable costs beyond the 40 euros, if actually incurred
B2B payment term cap	Article 3(5)	60 calendar days, unless grossly unfair to the creditor
Public authority term cap	Article 4(3)-(4)	30 days, extendable to 60 only for specific categories

The Bottom Line

The EU’s Late Payment Directive gives creditors more than most businesses realize they already have: interest that starts accruing the day after the due date with no reminder required, a fixed compensation payment on top of it, and hard limits on how long a contract can legally push a payment term out in the first place. None of that requires a lawsuit, a collections agency, or even a phone call to exist as a legal entitlement.

What it does not do is collect the money automatically. Intrum’s data shows the real-world payment gap widening even as the statutory framework has stayed the same, and the recast proposal that would have tightened the rules further is stuck in the Council with no clear path forward as of mid-2026. Until that changes, the practical answer for a business trying to close its own version of that gap is the same one the law leaves implicit: know the rate, state it, and follow up, which is exactly what BillyPaid’s payment reminders are built to automate on every invoice rather than only the ones a business remembers to chase.

Frequently Asked Questions

Do I need to send a reminder before I can charge interest under EU law? No. Article 3(1) of Directive 2011/7/EU entitles a creditor to statutory interest for late payment without the necessity of a reminder. The entitlement starts automatically the day after the agreed or statutory due date. A reminder is often what actually gets the invoice paid, but it is not a legal precondition for the interest to exist.

How much can I charge if a client pays my invoice late in the EU? Statutory interest equal to the European Central Bank’s reference rate plus a minimum 8 percentage point margin, which works out to 10.4 percent a year for invoices overdue in the second half of 2026, plus a fixed 40 euro minimum compensation payment, plus any further reasonable recovery costs actually incurred beyond that 40 euros, under Articles 2 and 6 of the directive.

What is the maximum payment term a contract can set in the EU? 60 calendar days for a business-to-business contract, and only if that longer period is expressly agreed and not grossly unfair to the creditor, per Article 3(5). The default when nothing is agreed is 30 calendar days. Public authorities are capped at 30 days, extendable to 60 days only for specific categories such as public healthcare entities.

Is the EU planning to change the Late Payment Directive? A 2023 proposal would have replaced the directive with a stricter regulation and a flat 30-day cap, but as of the European Parliament’s Legislative Train Schedule update on June 20, 2026, the file is listed as blocked in the Council. Directive 2011/7/EU remains fully in force in its original 2011 form across every member state.

Sources and References

1. EUR-Lex, Directive 2011/7/EU of the European Parliament and of the Council on Combating Late Payment in Commercial Transactions
2. European Parliament, Legislative Train Schedule: Revision of the Late Payment Directive
3. Intrum, European Payment Report 2026 (8,385 businesses, 20 European countries, April 2026)
4. Ireland Department of Enterprise, Trade and Employment, Late Payment Interest Rate (2026)

Note: All figures verified as of October 2026.